Disclaimer. The English translations provided herein are generated by artificial intelligence from Dutch and French content. While every effort has been made to ensure accuracy, we cannot guarantee that the translations will be error-free. The translated content is for readability purposes only and should not be considered as legal advice. For accurate information, employers and HR professionals are advised to consult the original versions in Dutch or French, or to consult your Securex Legal Advisor.
Increase in bicycle allowance
Employees who travel their commuting by bicycle are entitled to a bicycle allowance. That allowance is exempted up to a certain limit by the tax authorities and the NSSO. From 1 January 2024, the maximum exempted amount has been increased from €0.27 to €0.35 per kilometre.
From now on, the bicycle allowance for employees and company managers will only be subject to a social and tax exemption of a maximum of €0.35 per kilometre actually travelled by bicycle for commuting.
No withholding tax and social security contributions have to be withheld insofar as the kilometre allowance does not exceed the exempt amount.
The part that exceeds the exempt amount exceed is added to the monthly salary to calculate the withholding tax and social security contributions to be withheld.
The government thus aims to incentivise the use of bicycles in commuting to work.
For more information, read our actua of 24 October 2023 (available in Dutch and French)
Compensation in the form of a tax credit
In order to encourage employers to grant a higher maximum bicycle allowance, a temporary compensation will be introduced in the form of a tax credit. Thus, employers who decide to increase their bicycle allowance will be eligible for this tax credit.
A tax credit is a tax break that allows the employer to pay less tax. The extra cost due to the increase in bike allowance is thus compensated.
This tax credit applies only to allowances granted for journeys by bicycle as part of commuting. Allowances for business trips by bicycle are thus excluded from the measure.
To offset the increase in bicycle allowances
The tax credit applies only to facultative increases in bicycle mileage allowances.
The tax credit is equal to the optional increase in the bicycle mileage allowance multiplied by the number of kilometres for which the bicycle mileage allowance is granted.
Concretely, the tax credit can only be granted for the difference between:
- The bicycle mileage allowance granted for commuting during a given period, and
- The indexed “reference bicycle mileage allowance”
The reference bicycle kilometre allowance is the allowance granted by the employer for travel on 1 June 2023, with a minimum of €0.18.
The increase is borne by the employer
It is important that the increase in the mileage allowance is actually borne by the person granting the bicycle mileage allowance. Employers who pass on the cost of the increase to third parties or have it reimbursed by third parties cannot claim the tax credit for the bicycle mileage allowance increase.
This is the case, for example, if an employment agency, as a formal employer, passes on the cycle mileage allowance to the service applicant (the tangible employer). This employment agency can apply for the application of the tax credit on condition that it does not pass on this increase to the material employer.
The tax credit does not apply to the increase in the bicycle mileage allowance charged to a foreign branch of the employer.
A temporary measure
The tax credit is temporary and only applies to bicycle allowances paid for commuting during the period from 1 January 2024 to the end of 2026 and granted by 31 December 2027.
The tax credit is also subject to the condition that the bicycle allowance increase without time limitation applies. The increase must be stipulated in a collective agreement, in the labour regulations or in an individual agreement.
Although the tax credit is only granted on a temporary basis (more specifically, for commuting between 1 January 2024 and 31 December 2026), the increase of the bicycle mileage allowance must have been agreed indefinitely.
A sector collective agreement also counts as a voluntary increase
This increase can be provided at company level, but also at sector level. Indeed, a sectoral collective agreement can also serve perfectly well as a legal basis for claiming the tax credit for the voluntary increase in the bicycle deduction from 1 January 2024. So be sure to check what your sector has agreed on in the 2023-2024 sectoral agreement.
Example of the PC 126
The bicycle allowance was raised on 1 January 2024 to 0.27 euro per kilometre.
How to apply for the tax credit,
The tax credit must be applied for in the tax return. It is applicable in personal income tax, corporate income tax and corporate income tax, and in the corresponding tax non-resident.
What about the tax credit for the generalisation of the bicycle allowance (collective agreement No 164)?
A tax credit was also introduced to offset the financial impact on employers who since 1 May 2023 are required to grant a bicycle allowance based on CBA No 164.
Since 1 May 2023, employees who cycle to work are entitled to a mandatory bicycle allowance under collective agreement 164. This allowance amounts to €0.27 per kilometre travelled, with a maximum of 20 kilometres per single journey.
For more information, please read our actua of 20 December 2023 (available in Dutch and French)
Please note. The tax credit for the voluntary increment cannot be cumulated with the tax credit for the generalised bicycle allowance introduced by collective agreement No 164. Employers who already obtain this tax credit can only claim the new tax credit for the excess of the voluntary increase of the bicycle allowance.
What does Securex do for you?
Do you have questions about the cycle allowance? Then don't hesitate to contact your Securex Legal Advisor at myHR@securex.be.
If your question is about the calculation of the tax credit, we recommend that you contact your accounting office and inform them by how much the bike allowance was increased (via an industry collective bargaining agreement, company collective bargaining agreement, employment regulations or individual employment contract).
Source
- Constitutional Decree of 21 March 2024 laying down the modalities for the application of the tax credit for the optional increase of the bicycle kilometre allowance, BS of 29 March 2024
- Circular 2024/C/56 on the tax credit for the optional bicycle mileage allowance increase
