VAT treatment of company bicycles
On 9 February 2022, the Austrian Ministry of Finance issued a statement on the VAT treatment of company bicycles in a letter to the Austrian Chamber of Tax Advisors and Public Accountants (KSW).
Whether the private use of a company bicycle by an employee should be subject to VAT as a supply of goods or services or as a a consumption for ‘own use’ depends on whether a bicycle used for business purposes (min. 10% business use) is made available to the employee in return for consideration or free of charge.
The following circumstances should be deemed to be in return for consideration, as the employee provides a consideration for the use of the bicycle:
- company bicycle in addition to salary (consideration = work performed)
- company bicycle via conversion of part of the salary (consideration = work performed)
- company bicycle for rent (consideration = payment of rental fee).
If employees can use a pool bicycle for private purposes free of charge, this may, under certain circumstances, constitute a consumption for ‘own use’ that is subject to VAT.
VAT assessment base
In the event of use of a company bicycle via conversion of part of the salary or as a bonus (grant of use in return for consideration), as well as in the case of private use of a bicycle pool (grant of use free of charge), the income in kind value for wage tax purposes may be used as the VAT assessment base as a simplification. The Austrian Tax Reform Act 2020 introduced an exemption for income in kind in the form of bicycles and motorcycles with CO2 emissions of zero grams/km. The assessment base for the use of these vehicles is therefore nil.
If the company bicycle is rented out to the employee, the rental fee should be used as the assessment base.
Deduction of input VAT for the taxable person
A taxable person who does not exclusively use a company bicycle for VAT exempt transactions (e.g. services of doctors, health care providers, social insurance providers, charitable physical sport associations, schools etc.) may deduct input VAT on the purchase or lease of a company bicycle if it was purchased for business purposes and is used for business purposes at least 10% of the time.
If the bicycle is used for both transactions that disallow input VAT deduction (e.g. VAT exempt activities – see above) and transactions that allow input VAT deduction (e.g. bicycle rental), the taxable person must divide the input VAT amounts into deductible and non-deductible input taxes.
We would be happy to provide advice on the VAT treatment of company bicycles that are used both for business purposes and privately.