Bicycle hire-purchase and renting are simple and very accessible options for companies wishing to enable their staff to spread their payments over time from part of their gross remuneration, rather than making a one-off purchase from their net pocket. However, these terms are often used interchangeably, even though they refer to different legal and practical realities. The purpose of this article is to clarify these notions and explain the advantages of each formula.
Hire-purchase: In Belgium, although the term "leasing" is commonly used, it often refers to hire-purchase (as is the case at Ubike). This is a form of financing that can be spread over various durations (between 24 and 48 months, with 36 months being the norm), under which all the monthly payments invoiced by the service provider to the employer represent 100% of the price (Residual Value = 0%). When the employer pays the last monthly instalment, the title of ownership is transferred automatically and free of charge to the employer, who then has the option of transferring it in turn to any employee who so wishes. To do so, the employee will have to pay (initially out of his or her own pocket) an amount representing on average +/- 6% of the recommended retail price of the bike. For legal and tax reasons, the employer cannot give the bike to the employee free of charge.
Renting: a method of financing that can be spread over various periods (between 24 and 48 months, with 36 months being the norm), whereby all the monthly payments invoiced by the service provider to the employer represent 84% of the price (Residual Value = +/- 16%). When the employer pays the last monthly instalment, the employee concerned can choose whether or not to acquire ownership of the bike by paying (initially out of his or her own pocket) the estimated value of the bike on the second-hand bike market at that time.
The Belgian government authorizes employers to make bicycles available to their employees on favorable terms for a period of 24 to 48 months.
In practice, this means that employees can choose a bike through a "salary sacrifice". This mechanism enables them to reduce their gross salary in exchange for the provision of a bicycle, thus optimizing tax and social benefits. The net impact on their salary is calculated to maximize these benefits, and the employer can recover up to 100% of the cost of the lease through this method.
The cost of leasing is deducted from salary and converted into a new gross salary. On average, the impact on gross salary is around 80% of the leasing cost. Depending on individual circumstances, employees pay between 25% and 50% of the gross impact in net terms due to RSZ/ONSS tax exemptions.
Employees can expect to cover around 40-60% of the bike's retail price, depending on various factors. Employers can lease bicycles to their employees for up to 48 months at salary sacrifice, making the cost neutral for employers. The absence of taxation makes this formula highly advantageous.
- Hire-purchase and Renting: Contracts from 24 to 48 months.
- Hire purchase: Transfer of ownership to the employer and then to the employee for a small token payment.
- Renting: Possibility of acquiring the bike for the employee at the end of the contract.
- Hire-purchase: Residual value of 0%. Symbolic payment of around 6% of the initial price for transfer of ownership to the employee.
- Renting: Residual value of approximately 16% of the initial price for the purchase of the bike.
- Lease-purchase: Higher monthly payments, less impact on net salary.
- Renting: Lower monthly payments, higher total cost if bike is purchased.
- Administration, insurance, maintenance available for both options.
The employer and employee agree to a new salary for 24, 36, or 48 months. The amount the employee agrees to "sacrifice" is used by the employer to finance the company bike.
This follows budget neutrality:
Common financing sources include the monthly salary and the 13th month/end-of-year bonus.
This option offers better financial advantages than using the end-of-year bonus. It allows choosing a bike with a higher retail price due to a smaller gross impact and ensures regular payments, providing more security. The downside is the additional administrative work, requiring HR involvement. Ubike provides specialized HR tools to assist.
Financing through a one-off bonus is simpler and requires less administrative work. However, it limits the choice of bike due to lower financial benefits. This option is not authorized in all business sectors.
Employees must check sectoral authorizations, obtain authorization from the joint committee and draw up written agreements. Contract suspensions and certain types of leave may affect eligibility for bonuses. Agreements must clarify any outstanding financial obligations in the event of early contract termination, and social security contributions may affect vacation pay and pensions.
While the monthly salary sacrifice is more accessible and advantageous, the end-of-year bonus is easier to calculate and has less impact on other salary components.
A cafeteria plan or flexible income plan allows employees to make part of their annual salary flexible. Employees can choose benefits such as bike rentals, multimedia or additional vacation time with their gross salary, resulting in a better net impact. For employers, there are no additional costs beyond setting up the plan.
The budget comes mainly from the employee's annual budget (EYB), but additional options can be included. Companies can allocate a percentage of monthly salary or other budgets to the BIP. Access is usually facilitated by payroll organizations via an online tool, enabling employees to choose benefits "à la carte".
Employees eligible for a company car can access a mobility budget, separate from the traditional salary sacrifice. This budget, based on the total cost of ownership (TCO) of the car, can be allocated to alternative mobility options such as a rental bike. The reclassification of employees to access this budget should always be calculated on the basis of the car's TCO, starting at around 170-200 euros per month.
Unlike salary sacrifice, the mobility budget is a complement to the normal salary, offering a greener and more flexible mobility solution while maintaining the right to the company car.
The bicycle allowance is a tax benefit for commuting by bicycle. As of 2024, the bicycle allowance has been increased from €0.27/km to €0.35/km, with a maximum of €2,500 per year, which can rise to €3,500 pending legal authorization. This allowance can save regular cyclists up to €770 a year. It is 100% tax-deductible and exempt from social security contributions.
Sacrificing wages to rent a bike has an impact on various benefits, depending on the sector and employer policies. It can have an impact on
Government regulations limit the impact on pensions. For example, a 36-month bicycle rental contract can have a minimal impact of around 11 cents gross per month.
Respect the conditions of the employer's bicycle plan with regard to budget limits. If partial financing from personal funds is permitted, inform Ubike. However, personal financing is not recommended, as it is not covered by insurance and no refund is possible in the event of early termination or return of the bike.
At the end of a rental period, the transfer of ownership takes place smoothly, according to the terms predefined in the rental contract. At the end of the rental period - generally after 36 months - the employer becomes the owner of the bike. There are two ways of transferring ownership to the employee:
Renting offers greater flexibility at the end of the contract, allowing the employee to decide whether or not to buy the bike:
In the event of early termination of the rental contract, both parties - the employee and the employer - must contact Ubike to begin the process, which offers two options:
In both cases, termination procedures are designed to ensure clarity and fairness, taking into account the different needs and preferences of the parties involved. Whether buying the bike, returning it or terminating the contract early, each route is structured to deliver clear financial and practical outcomes.
Bicycle renting and hire-purchase are flexible, cost-effective alternatives to purchasing bicycles. Each option has unique advantages and implications for employers and employees. Hire-purchase generally involves higher monthly payments, but offers lower overall costs if ownership is the goal. Renting, on the other hand, offers lower monthly payments but a higher residual value if the bike is purchased at the end. Both options include useful services such as maintenance and insurance.
Below is a detailed comparison of the main aspects of bike renting and hire purchase.
This table should help you clarify the distinctions between bike renting and hire purchase, enabling you to choose the best option for your financial and operational needs.
