Who bears the costs for company car leasing?

Company bike leasing is becoming increasingly popular in Germany - among both employers and employees. Whether sporty, sustainable or simply practical: a leased bike or e-bike is increasingly complementing the company car. Both sides benefit - from tax advantages, greater employee satisfaction and a positive image in terms of sustainability.

But one question comes up again and again: Who bears the costs of company car leasing? The answer to this question is not straightforward, as there are several models - and a number of legal and tax aspects that need to be taken into account.

Who pays what?

With company bicycle leasing, the bicycle is leased by the employer and given to the employee for use - usually as part of so-called gross deferred compensation. The distribution of costs can be organised flexibly.

Cost absorption models for company car leasing

1st model: employees bear the full costs (gross deferred compensation)

Procedure: Employees use part of their gross salary to finance the leasing instalment.
Tax advantages: The leasing instalment is deducted from the gross salary before deduction of taxes and social security contributions - this reduces the taxable income.
Advantage: This often results in real savings of up to 40 % compared to direct purchase.
Prerequisite: A corresponding additional contractual agreement between employer and employee that the salary will be reduced by a fixed amount by mutual agreement for the duration of the leasing period.

2nd model: Employers bear the entire costs

Procedure: Employer pays the leasing instalments in full - as an additional salary component or benefit in kind.
Advantage for employees: No costs, but full right of use - both privately and professionally.
Advantage for employers: Increased employee loyalty and the option of claiming the leasing instalment as a business expense.

3rd model: Employers pay a subsidy

Procedure: The leasing instalment is split between employer and employee, e.g. in a 50:50 ratio.
Combination possible: The subsidy can be tax- and social security-free, provided it is structured as a non-cash benefit (up to €50 per month, as of 2025).

Advantages:

Employees benefit from a noticeable reduction in costs.
Employers strengthen their attractive employer brand without high additional costs.
The allowance can serve as a motivational tool and is cheaper than a traditional salary increase.
Can be used flexibly for different employee groups or individual agreements.

Cost neutrality for employers

Employers can offer company wheel leasing completely cost-neutral if they only act as lessees and have the leasing instalments paid in full by employees via gross deferred compensation. Advantage: No additional fixed costs for the company - but still plus points in employer branding.

More information for employers

Tax and legal aspects

There are two different tax treatment options for company bike leasing - depending on whether the bike is provided in addition to the salary or as part of a gross deferred compensation scheme:

1. company bicycle in addition to wages

Procedure: The employer provides the bike in addition to the salary owed anyway, without the employee forgoing any salary.
Tax treatment: Private use is tax-free - there is no non-cash benefit.
Legal basis: Section 3 No. 37 EStG
Benefit: 100% tax-free for the employee - maximum financial benefit.

2. company bike via gross deferred compensation

Procedure: The employee uses part of their gross salary to finance the leasing instalment.
Tax treatment: A non-cash benefit of 0.25% of the gross list price per month is recognised.
Advantage: Despite taxation, the model remains significantly more favourable than a private purchase, as income tax and social security contributions are waived on a reduced income.

What happens when a company bike lease ends?

A leasing contract usually runs for 36 months. After that, the following options are usually available:

Return of the bike to the leasing provider.
Purchase by the employee at a residual value.
Example with Lease a Bike: The employee is offered to buy the bike if they wish and if possible. In most cases, the calculated residual value is 18% of the original gross list price.
The purchase is voluntary - there is no legal entitlement.

man sitting on stair in front of yellow house and bike standing in front of him

Flexible model.

With benefits for employers and employees!

There is no one-size-fits-all answer to the question ‘Who bears the costs of company car leasing?’ - but in any case, the options are flexible and advantageous for both employee and employer. Whether the employer bears all the costs, provides a subsidy or simply converts the gross salary - all models offer tax advantages and can help to make mobility more sustainable and economical.

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