How Bike Start-Up Disrupted Car Addiction

GoByBike Finland Ltd. is no ordinary start-up – it has been a great success in changing attitudes to biking in this country – where most working people use public transport or their work car benefit. Now they can pedal all the way on a shiny new electric bike or trekking bike.

Your correspondent has seen how the Danes, and Dutch happily go about town on their bikes, keeping their air clean and their people a little more healthy. Now this start-up has taken advantage of a government initiative for companies to offer their employees a bike to get to the office with a modest tax incentive.

The result has been a huge take up by cyclists eager to get their hands on an electric bike or trekking bike at a reduced costs and modest profits for the company.

Thousands of Finns are already taking advantage of the bicycle initiative and is already more popular than the car benefit this year. The goal of the reform is to increase cycling in Finland by 30% by 2030 and reduce traffic emissions.

“The wheel advantage is not very well understood, even though it is a very simple matter in the end games. Thanks to the benefit, employees can get a bike worth thousands of euros for hundreds of euros cheaper. The fee is deducted from the employee’s gross salary for the duration of the contract, and it includes everything from bicycle insurance,” says Heikki Tiittanen, the founder of Finland’s largest bicycle benefit service provider GoByBike.

Heikki is an engineer and start-up guru, and his colleague, the other co-founder, Tommi Ylönen, is a financial expert from Nokia and banking jobs – both are keen cyclists…

The employee bicycle is tax-free up to €1,200 annually, and the tax value of the bicycle benefit is always €100 per month. The most common model is that the bicycle benefit is included in the total salary, in which case the employee’s taxable income is reduced by €1,200 per year. The benefit for the employee is thus created through a reduction in the tax rate.

The employee can claim the bike for himself at the end of the contract period. The redemption price is 5% of the purchase price of the bike package.

” The reduction of the tax rate by using the bicycle benefit means that the net salary paid to the account of a middle-income earner will only decrease by around €57 per month. For example, in the case of an electric bike worth €3,000, the total cost for a middle-income wage earner is about €2,200, when the 5% redemption fee is also taken into account, with which you can get the bike for yourself at the end of the contract period,” Tiittanen opens.

The employer’s direct costs for providing the bike benefit only include the service provider’s administration fee, which at GoByBike is €15 per rented bike per month. This payment is acceptable because GoByBike handles all the necessary administration on behalf of the employer.

Here is an example calculation of the costs and savings of an employment bicycle – the calculation uses the median monthly salary of Finns (€3,200) and the average purchase price of employee bicycles (approx. €3,100) with a contract period of 37 months.

The taxable income with bicycle benefit is based on €3100 that reduces the tax rate and net income by -0.78% and €57.18 respectively. This gives a cost for the employee during the contract period: 2116 euros plus the redemption price at the end of the contract period (5%): €155 making the total cost for the employee of €2271 a saving for the employee of €829.

In addition to the costs, there are a few matters many about the bicycle benefit that employees often ask about to which GoByBike replies here:

Do you have to travel to work on a company bike? “Many employees think that they are only allowed to ride a company bicycle for work trips, but that is not true, however. You don’t have to use the company bike for work trips at all, and you can use it in your free time whenever and however you want. The benefit is intended to encourage more cycling both as a form of movement and as a fitness hobby,” Tiittanen emphasizes.

Who pays for bike theft? “The service provider is responsible for insuring the company bicycle. Generally, the service provider’s monthly rent always includes comprehensive theft and damage insurance, which makes using the company bike as worry-free as using your own bike.

Who is entitled to a bicycle benefit? “Every employee is entitled to a bicycle benefit, but before acquiring an employee bicycle, the employer must offer the benefit to its employees. Usually, this happens by signing a contract with the service provider, after which the employees can get the employee bike they want from any brick-and-mortar store or online store.”

What happens if you change jobs in the middle of the rental period? “Usually, the employment bicycle is transferred with the employee to the new employer, and the benefit continues unchanged. This is easy, as long as you remember to agree on this with your new employer in advance. The employee can also redeem the bike for himself at the redemption price specified in the rental agreement. In more special situations, the bike can also be returned, but in this case the employee will lose the benefit he has already accrued from using the bike benefit.”

What kind of bike can you get? “You can get any bicycle or electric bike with a rated motor power of no more than 250W as a work bike. More than 70 percent of all bikes purchased as a work bike are electric bikes.”

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