What are the tax advantages of an electric cargo bike for business owners?

Business owners can gain significant tax advantages when purchasing an electric cargo bike for business use. The main tax schemes for this are the small business investment allowance (KIA) and the environmental investment allowance (MIA), which allow you to deduct up to 45% of the investment from your profits. In addition, you can reclaim VAT and depreciate the cargo bike in your accounts. This combination of tax benefits makes the electric cargo bike a financially attractive and sustainable choice for business owners operating in urban areas.

1. Tax advantages of an electric cargo bike for business owners: an overview
2. What is the small business investment allowance (KIA) for an electric cargo bike?
3. How does the environmental investment allowance (MIA) work when purchasing an electric cargo bike?
4. What VAT benefits apply to business owners when buying a cargo bike?
5. How can an electric cargo bike be depreciated in accounting? 
6. What are the tax rules when using a business electric cargo bike privately?
7. The main tax advantages summarized: here's how to maximize your tax benefit

Electric cargo bikes are rapidly gaining popularity among business owners. Not only because of their practical and sustainable nature, but also thanks to the attractive tax advantages. More and more entrepreneurs are discovering that these bikes are a tax-friendly alternative to traditional company cars. Especially in busy city centers.

"Many business owners are surprised by the tax advantages of our CargoX," Thomas explains. "You can take advantage of KIA, MIA and VAT deductions. Combined, that can save a significant amount on your investment."

The Dutch government encourages the use of environmentally friendly means of transport through various tax schemes. For entrepreneurs who invest in an electric cargo bike, there are benefits such as investment deductions, VAT refunds and favorable depreciation options.

Want to know more about business use? Then read our blog "What are the pros and cons of an electric fatbike for courier services?“

The small business investment deduction (KIA) is a tax scheme that allows you as an entrepreneur to deduct a portion of your investments from your profits. When purchasing an electric cargo bike for your business, you can take advantage of this tax deduction. Provided the cargo bike is used primarily for business purposes.

To qualify for the KIA, your investment must be at least €450. Which is almost always the case with electric cargo bikes. The percentage you can deduct depends on your total annual investments. For investments between €2,400 and €59,939 (2023 figures), you can count on the maximum percentage of 28%.

"The KIA is actually double benefit," Thomas explains. "You not only get the normal depreciation, but also an additional 28% deduction. For a €5,000 CargoX, that quickly means an additional €1,400 tax benefit."

The KIA is an additional deduction in addition to the regular depreciation of your cargo bike. This means you can process the purchase cost twice. Once through regular depreciation and once through the KIA. This gives you a significant tax benefit that directly lowers your investment.

Want to know more about investments? Then read our blog "What does a good fatbike cost?“

The environmental investment allowance (MIA) offers an additional tax benefit on top of the KIA. When you invest in an electric cargo bike. This scheme is specifically for environmentally friendly business assets that are on the Environmental List. Electric cargo bikes fall under code F3410 of this list and are eligible for an additional deduction percentage of 45% of the investment amount.

To take advantage of the MIA, you must register the investment with the Rijksdienst voor Ondernemend Nederland (RVO) within three months of purchase. This registration is easy to do online. The big advantage is that you can combine the MIA with the KIA. As a result, your total tax benefit can increase significantly.

"The beauty of the MIA is that you can stack it with the KIA," says Thomas. "Together, these deductions can provide as much as 73% tax benefits. That suddenly makes our CargoX a lot more attractive to entrepreneurs."

Please note that the MIA list can change annually. It is therefore wise to check before purchase whether electric cargo bikes are still on the current Environment List. And what percentage applies.

Want to learn more about sustainability? Then read our blog "Top 10 advantages of a fatbike for daily use“

As a VAT taxpayer, you can fully reclaim the VAT paid on the purchase of an electric cargo bike. Provided you use the bike for a minimum of 10% for business purposes. This gives you an immediate benefit of 21% on the purchase price. With full business use, the VAT refund is obviously the most advantageous.

If you use the electric cargo bike for both business and private use, you should calculate the VAT deduction proportionately. It is important to keep good records of business and private use. A trip registration form can be helpful. Although this is not required by law.

"I always advise business owners to keep good records of their usage," Thomas says. "For the VAT refund, you need a clear overview of business versus private use. That prevents problems with the IRS afterwards."

For the VAT refund, you need an invoice that meets all legal requirements. So when you purchase, make sure you receive a correct invoice that clearly specifies the VAT.

Want to know more about administration? Then read our blog "12 things to know before buying a fatbike“

An electric cargo bike that you purchase for your business may be included in your accounts as an asset. You can depreciate it over several years. The usual depreciation period for an electric cargo bike is between 3 and 5 years. Depending on the expected economic life.

In determining the annual depreciation, you start from the purchase price minus the expected residual value. This residual value is the amount you expect to get back when you sell the cargo bike after its period of use. Depreciation can be linear. Where you depreciate the same amount every year.

"Our CargoX holds its value well," Thomas explains. "Because of the durable belt drive and aluminum frame, you can count on a higher residual value. That makes depreciation more favorable for your accounting."

By depreciating the cargo bike, you spread the cost over several years. Which creates an annual deduction from your profit. This provides tax benefits throughout the depreciation period.

Want to learn more about sustainability? Then read our blog "What is the lifespan of a fatbike?“

If you also use an electric cargo bike purchased for business purposes privately, there are tax implications. Unlike cars, no additional taxable benefit applies to bicycles. Instead, you must apply a correction to the VAT deduction and depreciation for private use.

For income tax purposes, this means you have to reduce the expenses you deduct by the percentage of private use. For example, if you use the cargo bike privately for 30%, you may only claim 70% of the cost as a business expense.

"The beauty of cargo bikes is that there is no additional tax credit like cars," says Thomas. "You just have to apply a correction to your deductions. That makes it even more fiscally attractive than a company car."

A similar rule applies to VAT. For mixed use, you must correct the previously deducted VAT for private use. You do this in your last VAT return of the year. Keeping simple records of business versus private use is therefore recommended.

Want to know more about usage? Then read our blog "Fatbike for adults: which one suits you best?“

By making smart use of all available tax schemes, you as an entrepreneur can get the maximum benefit when purchasing an electric cargo bike. Combine the small-scale investment deduction (28%) with the environmental investment deduction (45%) for significant tax savings. Also, don't forget to reclaim the VAT and take advantage of the annual depreciation in your accounts.

For optimal tax results, it is important to register the purchase for the MIA on time (within 3 months). Keep clear records of business and private use. Plan the investment in the appropriate fiscal year, taking into account your profit forecast. Keep invoices and supporting documents carefully.

STOER Bikes: fiscally advantageous and practical

"At STOER Bikes we understand that tax advantages are an important consideration," Thomas says. "Our electric cargo bikes with innovative belt drive not only offer practical and sustainable transportation solutions. They also help you take advantage of attractive tax benefits that make your investment even more profitable."

Want to know more about our benefits? Then read our blog "What is a good brand of fatbike?“