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

A electric cargo bike for your business is not only environmentally friendly, but also very attractive fiscally. As an entrepreneur, you can take advantage of various tax benefits offered by the Dutch government to encourage sustainable mobility.

The main tax advantages are:

• Small-scale investment deduction (KIA) - an additional deduction on top of regular depreciation
• Environmental Investment Allowance (MIA) - an additional tax benefit for environmentally friendly investments
• VAT refund - ability to reclaim VAT paid
• Depreciation options - spreading costs over several years
• Local grants - additional support from municipalities and counties

These arrangements make the total investment in a belt-drive electric cargo bike significantly lower than the purchase price might suggest. Plus, as a business owner, you save on fuel costs, insurance and maintenance compared to motorized transportation.

1. What investment deduction is possible when purchasing an electric cargo bike?
2. How does the MIA scheme for electric cargo bikes work?
3. Can I reclaim VAT when buying an electric cargo bike?
4. What are the depreciation options for a business electric cargo bike?
5. What local subsidies are there for entrepreneurs with electric cargo bikes?
6. What are the benefits of a belt drive cargo bike for your tax return?
7. What are the main tax considerations when buying an electric cargo bike?

The Small Scale Investment Allowance (KIA) is an important tax incentive that you can take advantage of when purchasing an electric cargo bike for your business. This scheme applies to investments in business assets between €2,400 and €332,994 (amounts 2023).

The percentage you can deduct depends on the total amount you invest in a year:

• For investments up to €63,715, the deduction is 28% of the investment amount
• Between €63,715 and €117,991 there is a flat rate of €17,840
• Above €117,991, the deduction percentage gradually decreases

Joeri says, "Entrepreneurs are often surprised how much they can save on taxes with our CargoX. The KIA scheme makes it a lot more advantageous."

For most electric cargo bikes, which typically cost between €4,000 and €9,000, this means you can take 28% of the purchase price as an additional deduction. For a €5,000 electric cargo bike, this yields a KIA of €1,400. At a tax rate of 37.05% (2023), this gives about €519 tax benefit.

To qualify for this, however, you must use the cargo bike for business at least 70%. You must also capitalize the investment in your books as business assets.

Want to know more about ROI calculation? Then read our blog "ROI Calculate Business Bicycle: Complete Guide“

The Environmental Investment Allowance (MIA) is an additional tax benefit that comes on top of the regular investment deduction and depreciation. For electric cargo bikes on the Environment List, you may deduct 36% extra from your profit, and thus pay less tax.

To qualify for the MIA, you must meet the following conditions:

• The cargo bike must appear on the Environmental List, and also be specifically listed under code F 3410.
• You must register the purchase within three months, and that with the RFO through the official eLoket.
• The cargo bike must be new and also primarily intended for business transportation of goods.
• It must be a fully electric bicycle with both pedal assistance and zero-emission propulsion.

With a €5,000 cargo bike, you can therefore deduct an additional €1,800 thanks to the MIA scheme, which makes a significant difference. At a tax rate of 37.05%, this means a tax benefit of about €667, which is therefore an immediate financial benefit.

Joeri emphasizes, "The combination of KIA and MIA is powerful, as it allows customers to sometimes save up to 50% on their CargoX."

The combined KIA and MIA schemes allow you to recover a large part of your investment through tax benefits. Please note that you must submit the MIA application on time via the eLoket of the RVO, because late is really too late.

Want to know more about business benefits? Then read our blog "Electric Bakfiets Companies: Business Benefits“

As an entrepreneur, you can fully reclaim the VAT on the purchase of an electric cargo bike. This applies provided you use it for business purposes and your company is subject to VAT. This immediately saves 21% on the purchase price.

The following rules apply to VAT refunds:

• For 100% business use, full VAT can be reclaimed
• For mixed use (business and personal) you have to divide the VAT proportionally
• You must be able to prove that the cargo bike will actually be used for your business
• Keep the purchase invoice showing the specification of VAT in your records

For a €5,000 electric cargo bike (excluding VAT), you pay €1,050 in VAT. With full business use, you can reclaim this amount directly through your VAT return. This immediately makes the net investment a lot lower.

Joeri explains: "That VAT refund is often the first benefit entrepreneurs see. Direct 21% discount on our CargoX is not a bad thing."

You can also reclaim VAT on accessories, maintenance and repairs of your business cargo bike. Therefore, keep all receipts and invoices in your records.

Want to know more about cargo bike accessories? Then read our blog "These are the best accessories for your fatbike“

As a business owner, you can depreciate a CargoX over several years. This provides an annual deduction. The standard depreciation period for an electric cargo bike is 5 years. This is assuming an expected economic life.

When depreciating, consider:

• The purchase price (excluding VAT) minus the expected residual value
• A reasonable residual value (often 10-15% of the purchase price)
• Linear depreciation, where you depreciate the same amount every year

Suppose you buy an electric cargo bike for €5,000 (ex VAT) with an expected residual value of €750. Then you can depreciate a total of €4,250. This amounts to €850 per year over a period of 5 years. At a tax rate of 37.05%, this results in an annual tax benefit of about €315.

Joeri notes, "Electric cargo bikes with belt drive typically have a longer service life than chain-drive models. This can affect residual value and possibly justify a longer depreciation period."

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

In addition to national tax schemes, many municipalities and provinces offer local subsidies, especially if you invest in sustainable transportation. These subsidies are intended for business owners, who are thereby encouraged to opt for electric cargo bikes and thereby reduce emissions. The subsidy schemes vary by region, and moreover the conditions change regularly because they depend on local policies.

Some examples of local arrangements include:

• Amsterdam: Subsidy for electric commercial vehicles, including cargo bikes and thus interesting for urban logistics.
• Rotterdam: Subsidy scheme for zero-emission company transport, which you can also combine with national deductions.
• Utrecht: Incentive scheme for clean mobility, supporting both companies and self-employed people in sustainable choices.
• The Hague: Subsidy for sustainable business investments, making your switch more economical while contributing to environmental goals.
• Counties: Several provinces offer additional support, which often comes on top of municipal schemes and therefore lowers the investment.

Subsidy amounts usually vary between €1,000 and €2,000, depending on the municipality and the type of electric cargo bike. Some municipalities use a percentage of the purchase price, which is usually between 20% and 30%, with a maximum amount.

Joeri advises, "I regularly help clients look for subsidies, sometimes saving them an extra €1,500 and therefore getting in cheaper."

Always check with your municipality or province for current regulations, as they vary greatly and change frequently. Please note that for many grants, 'gone = gone' applies, so be on time and submit your application as soon as possible.

Want to know more about switching to a cargo bike? Then read our blog "8 Signs you're ready to switch from car to cargo bike“

A belt-driven electric cargo bike offers specific tax advantages due to lower maintenance costs and also a longer service life. This is advantageous compared to chain drive, as it requires more maintenance and therefore higher costs.

The tax advantages translate into several points, which together reduce expenses while providing tax benefits:

• Lower maintenance costs, which you can also list as business expenses and therefore deduct for tax purposes.
• Fewer replacement parts, so you spend less and also save costs in the long run.
• A longer depreciation period because the structure is more durable and therefore lasts longer.
• A higher residual value upon sale or trade-in, which is both financially attractive and fiscally beneficial.

With a chain drive, you have to regularly invest in chains, cassettes and sprockets, which means recurring costs and also additional maintenance. These maintenance costs can amount to hundreds of euros per year, especially if the bike is used intensively and at the same time gets little rest. A belt drive, on the other hand, often lasts the entire lifetime, without replacement and thus without additional costs.

Joeri emphasizes, "Customers with our CargoX belt drive have lower maintenance costs year after year, which is both beneficial for the wallet and the tax."

Because a belt drive is more reliable and also fails less often, you reduce the risk of unexpected repairs. This lowers your total cost of ownership and also prevents loss of productivity during important workdays. All of this ultimately leads to better operating results, and therefore less tax payments in both the short and long term.

Want to know more about belt drives? Then read our blog "Advantages of fatbikes with belt drive“

When purchasing an electric cargo bike for your business, it is important to take full advantage of all tax opportunities. Making smart use of the various schemes can significantly reduce the actual cost.

Keep these important considerations in mind:

• Timing of purchase - plan your investment at the beginning of the fiscal year to take maximum advantage of depreciation
• Combine different schemes - KIA, MIA, VAT refund and depreciation reinforce each other
• Document business use careful for the tax authorities
• Consider the longer lifespan Of a cargo bike with belt drive in your investment decision
• Investigate local grant opportunities prior to purchase

With a total package of tax benefits, the effective investment in a belt-drive electric cargo bike can drop to as little as 40-50% of the original purchase price. This makes the payback period extremely short. Especially when you also include the savings on fuel, parking costs and maintenance.

Joeri concludes, "We at STOER Bikes see more and more business owners opting for our electric cargo bikes with belt drive. Not only because of the durability and ease of use, but also because of these attractive tax advantages."

Our advisors will be happy to help you make a calculation specific to your situation. That way you can make an informed choice and take advantage of all available benefits.

Want to know more about environmental friendliness? Then read our blog "How environmentally friendly are electric cargo bikes compared to family transport cars?"

Want to know more about insurance? Then read our blog "Electric Bicycle Insurance: Complete Guide“