European Countries Give Tax Breaks to Bike Commuters

Over the last few months, four European countries have introduced measures to give further tax breaks to those who bike to work.

France, Belgium, Luxembourg and Italy are now rewarding individuals for choosing their bike over a car as means of limiting their “carbon footprint” and bolstering environmental sustainability, a trend that is attracting the interest of other countries. 

Perhaps the greatest example of this is in Belgium, where individuals have been given tax credit based on the number of kilometers they bike to and from work since 1999, and more recently, have been given a tax credit increase of 23 eurocents per kilometer.

As a result, the number of people benefiting from this tax incentive over the last four years has increased by 30% alone.

This means that over 400,000 Belgians, or 9% of the country’s workforce, is now receiving tax credit for cycling to work.

According to statistics, Belgians cycled more than 420 million kilometers in 2015 – almost three times the distance between Earth and the Sun, creating important benefits in terms of public health, air quality, CO2 emissions reductions and traffic congestion relief.  

However, these tax benefits come with a small price tag for Belgium’s state and local governments, which annually give out an estimated 93 million euros in tax credit, while losing approximately 2% in yearly tax revenues due to the under-taxation of corporate automobiles. 

To offset this loss, Belgium is considering a change its tax system under a so-called “mobility budget”, which would allow employees to option a higher salary instead of receiving a company vehicle. 

While this model has shown good results in terms of modal shift away from car commuting in an earlier pilot project, the exact legal arrangements, which are currently under discussion, will decide whether it will achieve its objective of making commuting in Belgium more sustainable. To do so, the benefits of cycling to work, and especially the potential of electric cycling, should be strongly promoted and reflected in the mobility choices offered under the new model.

In the larger picture however, if Belgium is successful in restructuring its tax code to provide further incentive for people to bike to work instead of drive, the positive results of their model may prove to have world-wide implications – possibly even for such fossil fuel dependent countries as the USA to follow.