Reducing VAT (Value Added Tax) on the sales of bicycles and pedelecs from 21% to 6%: That is what the Finance Commission of the Belgian Chamber of Representatives called for in a unanimous vote last week. In order for the decision to become effective, a change of EU legislation, which ECF is advocating for, is required.

Fulfilling a longstanding demand of Belgian ECF member organisations GRACQ and Fietsersbond and citing the numerous co-benefits of cycling for public health and the environment, the Commission voted unanimously in favour of the law proposal, which would bring down the VAT rate applied to the sales of bicycles and pedelecs by 15 percentage points. Concretely, for a pedelec that costs EUR 3’000 including VAT at the moment, the VAT reduction would amount to around EUR 370 – making the purchase considerably more interesting.

There is one big caveat however: Belgium cannot lower the tax rate on its own under the current EU VAT Directive. A proposal to revise the European legislation has been published last year by the European Commission and would make it possible to apply a reduced or even zero rate to mechanically driven bikes, but not to electric ones. Since the publication of the proposal, ECF has been advocating together with partners like the bicycle industry or the Electro-mobility Platform for the inclusion of electric bicycles in the upcoming negotiations between EU Member States on this proposal. The decision by the Belgian Parliament highlights that there is support for this position around Europe: A similar resolution had been adopted by a Spanish parliamentary commission last year already.

While negotiations between EU Member States on the VAT rates reform could potentially take years, other instruments that can be easily and quickly implemented at national level are available to national legislators to support buyers of electric and mechanic bikes. For example, Luxembourg provides an income tax reduction for the purchase of both types, and both Sweden and France have had purchase premium schemes for electric bicycles in the past.

Looking at the bigger picture, ECF is advocating for a shift to more sustainable taxation regimes for the mobility sector as a whole. This includes more fiscal incentives for cycling, but also measures like phasing out generous tax regimes for company cars. You can find more information in our reports on taxation of commuters and on purchase premiums for electric bicycles.