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In March 2009, the Council reached an agreement on the continuation of reduced VAT-rates on a number of labour-intensive services, including bicycle repairs. To date, five member states are making use of the measure for bicycle repairs: in Belgium, Luxembourg and Holland there is 6% VAT on bicycle repairs, in Poland 7% and in Greece 9%.
The above agreement caused several member states, among which Germany, Bulgaria, Denmark, Estonia and Lithuania, to call for a halt to the debate on reduced VAT-rates. ETRA, COLIBI and COLIPED had been lobbying for lower VAT-rates on all bicycle products and services in this framework. Following indications that the Commission would discontinue all research into the effect of VAT-rates on the use of energy-efficient goods and energy-saving materials, ETRA, COLIBI and COLIPED made a joint appeal to the Taxation Commissioner for a European strategy on tax incentives for cycling. The associations believe transport in the European Union can be made more sustainable through harmonized fiscal incentives.
Whereas millions of European citizens are driving cars, which they have obtained for free, as an extra-legal benefit, the majority of commuting cyclists have to pay for their bikes. They also have to pay the standard VAT-rate on that bike, with a minimum of 15% and a maximum of 25% of the buying price. ETRA, COLIBI and COLIPED argue that this taxation policy goes totally against other EU policies such as transport, environment and energy.
Fiscal incentives are effective as is proven by measures taken by member states. In Belgium, since 1997, the law allows employers to pay employees, who cycle to work, a tax-free fee of currently 0.20 per cycled kilometre. Paying the fee is a favour, not a legal obligation. Research by the Belgian mobility department has shown that if a company pays the fee, cycling increases considerably. The number of cyclists rises from 6.3% to 9.5%, that is +50%.
Many years ago, Holland introduced a law allowing employers to give their employees a bike, tax-free, up to an amount of 749. In 2008, 240,000 so-called company bikes were sold, i.e. almost 1 out of 5 new bikes, at an average price of 836. Holland has 18 million bicycles for 16 million people. The bicycle accounts for 26% of all trips.
In 2005, the UK government launched the "Cycle to Work" tax incentive scheme. Employers can lend bicycles to their staff as a tax-free benefit on condition that the bicycles are mainly used to go to and from work or for work-related purposes. The employee buys the bike at the end of the lending period for a nominal sum.
In 2009, the Italian Ministry of Environment set up a subsidy scheme for the purchase of bicycles or electric two-wheelers. The total budget of 19 million resulted in the sales of an extra 127,000 bicycles/pedelecs.
According to COLIBI & COLIPED Secretary General, Greet Engelen investing in cycling pays: "Every kilometre cycled instead of travelled by car avoids 0.2 kg CO² emission. More cyclists on the road improve road safety. Regular cycling reduces the risk of hart diseases, diabetes, high blood pressure, certain types of cancer and problems linked to obesity. Cycling to work reduces absence through illness. In 2002, the European Commission presented a new strategy on the taxation of passenger cars in the European Union. The Commission analysed existing passenger car taxation systems and explored ways to remove the tax obstacles to free movement of passenger cars within the Internal Market. We believe it is now time for a European analysis of cycling prohibitive taxation systems as an impetus for a new strategy on tax incentives for cycling in the European Union."

In view of the direct effect of the EUs taxation policy on transport, environment and energy, a copy of the letter to Mr Kov¢cs has been sent to Vice President Tajani, Environment Commissioner Dimas and to Energy Commissioner Piebalgs. Furthermore, ETRA, COLIBI and COLIPED have urged their members to lobby for the reduced rate on cycling repairs where the measure is not yet applicable. To date, five member states are already making use of the measure: in Belgium, Luxembourg and Holland there is 6% VAT on bicycle repairs, in Poland 7% and in Greece 9%.