Catherine Connolly (Galway West, Independent)
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450. To ask the Minister for Finance the analysis his Department has carried out into the use by employers of third-party providers who operate a voucher system in the delivery of the bike-to-work scheme; his views on the use of third-party providers in this regard by employers given that they take roughly 10% of every sale at no cost to the employer but resulting in the bike shop losing out on this money; and if he will make a statement on the matter. [14470/21]

Catherine Connolly (Galway West, Independent)
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451. To ask the Minister for Finance if his attention has been drawn to the fact that the protracted payment process of the voucher system with regard to employers’ use of third-party providers who operate a voucher system in the delivery of the bike-to-work scheme has resulted in many bicycle shops being unable to facilitate these third-party providers and the employees of the companies they represent; and if he will make a statement on the matter. [14471/21]

Paschal Donohoe (Dublin Central, Fine Gael)
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I propose to take Questions Nos. 450 and 451 together.

I am advised by Revenue that section 118(5G) of the Taxes Consolidation Act 1997 (TCA 1997) provides for the Cycle to Work scheme. This scheme provides an exemption from benefit-in-kind (BIK) where an employer purchases a bicycle and associated safety equipment for an employee.

Under section 118B TCA 1997 an employer and employee may also enter into a salary sacrifice arrangement under which the employee agrees to sacrifice part of his or her salary, in exchange for a bicycle and related safety equipment.

Where a bicycle or safety equipment is purchased under the Cycle to Work scheme or through a salary sacrifice arrangement certain conditions must be met, for example:

- The exemption applies to the first €1,250 of expenditure incurred by the employer in obtaining a bicycle and related safety equipment, or the first €1,500 for pedelecs or ebikes and related safety equipment. Employers may incur costs in excess of these limits, but any such excess will not qualify for the exemption and will be liable to tax. A salary sacrifice arrangement is subject to the same monetary limits.

- The bicycle and related safety equipment must be new and must be purchased by the employer.

- The bicycle and related safety equipment must be used by the employee or director mainly for the whole or part of their journey to or from work.

- An employee or director can only avail of the Cycle to Work scheme once in any 4-year period. A salary sacrifice arrangement is subject to the same time limits and any salary sacrifice arrangement entered into must be completed within a 12-month period.

There are no legislative provisions specifying where a bicycle or safety equipment may be purchased. Employers may therefore choose to allow employees to select a bicycle and safety equipment from the retailer of their choice, or may alternatively offer more limited options, for example, allowing employees to choose their bicycle and safety equipment from a specific range or a single retailer only.

I am advised by Revenue that it understands that the voucher system that the Deputy refers to relates to arrangements whereby employers may decide to engage the services of a third party to facilitate the operation of the cycle to work scheme. As such arrangements are at the discretion of the employer they are a matter for the employers concerned.

The scheme is designed to be administratively simple in order to encourage employers to participate. Any restriction on the employers' discretion could involve additional administrative procedures for either or both Revenue and employers. As this runs counter to the administrative simplicity of the existing provisions, it would not be appropriate to alter the existing scheme.

Further guidance regarding the and can be found on Revenue’s website.

Furthermore, I understand that as part of the 2021 Spending Review, the Department of Transport is currently examining the Cycle-to-Work Scheme.  The primary focus of the analysis will be the rationale and efficiency of the scheme.  The delivery and operation of the scheme will be considered in this context, however, the role of third-party providers will not be the focus of this work.