Why ongoing EU VAT reform could lead to a boom in shared micro-mobility
May 18, 2022
By Valerio Giovannini, Head of Regulatory Strategy & EU Affairs
In 2019 Belgium adopted a reduced VAT rate of 6% on the sale of bicycles to promote more sustainable and healthier transport. Several other countries, including Spain, Sweden and Austria, have shown similar leadership. In April, the Council of the EU encouraged member states to accelerate micro-mobility adoption even further – countries across Europe can now lower VAT rates on the rental, supply, and repair of bikes and e-bikes to 5%. For many European countries, the opportunity to establish themselves as global leaders in shared micro-mobility is now even closer.
The first step is for EU member states to adopt reduced VAT rates for the rental, supply and repair of bikes and e-bikes. As the world’s largest shared micro-mobility provider and wanting to change mobility for good, TIER supports making sustainable transport options more accessible. The goal is to have reduced VAT rates for bicycles and e-bikes throughout Europe, and in future to extend this to other micro-mobility modes able to respond to sustainability and accessibility needs, like shared e-scooters.
There are four good reasons for countries to adopt this ambition, with significant benefits for cities and those living in them:
1. Cutting CO2 emissions from cars
2. Reversing transport poverty
3. Protecting and improving the health of EU citizens
4. Attracting new investment
But how can making micro-mobility more accessible really achieve all this? Growing appreciation of the benefits of micro-mobility is precisely what has encouraged the EU to take such a bold step in VAT reform.
Sustainable transport solutions, like shared micro-mobility, are imperative to the EU achieving the ambitious climate goals it has set itself. Reducing emissions is a game of numbers. Passenger cars alone are responsible for around 12% of total EU CO2 emissions; most of this will need to be replaced by more sustainable modes. Since 2018 TIER Mobility (excluding recent acquisitions of nextbike and Spin) has helped cities to avoid 42 million car kilometres from being driven, preventing 7.2 million kilograms of CO2 emissions. Nextbike, Europe's largest bike sharing company, prevented 35.1 million kilograms of CO2 emissions between 2019 and 2021.
Shared micro-mobility is a cheaper alternative to traditional means of transport and provides a solution to the growing challenge of transport poverty. The inability to afford mobility services limits access to medical care, education and employment. New lower VAT rates will incentivise bicycle and electric bicycle sales, improve shared micro-mobility adoption, and facilitate access to cheaper means of transport across Europe.
Sustainable modes of transport contribute to healthier cities. Motor traffic in cities leads to an increase in toxic pollutants, negatively affects mental and physical health, and robs EU citizens of precious free time. The congestion caused is also often unnecessary: it is estimated that about 50% of car trips in urban areas are 5km or less in length, making them a perfect candidate for replacement with other modes. In Seattle, a Carnegie Mellon University study found that replacing just 10% of short trips in the afternoon peak with micro-mobility would reduce the city’s greenhouse gas emissions by 2.8%. That’s a big number for only replacing a handful of car trips with bicycles or scooters. Promoting the use of shared micro-mobility – and of bikes/e-bikes especially – also encourages physical activity with associated positive health benefits like reduced risk of the top causes of premature mortality in Europe.
Sustainable transport modes will trigger investments in urban mobility infrastructure, create green jobs, and boost European productivity. The rapidly growing global micro-mobility market is projected to reach €200 billion by 2030 - similar to the economies of countries like Portugal, Greece or Hungary. In Europe shared micro-mobility has already created thousands of new jobs as well as encouraging urban investments that make cities more desirable places to live in. TIER Mobility, for example, is one of Europe’s global micro-mobility success stories providing hundreds of local green jobs in over 20 European nations. In the years to come progress in smart cities and micro-mobility infrastructure will not only create new opportunities for European micro-mobility leadership, but bold moves like reduced VAT rates will provide confidence to investors to expand new micro-mobility business in European cities.
So here’s to Europe leading the shared micro-mobility revolution. And if you need the fineprint, lookup the amended annex III to Directives 2006/112/EC.