Indexed lump sum allowance per kilometer for the professional use of the employee’s own vehicle
For employees who travel professionally (i.e. in performance of their employment contract) with their own vehicle, employers can reimburse the professional use on the basis of a lump sum allowance which qualifies for tax purposes as a reimbursement of costs proper to the employer.
Vehicles are defined as cars, motorcycles or mopeds. Travel by bicycle is not covered by this lump sum allowance.
The lump sum allowance is indexed annually.
For the period from 1 July 2019 to 30 June 2020 the maximum that could be reimbursed was 0,3653 EUR per kilometre. As of July 2020, the amount is 0,3542 EUR (!).
Lump sum allowance per kilometer is a ‘serious norm’
The lump sum allowance of 0,3542 EUR per kilometer qualifies for tax purposes as a serious norm . It implies that the rate itself cannot be challenged by the tax authorities in the event of a tax audit since the same rate is also used for reimbursing public servants who professionally use their own vehicle.
Of course, it is still important that the total amount reimbursed reflects the professional kilometers actually driven. This is also important to ensure that the reimbursed amount is exempt from social security contributions.
Higher allowance is possible!
The tax authorities may accept a higher lump sum amount for reimbursing the costs incurred for the professional use of the employee’s own vehicle provided the employer proves that the allowance reflects the actual costs incurred.
Otherwise, the difference may be considered as taxable remuneration.
Home-work commuting is treated differently
Commuting between the employee’s home and normal place of work is not considered professional use of one’s own vehicle. A normal place of work is any place where the employee performs his professional activity for at least 40 days per year.
An employer may of course reimburse the employee the costs he or she incurred in that respect but should also bear in mind that this reimbursement is a taxable event for the employee.
Because the reimbursed amount constitutes taxable income for the employee, the employer can of course reimburse these costs on the basis of the same amount as used for professional use, or on the basis of a lower or even higher lump sum amount.
Tax authorities do apply an exemption of 410 EUR per year (income year 2020 / tax year 2021). The employee has to claim this exemption via his income tax return (box 1255 / 2255). This partial (tax) exemption applies only to employees who do not deduct their actual professional expenses for income tax purposes.
The reimbursement of costs of commuting with one’s own vehicle is not subject to social security contributions. It is of course important to be able to demonstrate that the reimbursed amount reflects real costs incurred for that purpose.
Gunther ValkenborgCounsel Attorney at Law
Gunther Valkenborg is counsel to our Brussels office. He is member of the Employment & Benefits Practice group, leads the Compensation & Benefits Team and is a member of the Automotive Team. His main focus is on employment and benefits and international mobility of employees.T: +32 2 743 43 39 E: firstname.lastname@example.org
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