While the reimbursement of travel expenses is not legally required in the Netherlands, most Dutch organizations will take advantage of tax-free mileage allowances to reimburse their employees' travel costs.
Businesses might even fully refund their workers' commute costs in certain cases. Whatever is agreed upon, the allowances and requirements for refunding travel costs will always be outlined in company policies, employment contracts, or any collective labour agreements.
What are the mileage allowance rates in the Netherlands for 2023?
The Dutch Tax Authority has recently updated its approved mileage rates. From January 1st, 2023, the suggested tax-free fixed allowance in the Netherlands increased to €0.21 for each kilometer traveled between an employee's residence and their place of work and vice versa.
This year is the first time the Dutch government has increased tax exemptions on business miles since 2016. These figures do not typically increase on an annual basis. But to help fight the ongoing rise in living costs and car fuel prices, there are plans for this allowance to rise again in the 2024 tax year to €0.22 per kilometer.
While this may appear straightforward at first glance, different disclaimers apply depending on your employee's means of transportation. These rules will affect the amount they receive and have implications for tax returns.
How does mileage allowance work?
As we alluded to above, the business mileage rate varies slightly between different types of transport.
Employees driving their personal car
Workers driving their private car between home and the office can receive an allowance of €0.21 per kilometer. To be tax-free, this business expenses allowance cannot exceed the rate set by the Tax Authority (€0.21) and cannot be claimed for more than 214 working days per calendar year.
Employees driving a company van or car
Many organizations allow staff to use a company vehicle for business and private purposes. Whether traveling on family trips or to and from the grocery store, if employees' private use of the car or van exceeds 500 kilometers in a year, then the personal usage is considered 'salary of kind' and is taxable.
Electric Vehicles
While reimbursing employees' electricity costs for recharging vehicles is not permitted, workers driving electric cars are entitled to a mileage allowance. The office may have the facilities to charge electric vehicles removing the cost to the employee, but as this cannot be guaranteed, the car allowance is in place to cover the costs of charging at home.
Taxi, boat, or airplane
Staff traveling by taxis, boats, or airplanes can also receive mileage allowance relief. Still, it should be noted that any expenses paid over the €0.21 allowance will be considered salary and taxed accordingly.
Traveling by public transport
Workers who come to the office by bus, ferry, or metro are also entitled to tax-free mileage allowances, but to be eligible, they must meet the following criteria.
- Employees must travel more than 10 kilometers each way to reach their place of work from home.
- Staff must commute to the same workplace at least 1 day a week and for at least 40 days each year. Each journey must be completed within 24 hours to count towards their total.
Public transport expenses are completely tax-free. So on top of the €0.21 allowance, employers may also decide to pay workers full travel expenses when they commute to work by these means.
Employees must provide proof of their public transport costs to have these expenses reimbursed. They will need to submit copies of their tickets or the digital trip list they can generate through their public transport card (OV-chipkaart) or provide receipts of any monthly subscription costs.
While public transport receives greater tax exemption, as we will soon see, the amount that can be deducted depends on the distance and frequency of travel.
What additional tax implications are there?
Additional reimbursements
Any expenses an organization pays employees above the €0.21 business travel and commuting allowance are deemed part of an employee's salary and subject to their income tax rate. This includes any money received for tolls, depreciation for wear and tear, or personal vehicle damage.
Employees driving their own vehicles
To calculate the tax-free reimbursement for their business trips and commuting expenses with private transport, employees can use the following formula;
- (number of kilometers traveled one way 2) €0.21 * 214 working travel days / 12 months = your tax-free travel allowance per month.
This calculation already considers vacation days, national holidays, and statutory sick days. However, in the case of longer-term illness, further rules need to be taken into account. In addition, if workers are employed part-time, they must pro-rata this equation accordingly.
Travel allowances can be paid for up to six weeks of absence, but all reimbursement must cease afterward. As mentioned above, if the organization reimburses business journeys over the advisory €0.21 rate, the additional amount will still be taxed as usual.
Company vehicles
While businesses can get tax relief on expenses like MOTs and the VAT on company vehicles, they must account for any private use of company cars. Car mileage racked up for business purposes can still benefit from the tax-free allowance but must be recorded and evidenced accurately.
Parking expenses
The costs of parking a company car can be labeled intermediary and can therefore be reimbursed tax-free. However, this is not the case for employees using their own vehicles to drive to work.
When staff declare the parking expenses for their personal vehicle, they are taxable and must be included in any payroll. For this reason, the €0.21 allowance also covers any parking expenses for workers driving their own car to the office.
Public transport users
The tax deductions for business use mileage for employees who use public transport depend on two factors.
- The distance traveled between the employee's home and their work location.
- The number of days the employee travels into the office.
The table below can be used to help determine the approved mileage allowance payment in this instance:
Distance each way
When traveling 4 days or more each week
When traveling 3 days or more each week
When traveling 2 days or more each week
When traveling 1 day or more each week
0 km to 10 km
€0
€0
€0
€0
10 km to 15 km
€509
€382
€255
€128
15 km to 20 km
€676
€507
€338
€169
20 km to 30 km
€1,126
€845
€563
€282
30 km to 40 km
€1,396
€1,047
€698
€349
40 km to 50 km
€1,819
€1,365
€910
€455
50 km to 60 km
€2,024
€1,518
€1,012
€506
60 km to 70 km
€2,244
€1,683
€1,122
€561
70 km to 80 km
€2,322
€1,742
US€1,161
US€581
80 km to 90 km
€2,354
€1,766
€1,177
€589
Over 90 km
€2,354
*
*
*
* Over 90 kilometers, the travel allowance increases to €0.26 per kilometer up to a maximum of €2,354 regardless of the number of days traveled.
Source:
belastingdienst.nl
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