The amount an employer can give an employee per business kilometre tax-free will increase from €0.21 to €0.23 from 1 January 2024. This maximum tax-free kilometre allowance applies to all types of transport. So not only for the car or bicycle but also for travel costs by public transport. And in addition, also for costs of a taxi, boat or plane, as long as these costs are reasonable.
The tax-free travel allowance does not apply if the employer offers the employee a company car or company bicycle.
Under the rules of the work-related costs scheme, an employer can give a tax-free reimbursement for the business and commuting kilometres the employee makes. That maximum reimbursement was €0.19 per kilometre for many years, but increased to €0.21 per kilometre from 1 January 2023. In 2024, the maximum allowance will be increased further, to €0.23 per kilometre.
Designate as final taxable benefit
If the employer complies with the conditions, the tax authorities will assume next year that the employer has designated that allowance as a final taxable benefit, up to and including the maximum of €0.23 per kilometre. If an employer gives a higher amount, then there is an excessive portion. This part must be taxed as wages to the employee, or the employer may choose to designate it as final taxable benefit charged to the free space. Business kilometres also include the employee’s commuting between home and work.
Only the amount of the targeted exemption goes up. It is up to the employer to also implement this in the employee’s terms of employment. However, this is not mandatory. It depends on the agreements between employer and employee whether and at what level the travel costs are reimbursed. There is no legal obligation to reimburse travel expenses (up to the maximum amount). However, there may be agreements on this in a collective agreement.
Not only for employees in salaried employment
The proposed increase of the maximum tax-free travel allowance to €0.23 per business kilometre applies to employees in salaried employment, but is also proposed for the deductibility of travel expenses of entrepreneurs where it concerns using a means of transport belonging to private assets.
New review planned in 2028
Another review of the tax-free travel allowance will take place in 2028 in which there will be specific attention to the recent increases. It will also consider employers’ reaction to the increase in the maximum travel allowance, changes in employees’ use of the travel allowance and changes in travel behaviour.
Tax-free work from home allowance for 2024 announced in December
The tax-free travel allowance has not been agreed to be indexed annually, as is the case for the tax-free work from home allowance, for example. That allowance will be increased in line with the inflation correction as of 2024. The table correction factor will be announced at the end of December.