Do your employees travel to work by car or public transport? Then you can often reimburse the costs incurred by these employees as commuting expenses. You can also pay an allowance for business travel. You can choose to reimburse travel expenses per trip or to pay a fixed travel allowance.
Is an employee entitled to a travel allowance?
Nowhere in the law is stated that an employee is entitled to a travel allowance. The employee is only entitled to it if there are agreements about this in the collective labour agreement, employment contract or company regulations. If that is the case, you must reimburse travel expenses as an employer.
What is the maximum travel allowance that I can pay as an employer?
It is important to know whether the employee uses his own transport, uses public transport or is carpooling with colleagues.
Tax-free reimbursement of own transport
If the employee travels to work by his own transportation, you can reimburse a maximum of € 0.19 per kilometer without having to withhold taxes. For this maximum kilometerage it does not matter which means of transport the employee uses.
If you pay a higher travel allowance, the portion in excess of € 0.19 per kilometer is considered wages. You must then deduct payroll taxes over the excess.
Tax-free reimbursement of public transport
If the employee makes use of public transport to travel to work you can choose between a tax-free reimbursement of
- the actual travel costs incurred;
- the number of kilometers traveled up to a maximum of € 0.19 per kilometer.
Mileage compensation for carpooling
If you organize carpooling, you may reimburse the driver € 0.19 per kilometer. This includes the kilometers that the driver makes a detour.
If the employee organizes the carpooling himself with a colleague, then each colleague or employee can receive an allowance of € 0.19 per kilometer. The kilometers that the employee has to make a detour for this purpose can’t be reimbursed free of tax in that case.
Fixed travel allowance
In the past, it was possible for the employer to pay a fixed travel allowance if employees would have to travel 60% or more of the time to come to work. But since the corona crisis, a large proportion of people work from home. As a result, many companies found themselves in a bind with their fixed travel allowances. The government then stipulated that work-from-home days could also be considered travel days for determining commuting expenses. This regulation was abolished as of January 1, 2022.
Since January 1, 2022, employers are only allowed to reimburse actual travel expenses. Of course, as an employer you may still decide how much travel expenses you give an employee, but only the actual costs incurred can be reimbursed untaxed.
Employers must therefore determine whether their employees meet the conditions for a fixed travel allowance in 2022.
The statutory scheme says that an employee who travels to a fixed place of work on at least 128 days in a calendar year may receive reimbursement based on 214 days. This applies to five travel days. If an employee travels fewer days, the allowance must be calculated on a pro rata basis.
William travels to work four days per week in 2022. The one-way travel distance is 20 kilometers, or 40 kilometers back and forth. William must travel to work for at least 128 x 4/5 = 103 days. He meets this requirement. He travels four days x 52 weeks = 208 days to work. These 208 days do not include vacations and short-term sickness. But it is expected that William will certainly travel to work for at least 103 days in 2022.
William can be paid a travel allowance for 214 x 4/5 = 172 days in 2022. This leads to an allowance of 172 x 40 km x € 0.19 / 12 months = € 108.93 per month.
Work from home allowance
As of January 1, 2022, the new targeted exemption for working from home is in effect. You can pay your employees an allowance of € 2 per day worked from home.
The allowance can be paid to compensate for the additional costs incurred by the employee due to working from home. These additional costs include:
- water and electricity consumption;
- coffee and tea;
- toilet paper.
Such an allowance does not take up any of your free space under the work-related costs scheme. Would you like to give your employees a higher allowance? Then the excess falls in the tax-free margin. Remember to designate the allowance as a final taxable component.
If you make agreements regarding the travel/work from home pattern of your employee you can give a fixed (monthly) allowance. With these agreements you make it plausible on how many days the employee works at home and/or travels. These written agreements are formless. This means that it is not necessary to keep records or make periodic declarations.
To determine the compensation, you can use the so-called 128/214-day rule (statutory regulation). This regulation means that if your employee travels at least 128 days per year to the fixed workplace, the travel allowance on an annual basis may be calculated as if your employee travels on 214 working days. This formula already takes into account occasional working from home, sickness and vacations.
It is permitted to occasionally deviate from agreements made without an adjustment. This follows from the 128-day rule. If there are structural changes, then the allowances must be reconsidered.
As of 2022, the work from home and travel allowance must both be calculated pro-rata based on the number of travel days and work from home days (instead of previously working days).
In 2022, William works two days at home and travels to the office three days. The one-way travel distance is 20 kilometers, so 40 kilometers back and forth. The 128 days test means that William must work at least 128 x 2/5 = 52 days at home for a fixed allowance. And in addition, on at least 77 days must travel to the office.
An allowance for working from home is possible for 214 x 2/5 = 86 days. This leads to an allowance of 86 x € 2 /12 months = € 14.33 per month. In addition, a travel allowance is possible for 214 x 3/5 = 129 x (40 km x € 0.19) / 12 months= € 81.70 per month.
Bouchra works 4 days a week. She works 2 days at home and 2 days at the office (single journey distance 12 km.)
Travel allowance: 214 x 2/5 = 86 days x (24 km x € 0.19) / 12 months = € 32.68 per month
Work from home allowance: 214 x 2/5 = 86 days x € 2 / 12 months = € 14.33 per month
Combination of working from home and travelling to the office on the same day
The exemption for a work from home allowance of up to € 2 per day can also be applied if an employee only works from home for part of the day.
However, you cannot give a work from home allowance for the days when you also pay a travel allowance for commuting. This means that if an employee works at home for part of the day and the other part at the regular workplace, you can only apply one of the exemptions:
- either you reimburse the commuting expenses;
- or you pay a work from home allowance.
You decide in consultation with your employees which allowance is paid. The turning point is around five kilometers one way.
It is, however, permitted to give both a travel allowance and a work from home allowance on a day on which part of the work is done from home and the employee travels to a place other than the fixed workplace. This practical interpretation makes it possible to give an employee a travel allowance on a claim basis for a business trip from home. Think for example of a customer visit. The fixed work from home allowance does not need to be adjusted for this.
Transport on behalf of the employer
If transportation is provided by the employer, then a work from home allowance is only possible if no use is made of that transportation on the work from home day. Transport on behalf of the employer includes a company car or bicycle and the reimbursement, provision or issue of a public transport season ticket.
Allowance for furnishing a home office
For the furnishing of a home office, an employer may already give a tax-free allowance. The costs of an office chair, a computer or telephone can be reimbursed by the employer via other targeted exemptions under the work-related costs scheme.
Use of private PC and internet
On top of the work from home allowance, as an employer you may also pay an allowance if the employee uses his own computer and internet subscription for work. The condition is that the use is necessary. Necessary in this case means that the employee can’t perform his work properly without this facility. This means that the employee needs and uses the internet subscription for work.
If the internet at your employee’s home meets the conditions, then the reimbursement of the subscription costs is specifically exempt. You can also apply the targeted exemption if the employee pays a personal contribution for private use. An allowance for internet use proportional to the number of homeworking days does not conflict with the necessity criterion.
Has your employee purchased a 3-in-1 package (internet, landline telephone and television) from a provider? If so, you determine the portion of the invoice that is for the internet connection. If necessary, you can check what the provider charges for a separate internet subscription. That part can be specifically exempted from reimbursement.
Changes for 2023
Increase of tax-free travel allowance
There will probably be an increase in the current tax-free travel allowance. However, the exact increase is unknown at the time of writing. Based on the reserved amount, an increase in the tax-free travel allowance of 1 to 1.5 cents as of 2023 should be possible. The exact details are still being worked out.
Increase of tax-free work from home allowance
As of January 1, 2023, the tax-free work from home allowance will be indexed on the basis of the table correction factor. This table correction factor takes inflation into account. It is expected that the table correction factor will amount to 1.063, which means that the tax-free work from home allowance as of 2023 will probably amount to € 2.13 per work from home day. The actual amount that can be compensated untaxed in 2023 will be known in December 2022.
So there are a number of options for untaxed reimbursement of your employers’ travel expenses. You can also pay an allowance for home working days. Make proper agreements on this with your employees so that it is clear what choices are being made. Also ensure that the calculation of the tax-free allowance is correct. This can be complicated, especially if travel days and homeworking days coincide.
It is expected that the tax-free amounts will be increased in 2023. However, this increase will not be able to keep up with inflation. But it is important to adjust the calculations with the changed amounts, if desired of course. Because paying a travel allowance or home-work allowance is not a legal obligation. And therefore also not the amount thereof. This is only different if agreements have been made about this in the collective labour agreement or the employment contract. But this does not always automatically include any increase in the untaxed amount.