The fixed mileage allowance from 1 July 2022 to 30 June 2023

Traditionally, it is announced around 1 July what the amount of the mileage allowance will be for federal civil servants who carry out a trip for the government with their own car. This is important for businesses, accountants and tax advisers, because that amount also has tax relevance.

With your own vehicle

If you, as an employer, send your employee on the road with his own car to arrange things for work, then it is logical that you pay a fee for the costs incurred. Strictly speaking, the employee must prove those costs. But for practical reasons, the tax authorities accept that you reimburse these costs at a fixed rate.

The compensation may not exceed a certain maximum. And that maximum is equal to the flat-rate mileage allowance that federal officials receive for the use of their personal motor vehicle for work purposes.

For the period from 1 July 2022 to 30 June 2023, that maximum is 0,417 euros/km. Compared to 0,3707 euros/km in the previous year.

But there is more: as a measure against the sharply rising fuel prices in the first quarter of 2022, the minister has decided that the mileage allowance for the period from March 2022 to June 2022 will be increased once and retroactively to 0,402 euros/km.

Attention: movements made by an employee between his home and his permanent place of employment are not movements for the benefit of the employer! Those trips are therefore not eligible and if you as an employer pay a compensation, that part of the compensation in principle qualifies as wages (although various exemptions are possible).

Maximum 24.000 km

With regard to trips on behalf of the employer, the tax authorities accept that you determine the compensation at a fixed rate as long as the total distance covered remains below 24.000 km. Above 24.000 km, the tax authorities will no longer accept the lump sum calculation and therefore proof must still be put on the table.

The amount of 0,4170 euros/km is also just a lump sum. If the employee can demonstrate a higher cost, you may grant a higher compensation, but always subject to the necessary evidence.

Note that this regulation also applies to social security purposes. In principle, all allowances that you pay to the employee are considered wages, but costs that are proper to the employer are deducted from the wages and you can use the same lump-sum amount as the tax authorities for travel expenses.

Can you, as an employer, deduct this allowance?

Until tax year 2020, fuel costs on the one hand and all other car costs on the other were treated differently for corporate tax. For this reason, the lump-sum allowance for the calculation of the cost deduction was split into a part for the fuel and a part for the other costs (such as the depreciation of the vehicle and maintenance).

However, due to a radical change in the deductibility of car expenses from 1 January 2020 (assessment year 2021), this division is no longer necessary. After all, as from assessment year 2021, all car expenses are deductible on the basis of the following formula:
120% - (0.5 x coefficient x CO2 emissions (in gr/km) )

The coefficient is

'1' for diesel cars;

'0.90' for natural gas vehicles (with a power of less than 12 fiscal horsepower); and

'0.95' for cars with a different engine (petrol, electric, LPG, etc.).

The deduction calculated using this formula may not be higher than 100% and not lower than 50% (or 40% if the car emits more than 200 gr/km CO2).
The distinction between fuel costs and other costs is therefore no longer relevant.

Volunteers

Apart from the above, the mileage allowance for federal civil servants is also used for another lump-sum calculation. Namely for the volunteer allowances.

The status of the volunteer does not allow payment for services rendered. Only an expense allowance is allowed. In addition to the general maximums per month and per year, there is a separate limit for travel allowances. That limit is 2.000 km per year per volunteer (although there is no limit for volunteers whose activity is the regular transport of people). In this case, too, the allowance may not exceed the mileage allowance for federal civil servants.

Annual adjustment under scrutiny?

The minister recently announced that the annual adjustment of the mileage allowance will disappear. It will be replaced by a quarterly indexation. The initiative is commendable, since it will bring the lump sum payment closer to the actual cost price.

On the other hand, it is a double-edged sword, if over time fuel prices normalize again, the compensation will also decrease faster.

Moreover, this means that the payroll office has to adjust the figures every quarter: the employee knows less and less what he or she will receive at the end of the month and the employer is less and less sure of the actual cost price of his staff.
Every coin has two sides…