Lump sum mileage allowance from 1 July 2020 until 30 June 2021
Traditionally, the amount of the mileage allowance for federal officers when using their own car is published shortly before 1 July. But it is also important news for accountant and tax advisers, as this amount is also relevant for tax purposes.
Use of own car
When you as employer instruct your employee do to things using his own car, it is logical that you pay an allowance for the incurred costs. In principle your employee should provide proof of these costs. But for practical reasons the tax authorities accept that you apply a lump sum allowance.
Such allowance cannot exceed a certain maximum. And this maximum equals the lump sum allowance which federal officers receive for the using of their private vehicle for professional purposes.
For the period of 1 July 2020 until 30 June 2021 the maximum amounts to 0,3542 €/km (compared to 0,3653 €/km in the previous year).
Watch out: movements which an employee makes from home to work are not movements on behalf of the employer! Such movements do not qualify and if you pay an allowance for such movements, this is in principle considered as salary (however several exemptions may apply).
Maximum 24.000 km
With respect to movements on behalf of the employer, the tax authorities accept that you apply the lump sum allowance as long as the total distance remains lower than 24.000 km. Above 24.000 km the tax authorities will no longer accept the lump sum calculation and proof will have to be submitted.
The amount of 0,3542 €/km is also 'only' a maximum amount. In case an employee can prove higher expenses, then you can pay a higher amount, when such proof is available.
Note that these rules also apply for social security purposes. In principle all amounts paid to your employee are considered as salary. Expenses proper to the employer are extracted from the salary base and for transportation costs you can use the same lump sum which is used for tax purposes.
Can you deduct this allowance as employer?
Up to tax year 2020 fuel costs and other car costs were treated differently for corporate tax purposes. Therefore the lump sum allowance was, in order to calculate the tax deduction, split up in a part for fuel and a part for other expenses (such as depreciation and maintenance). The proportion was determined as 30% for fuel and 70% for other expenses.
Due to the important change of the deductibility of car expenditure as from 1 January 2020 (tax year 2021), this split up is no longer necessary.
As from tax year 2021 all car expenses are deductible based on the following formula:
120% - (0,5 x coefficient x CO2 emission in gr/km).
The coefficient is '1' for diesel cars; '0,90' for cars on CNG (with power less than 12 taxable HP) and '0,95' for cars with another engine (petrol, electric, LPG, ..).
The deduction calculated using the formula cannot be higher than 100% and not lower that 50% (40% in case the car has a emission of more than 200 gr/km CO2).
The difference between fuel costs and other expenses is no longer relevant.
Next to the above, the mileage allowance for federal officers is also used for another lump sum calculation.
A volunteer cannot be paid for the services he provides. Only an expenses allowance is allowed. Next to the general maximum amounts per month and per year, a separate threshold applies for displacement allowances. The threshold is 2.000 km per year per volunteer (there is no maximum for volunteers which has the transport of persons as activity). Also in this case the allowance cannot exceed the mileage allowance for federal officers.
The price of comfort
The lump sum calculation has the big advantage that employer and employee can limit themselves to proving the kilometers travelled. Additionally an allowance of 0,3542 €/km is not ridiculously low. As it is the case for each lump sum calculation, there are winners and losers, but it is in any case a simple and practical working method.