Bookkeeping

Mileage allowance

A fixed amount per kilometre that compensates the use of a private vehicle for business trips, usually tax free up to a national rate.

What Mileage allowance means

When an employee or a sole trader uses a private car for business travel, most EU countries allow a flat amount per kilometre to be paid or deducted instead of actual costs. The rate is set nationally and is meant to cover fuel, wear, insurance and depreciation. Amounts paid within the rate are tax free for the recipient and deductible for the business; amounts above it are taxable.

The condition is a log of trips with date, purpose, route and distance. Some countries add a monthly cap or reduce the rate above a certain annual distance; others distinguish cars, motorcycles and bicycles. Company cars follow different rules based on actual costs and a taxable benefit for private use. Kontevia keeps a trip log and calculates the allowance at the rate of the user's country.

Related terms

Per diem (daily allowance)A fixed daily amount that covers meals and incidental costs on business trips, tax free up to national rates that depend on the destination and duration.Deductible expenseA cost incurred to earn taxable income that reduces the tax base. Must be documented, business related and not excluded by law.Representation costs (entertainment)Spending on hospitality, gifts and entertainment of business partners. Deductibility is limited or excluded in most EU countries.

This entry is general information, not tax advice. Rules change; check the current position with your adviser or the tax authority of your country.

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Rates, thresholds and e-invoicing formats come from the jurisdiction data of your country. You send the document, Kontevia books it and keeps the VAT summary ready.

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