Employee Mileage: How to Compensate Use of Their Own Vehicle
What mileage compensation is
When a worker uses their private vehicle for work trips, the company pays an amount per kilometre travelled to compensate for fuel and wear. It is a travel expense.
IRPF-exempt amount
The amount per kilometre is exempt from IRPF up to the limit set by the rules. If the company pays above it, the excess is taxed as employment income. In addition to mileage, tolls and parking are compensable with a supporting document.
Only travel for work reasons is compensated: the commute from home to the usual workplace does not count.
How to calculate mileage
- Record the kilometres of each work trip.
- Multiply by the established amount per km.
- Add tolls and parking with their supporting document.
How to justify it
- State date, origin, destination and reason of each trip.
- Keep toll and parking receipts.
- Reflect it on the payslip or in the expense settlement.
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Conclusion
Mileage compensates the employee for using their vehicle at work and is exempt up to a limit. Recording trips well and keeping supporting documents is key to correct taxation.
Frequently Asked Questions
What is mileage compensation?
The amount the company pays the employee per kilometre when they use their own vehicle for work trips.
Is mileage exempt from IRPF?
Yes, up to the per-kilometre limit set by the rules; the excess is taxed as employment income.
Is the home-to-work commute compensated?
No. Only trips for work reasons are compensated, not the usual commute to the workplace.
Can tolls and parking be compensated?
Yes, in addition to mileage, with their corresponding supporting document.
How is mileage justified?
By stating the date, origin, destination and reason of each trip and keeping toll and parking receipts.