Minister Van Gennip of Social Affairs states in a letter to Parliament that the Government is examining how the rules on travel allowances can be modernised.
Pay rise?
Soaring fuel prices have for some time now been prompting calls to increase employees’ travel allowances. In our article Travel expenses should be increased We explain the key rules governing tax-free travel allowances.
The focus is, of course, primarily on the maximum mileage allowance: €0.19 per kilometre. Up to that amount, employers may reimburse employees for business travel expenses (including commuting) tax-free, as a specific exemption applies under the income tax rules. If the employer pays a higher allowance than €0.19 per kilometre for business travel expenses, the excess amount is subject to payroll tax.
Variable costs only
Van Gennip emphasises, just like her predecessors, that the €0.19 per kilometre allowance is intended to cover only the variable costs (tax-free). After some deliberation, she concludes in her letter that these costs have most likely risen recently. It should be noted, however, that this can vary significantly from one employee to another. After all, employees may now, for example, cycle to work instead of driving.
Maximum reimbursement
Tax rules allow employers to reimburse business travel expenses tax-free at a rate of (up to) €0.19 per kilometre. However, by no means do all employers make full use of this option. Employers are not obliged to pay the maximum reimbursement allowed under tax law. The Government is investigating, amongst other things, the extent to which the maximum allowance is being paid. Where this is not the case, an increase in the maximum allowance will, of course, be of little benefit to employees. It is up to employers and employees to reach agreements on this in (collective) arrangements.