Traveling Costs: Understanding The Per-Kilometer Rate

The going rate for travel per km varies depending on the country and the purpose of the travel. For example, in Austria, the rate for mileage reimbursement is €0.42 per km for a car, while in Belgium, it is €0.4259 per km. In the UK, mileage reimbursement is considered a benefit for employees, so employers are not required to pay it. However, many employers choose to reimburse their employees for business mileage to avoid reporting it to the authorities. The rate per km for a car in the UK is 45 pence for the first 10,000 miles and 25 pence after that.

In some countries, the reimbursement rate may depend on the type of car, the kilometres travelled, or the engine capacity. For instance, Italy has various legal reimbursement rates depending on the engine category, car manufacturer, type of fuel, and engine capacity.

It's important to note that these rates are subject to change over time, and different organisations may have their own specific rates.

Mileage reimbursement rates in Europe

Mileage reimbursement rates vary across Europe, and they are subject to change. Here is a list of the rates in several European countries as of 2023:

• Austria: €0.42 per km for a car. The official mileage allowance is recognised for a maximum of 30,000 kilometres per calendar year.
• Belgium: €0.4259 per kilometre driven. This rate is neither subject to social security contributions nor payroll tax, but the employee has to pay social security contributions on this amount. The maximum number of kilometres per year is 24,000, and proof must be provided if the number of kilometres is higher.
• Croatia: 2 Croatian Kuna per kilometre, which is equivalent to €0.27. This reimbursement is tax-free.
• Czech Republic: CZK 4.70 or €0.19 per kilometre.
• Finland: €0.53 tax-exempt per kilometre driven by private car.
• France: The French system is more complex, as the reimbursement rate depends on the type of car and the total amount of kilometres driven.
• Germany: German employers are allowed to reimburse €0.30 per kilometre tax-free for a car. For distances above 20 kilometres, the reimbursement rate increases to €0.38.
• Hungary: HUF 15 (€0.038) per kilometre is the flat rate, but employees can also choose reimbursement for petrol usage upon presenting a receipt.
• Ireland: The reimbursement in Ireland depends on the type of car and the kilometres per year.
• Italy: Italy has many different legal mileage reimbursement rates, depending on the engine category, car manufacturer, type of fuel, and engine capacity.
• Netherlands: An allowance of €0.21 or less per kilometre is free of tax and social security contributions. If an allowance exceeds €0.21 per kilometre, the excess is regarded as taxable wages.
• United Kingdom: In the UK, mileage reimbursement is considered a benefit for employees, so employers are not obligated to pay. However, many choose to reimburse their employees for business mileage, and the approved rate is 45 pence for the first 10,000 miles and 25 pence above that.
• Poland: In Poland, the reimbursement depends on the car cc. For a car below 900 cm3, it is 0.89 Polish Zloty (€0.19) per km, and for a car above 900 cm3, it is 1.15 Polish Zloty (€0.24) per km.
• Portugal: A Portuguese employer can reimburse up to €0.36 per km.
• Spain: The tax-free rate is €0.19 per kilometre, and everything above that is taxable.
• Slovakia: The basic compensation for using road motor vehicles for business trips is €0.213 per km.
• Slovenia: As of July 1, 2022, the mileage reimbursement for transport on a business trip is €0.43 per kilometre (it was €0.37 before that). For commuting to and from work, the rate is €0.21 per kilometre (previously €0.18).
• Sweden: SEK 25 per 10 km for a car, which is equal to €2.25 per 10 km.
• Switzerland: The average kilometre cost is CHF 0.72 per km for a total mileage per year.
• Norway: The distance-based allowance is tax-free when using a private vehicle for work. For cars, including electric cars, it is NOK 3.5 per km, equal to €0.31 per km.

Please note that these rates may change, and it is always a good idea to consult the latest information and seek guidance from HR professionals.

Cents per kilometre method in Australia

The Australian Taxation Office (ATO) allows individuals to claim a set rate per kilometre travelled for business purposes. This is known as the Cents per Kilometre method. This method can be used by sole traders, partnerships, employees, or the self-employed. It is ideal for those who have difficulty retaining receipts, as it does not require full substantiation or written evidence of the exact number of kilometres travelled. However, individuals must be able to demonstrate how they determined their business kilometres, such as through diary records.

The Cents per Kilometre method covers all running expenses, including registration, fuel, servicing, and insurance, as well as depreciation. The rates are reviewed regularly and have been adjusted over the years to better reflect the actual operating cost of cars. For the 2024-25 financial year, the rate is 88 cents per kilometre, allowing for a total maximum claim of $4,400 for 5,000 business kilometres.

To calculate the amount that can be claimed, individuals simply multiply the total business kilometres travelled by the rate for that financial year. It is important to note that this method has a cap of 5,000 business kilometres per car per year, and any excess kilometres beyond this limit will not be included in the claim.

The Cents per Kilometre method offers simplicity and minimal record-keeping, making it attractive to those with lower vehicle usage. However, for individuals with high business-related vehicle use, the logbook method may be more suitable as it allows for the reimbursement of a larger number of kilometres and provides the potential for bigger tax benefits.

It is recommended to assess your vehicle usage and choose the most suitable method for claiming car-related expenses. The Cents per Kilometre method is a convenient option for those seeking a straightforward way to claim without the burden of extensive record-keeping.

Calculating average speed

The going rate for travel per km varies depending on the country and the purpose of the travel. For example, in Australia, the Australian Taxation Office (ATO) allows people to claim a certain amount per kilometre travelled for business. This rate is reviewed regularly and has changed over the years, ranging from 66 cents per kilometre to 88 cents per kilometre.

Now, to calculate the average speed of travel, you can use the formula:

> Average speed = total distance / total time

This formula will give you the average speed in units of distance per time, such as kilometres per hour or miles per hour.

Let's go through a few examples to better understand how to calculate average speed.

Example 1: One Distance and One Time Period

Say Ben travelled 150 miles in 3 hours. To find his average speed, you would set up the formula as follows:

> Average speed = 150 miles / 3 hours

Now, simply divide the distance by the time:

> Average speed = 50 miles per hour

So, Ben's average speed was 50 miles per hour.

Example 2: Multiple Distances in Different Amounts of Time

Now, let's say Ben travelled at different speeds for different amounts of time. For instance, he travelled 150 miles in 3 hours, then 120 miles in 2 hours, and finally 70 miles in 1 hour. To find his average speed for the entire trip, you first need to calculate the total distance and total time.

> Total distance = 150 miles + 120 miles + 70 miles = 340 miles

> Total time = 3 hours + 2 hours + 1 hour = 6 hours

Now, plug these values into the formula:

> Average speed = 340 miles / 6 hours

> Average speed = 56.67 miles per hour

So, Ben's average speed for the entire trip was about 57 miles per hour.

Example 3: Multiple Speeds for Different Amounts of Time

In this example, let's assume Ben travelled at different speeds for different amounts of time. He travelled at 50 mph for 3 hours, then 60 mph for 2 hours, and finally 70 mph for 1 hour. To find his average speed, you first calculate the total distance and total time.

> Total distance = 50 mph x 3 hours + 60 mph x 2 hours + 70 mph x 1 hour = 340 miles

> Total time = 3 hours + 2 hours + 1 hour = 6 hours

Now, plug these values into the formula:

> Average speed = 340 miles / 6 hours

> Average speed = 56.67 miles per hour

So, Ben's average speed for the entire trip was about 57 miles per hour.

Example 4: Two Speeds for Half the Time

In this scenario, Ben drove at two different speeds for the same amount of time. He travelled at 40 mph for 2 hours, and then at 60 mph for another 2 hours. To find his average speed, you can use the formula:

> Average speed = (speed1 + speed2) / 2

Plugging in the values:

> Average speed = (40 mph + 60 mph) / 2

> Average speed = 50 mph

So, when Ben travelled at 40 mph for 2 hours and 60 mph for another 2 hours, his average speed was 50 mph.

Example 5: Two Speeds for Half the Distance

For this example, let's say Ben drove 160 miles to a waterpark at 40 mph, and then returned the same distance back home at 60 mph. To find his average speed for the entire trip, you can use the formula:

> Average speed = 2 * speed1 * speed2 / (speed1 + speed2)

Plugging in the values:

> Average speed = 2 * 40 mph * 60 mph / (40 mph + 60 mph)

> Average speed = 48 mph

So, when Ben drove 160 miles at 40 mph and then returned at 60 mph, his average speed for the entire trip was 48 mph.

As you can see, calculating average speed can be done in a few simple steps. It's important to identify the given information, such as distances, speeds, and times, and then apply the appropriate formula to find the average speed.

Tax-deductible travel expenses

The going rate for travel per km depends on the country and the year in which the travel takes place. For example, in Australia, the rate for the 2024-25 financial year is 88 cents per kilometre, whereas in South Africa, the rate for the 2025 year of assessment is determined using the table in the Notice for the Fixing of Rate per Kilometre in respect of motor vehicles.

In terms of tax-deductible travel expenses, these vary depending on the country and the specific legislation in place. In the United States, the Internal Revenue Service (IRS) allows tax deductions on certain travel expenses when the trip's main purpose directly relates to business. This includes travel by airplane, train, bus, or car between the taxpayer's home and their business destination, as well as fares for taxis or other types of transportation between locations. The IRS also allows deductions for shipping baggage and sample or display materials, the use of a personally owned car for business, dry cleaning and laundry, business calls and communication, tips for services, and other similar ordinary and necessary expenses. It is important to note that travel expenses must be ordinary and necessary and cannot be lavish, extravagant, or for personal purposes.

In Australia, the Australian Taxation Office (ATO) allows individuals to claim the use of their car for work as a tax deduction using the cents per kilometre method. This method uses a set rate for each kilometre travelled for business and allows a maximum claim of 5,000 business kilometres per car per year. The rate for the 2022-23 financial year was 78 cents per kilometre. It is important to note that this method can only be used by sole traders or partnerships where at least one partner is an individual.

Overall, it is important to consult the specific legislation and guidelines in your country to understand what travel expenses are tax-deductible and how to claim them.

Reimbursement for business travel

When it comes to reimbursement for business travel, there are a few things to keep in mind. Firstly, the reimbursement rate for travel expenses can vary depending on the country and the applicable tax laws. For example, in Australia, the Australian Taxation Office (ATO) allows individuals to claim a set rate per kilometre for business-related travel, which was 78 cents per kilometre for the 2022-23 financial tax year. This rate is regularly reviewed and updated.

In the United States, the Internal Revenue Service (IRS) allows for the deduction of business travel expenses that are considered "ordinary and necessary" for carrying out business activities. These expenses can include transportation costs, such as plane, train, or bus tickets, as well as car rental and mileage expenses. Other deductible expenses may include lodging, meals, dry cleaning, business calls, tips, and other similar expenses related to the business travel. It is important to note that expenses must not be lavish or extravagant, and should not be for personal purposes.

Additionally, the IRS requires that the primary purpose of the trip be for business. This means that the trip must consist "mostly" of business activities, and the time spent on business versus personal activities is an important factor in determining deductibility. For example, spending five days out of a seven-day trip meeting with clients while taking two days for leisure would qualify as a business trip. However, spending only three days on business and four days on leisure would be considered a vacation, and the business-related expenses would not be deductible.

Proper documentation and record-keeping are crucial for claiming reimbursement for business travel expenses. This includes keeping receipts, cancelled checks, and other relevant documents that support the deduction. It is also important to plan the trip in advance and have a clear itinerary outlining the business activities to demonstrate the professional intent behind the trip.

In South Africa, the South African Revenue Service (SARS) has published a table of rates per kilometre for motor vehicles for the 2025 year of assessment. These rates can be used to determine the allowable deduction for business travel expenses, and they vary depending on the vehicle and the purpose of the travel. It is important to refer to the SARS guidelines for the most up-to-date and accurate information on reimbursement rates and eligibility.

Frequently asked questions