B Law & Tax
25 July 2023

Tax advisor: Treasury raises the exemption for travel expenses to 0.26 euros/km in the Personal Income Tax

In today’s BOE, the Ministry of Finance has published an update of the compensation for mileage expenses for those who use a vehicle in their work. The compensation will increase immediately from €0.19 to €0.26 per kilometer, which represents an increase of almost 37%. This compensation includes fuel, vehicle wear and tear and possible breakdowns, as well as proportionally, insurance and vehicle-related taxes, as explained by the department headed by María Jesús Montero.

Two ministerial orders have been issued introducing regulatory changes. One of them provides for allowances for public employees who use their own vehicle at work, while the other establishes personal income tax (IRPF) exemptions for daily commuting expenses by car or other vehicles. It is important to note that the amount of these exemptions had not been modified since 2005, when it was set at 19 cents per kilometer.

Each type of professional will be able to obtain the benefit in two ways. Public employees will receive the 0.26 euros per kilometer after presenting the fuel bill related to the trip and a statement justifying the trip. Once the documentation has been verified, a deposit will be made into their current account. For other taxpayers who use their vehicle for work, the IRPF exemptions will be 0.26 euros per kilometer traveled. It will be necessary to present a document justifying the trip and including the necessary toll and parking expenses. According to the BOE, the amount resulting from multiplying 0.26 euros by the kilometers traveled will be excluded from income tax, provided that the travel and the toll and parking expenses are justified.

The Registro de Economistas de Asesores Fiscales (REAF) had long been calling for an update of the amounts, as the 19 euro cents per kilometer previously established did not cover even half of the current costs of traveling by car. According to estimates by the consultants, the average cost of commuting in a mid-range car is €0.47 per kilometer, including fuel, maintenance and vehicle depreciation. In parallel, an update of the IRPF exempt meal expenses, currently set at 11 euros per day, was also requested.

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