New mileage allowances for travel expenses in Spain: Key benefits and updates
On July 17, 2023, a new regulation came into effect in Spain that brought significant changes to mileage allowances for travel expenses.
Published in the Boletín Oficial del Estado (BOE), Order HPF/792/2023 of July 12, 2023, revises the amounts exempt from Personal Income Tax (IRPF) for work-related travel.
This change increases the kilometric/mileage allowance for employees who use their personal vehicles for professional purposes.
What Are the new mileage allowances?
The new mileage allowances, also known as kilometric allowances in the EU, are reimbursements employers provide to employees for the use of their private vehicles during work-related travel.
These reimbursements cover fuel, wear and tear, and other costs associated with vehicle use.
In Spain, a portion of these allowances is exempt from Personal Income Tax, provided the employee justifies the distance travelled and the purpose of the trip.
What has changed?
Previously, the tax-exempt kilometric allowance stood at €0.19 per kilometre (roughly €0.31 per mile).
However, as of July 17, 2023, this amount has increased to €0.26 per kilometre (about €0.42 per mile).
This adjustment reflects the growing costs of vehicle maintenance and fuel and guarantees that employees are fairly compensated for work-related travel.
Conditions for exemption of the new mileage allowances
To benefit from the tax exemption:
- The journey must be work-related and justified with proper documentation, such as travel logs or receipts.
- The reimbursement must not exceed €0.26 per kilometre. Any amount paid above this limit is subject to taxation.
- Employers are responsible for reporting these allowances accurately.
Who benefits from the new mileage allowances?
The revised rates are particularly advantageous for employees who regularly use their vehicles for work-related tasks, such as:
- Sales representatives travelling to meet clients.
- Technicians commuting to various job sites.
- Professionals attending off-site meetings or events.
This change not only increases the amount employees can receive tax-free but also ensures their out-of-pocket expenses are better covered.
How to maximize your benefit
To fully take advantage of this revision:
- Document Your Trips: Maintain detailed records of your travel, including dates, distances, destinations, and purposes. Digital tools or apps can simplify this process.
- Communicate with Your Employer: Ensure your employer is aware of the updated allowance and adjusts reimbursements accordingly.
- Understand Tax Implications: If your reimbursement exceeds €0.26 per kilometre, the excess amount will be taxable. Clarify any discrepancies with your employer or a tax advisor.
Additional considerations
This adjustment reflects the Spanish government’s recognition of rising transportation costs.
It aligns with broader fiscal measures aimed at supporting workers and promoting fair compensation.
Employers, too, should be aware of their obligation to update reimbursement policies and ensure compliance with the new limits.
Maximize your benefits with the new mileage allowances
The increase in mileage allowances to €0.26 per kilometre (approximately €0.42 per mile) provides much-needed relief for professionals who rely on their personal vehicles for work.
Managing these updates can be complex, whether you’re an employee claiming allowances or a business managing reimbursements.
For expert guidance on tax and accounting matters, Delaguía&Luzón is your ideal partner.
With a proven track record in simplifying personal and business finances, we can ensure you’re making the most of these new allowances while staying on top of all tax requirements.
About Delaguía & Luzón
Delaguía&Luzón is a trusted tax and accounting firm dedicated to providing personalised solutions for individuals and businesses.
With a deep understanding of Spanish tax laws and financial regulations, our team ensures clients stay compliant while optimising their financial strategies.
From tax planning and consulting to accounting and business advisory, we offer expert guidance to help you achieve your goals with confidence.
