Beware, as a self-employed person with a sole proprietorship, mileage reimbursement for travel by car is not as simple as you sometimes read!
You often hear and read about it in the context of an employee making a trip for his employer with his own car. Or a self-employed person with a company who then drives around with his personal car for his self-employed activity.
For a sole trader, the cards are completely different!
A mileage allowance for all travel? 🚗
As a self-employed person with a sole proprietorship, you need to consider three types of trips for a mileage allowance, namely: private trips, trips between your home and fixed place of work (your office, for example) and professional trips.
- Private trips: these trips are not related to your work as a self-employed person. They include, for example, a trip to the supermarket, your sports club or friends. You may not charge a mileage allowance for these trips.
- Trips between home and fixed place of work: if you are self-employed and have a fixed place of work, for example an office, you may charge a mileage allowance for this trip.
- Purely professional trips: these trips are directly related to your professional activity as a self-employed person. They include, for example, journeys to customers, suppliers, meetings or trade fairs. Here, you cannot use a mileage allowance and have to work with your actual expenses.
What is a fixed place of employment?
The tax authorities consider a location where you work for at least 40 days a year (consecutive or not) as a permanent place of employment. This can be in the office, on location at a regular customer’s premises, … Are you working at the same location for at least 40 days a year? Then that location is automatically a fixed place of employment.
It is also possible to have several fixed places of employment in a year.
Travel between the place of residence and the fixed place of employment is then no longer pure professional travel, so you can only charge a flat-rate kilometre allowance of EUR 0.15 per kilometre.
You may only charge your actual professional expenses for pure professional travel. Find out in our calculation example below.
A calculation example 🧮
Suppose Danny has 40,000 kilometres on his car’s odometer at the beginning of the year and 50,000 kilometres at the end of the year. He can then make the following breakdown based on trip records:
- 5,000 kilometres of private journeys: this is nothing for him in the context of his sole proprietorship.
- 2,000 kilometres home-fixed place of employment: for this, Danny may enter 0.15 euros per kilometre in his accounts. He may not use actual costs for this!
- 3,000 kilometres of pure professional travel: on an annual basis, this amounts to 30% of his kilometres driven. He may therefore enter 30% of his actual costs in his sole trader’s accounts. Think of: the depreciation on his car, fuel, maintenance, insurance, road tax, etc.
How can you process a mileage allowance in Dexxter?
You can enter it as a ‘classic’ expense. You can also use the document in which you keep track of the number of kilometres as a document to record the expense in Dexxter.
You can upload this document in Dexxter and then link all the necessary information to it. For example, your supplier may be a private individual that you name ‘mileage allowance’.
Under the amounts, you then enter the total amount of the reimbursement and create a new cost category under the main category of your vehicle type.
For example, if you have a passenger car, you select ‘costs for passenger car’ as the main category and then name the new cost category ‘kilometre allowance’.
You may set the percentage of professional use to 100% and (if applicable) set the percentage VAT deduction to 0%. Then complete the steps and you can record the expense.
What should you keep track of? 🔎
Ideally, you start from the mileage at the beginning of the calendar year (or from the start date of your self-employment).
Then you can build up the following reasoning: mileage at the beginning of the year + private mileage + commuting mileage + purely professional mileage = mileage at the end of the year.
How much is the mileage allowance?
As already mentioned in the example above, the allowance for travel between your place of residence and fixed place of work can be entered at 0.15 euros per kilometre.
You may not use actual costs for this purpose, but only enter a kilometre allowance.
Moreover, it is important to use a maximum of 0.15 euros per kilometre, which is the maximum allowed by the tax authorities.
And in case of tax audit?
In the context of fiscal control, it is important, on the one hand, to apply the mileage allowance only to travel between your place of residence and the permanent place of employment.
On the other hand, as a sole trader, you must always keep your accounts and supporting documents. This therefore also means that you must be able to present documentary evidence of the number of kilometres driven.
This can also be done on the basis of your diary, for example. From there, you can find appointments on location and calculate the number of kilometres driven.
