The mileage allowance for those who use a vehicle for their work is updated to 0.26 euros per kilometer traveled.
On July 17, 2023, the Official State Gazette published Order HFP/793/2023 of July 12, 2023, which updates the compensation for mileage expenses for those who use a vehicle to carry out their work, which now amounts to 0.26 euros per kilometer traveled.
This covers fuel and expenses related to wear and tear caused to the vehicle and possible breakdowns. Insurance and vehicle-related taxes are also covered, albeit on a proportional basis.
This order is effective as from July 18th, 2023.
This indemnity or exemption had an amount until now of 0.19 euros per kilometer, an amount established in 2005.
For all the workers who pay income tax and use the vehicle for work, the exemptions will be applied allowing to exclude from the tax return the amount resulting from multiplying 0.26 euros by the kilometers traveled. A procedure for which it will be necessary to have a document justifying the trip, and in which it will be possible to include the necessary toll and parking expenses.
The update to 0.26 euros was pending for several reasons. One of them is that the figure had not been updated since 2005, the year in which 0.19 euros was introduced for both compensation and personal income tax exemption. This has been compounded by other determining factors on the final price of raw materials, such as the Russian invasion of Ukraine, which caused a historic escalation in energy prices.
The consequences of the warlike tension in Ukraine have meant that, at present, gasoline or diesel prices are almost double what they were in 2005, when the last update was carried out. The current reality makes evident the need to carry out the updating of these compensations, with the correlative increase of the amounts exempted as per diems and allowances for travel expenses in the Personal Income Tax.
For further information, please consult a tax advisor.