10 Countries That Let You Deduct Travel Expenses
If you travel on a daily basis, you may be eligible for a hefty tax return on your travel expenses.
Several countries around the world accommodate for tax-deduction of travel expenses for various purposes. Within each country, you will find clear regulations defining which expenses are deductible, who can deduct them, and how it should be done.
You almost always need proof of your expenses - in the form of a trip log book and/or original receipts - in order to deduct travel expenses. Psngr app automates this tedious task for you and supports the standard mileage rates in all these countries listed below.
United States
The IRS defines two methods for deduction of driving expenses: the actual expenses method and the standard mileage rate method. Both methods require proof in the form of a logbook and/or original receipts. The standard mileage method is the most common method used by individuals and provides mileage rates for travel on several key purposes, including: business, medical or moving and for charitable organizations. Check out our IRS articles collection for more info on tax deductions.
United Kingdom
HM Revenue and Customs (HMRC) provides a working sheet for mileage allowance and travel payments for employees traveling to work and/or on business. In the UK Mileage Allowance Payments for employees are exempt from taxes up to an ‘approved amount’ which is calculated based on the amount of miles driven by the employee per year. This tax law also defines standard mileage rates for cars, motorcycles and even bikes!
Check out this article on how to claim vehicle expenses based in HMRC guidelines.
Germany
In Germany, reimbursement of mileage expenses in called Pauschale Kilometersätze. The German Ministry of Finance (Bundesministerium der Finanzen), defines standard mileage rates for driving (separate rates for motor vehicles and motorcycles).
France
The French define standard rates per kilometer for driving depending on your vehicle's engine size, defined in horsepower (cheval fiscal, CV). The larger the engine, the higher the rate. In addition, the total amount of kilometers driven in a calendar year also affects this calculation, as explained by a publication from Le Service-Public.
Australia
The Australian Taxation office sets forth Motor vehicle expenses as tax-deductible for both business owners and private individuals, depending on certain conditions. Calculating your deductions for a car you own or lease can be done in several ways, including "Cents-per-kilometer" method. In all cases, you must keep a detailed record (logbook) of your trips and be able to calculate the percentage of business use of your vehicle. If you drive over 5000 KM per year, you need to pro-rate your actual vehicle expenses (fuel, insurance premiums, maintenance costs, licenses, etc.) based on your business-use percentage.
In Australia, you cannot claim the cost of traveling between your home and your place of business. However, if your home is your place of business, you can generally claim the cost of trips you make between your home and other places, if you made the trip for business purposes.
For a comprehensive overview of travel tax deductions in Australia check out Bristax.
Canada
Canada's Revenue Agency defines Automobile allowance rates with standard rates per kilometer driven by car. The rate is higher for the first 5000 KM driven. Maybe it's a way to encourage Canadians to drive less because you can also claim the cost of monthly public transit passes as tax-deductible.
Ireland
The Office of the Revenue Commissioners publishes the re-imbursement of Motoring/Bicycle Expenses to Employees defining which types of travel may be reimbursed and/or are tax-exempt. These include driving and bicycling. Kilometric rates for motor vehicles, motorcycles, and bicycles are determined based on the vehicle's engine size and the total distance driven in a year with the vehicle.
New Zealand
New Zealand Inland Revenue office publishes regulations and mileage rates for claiming business expenses related to travel. Similar to the Australian regulations, you must record your travel details in a diary and keep invoices and tickets in order to claim driving or public transport expenses. Claiming driving expenses is based on mileage rates and the business-use percentage of your vehicle. The regulations apply for both self-employed and employee reimbursement.
South Africa
The South African Revenue Service (SARS) publishes the rates per kilometer that are tax-deductible and/or may be reimbursed to employees for covering travel expenses. Reimbursing driving expenses is done using kilometric rates which are determined based on the purchase price of your vehicle. Mileage rates are comprised of separate components for fixed cost, fuel cost and maintenance cost of the vehicle. These allowance components may be pro-rated depending on the business-use percentage of the vehicle. More details in this Budget Pocket Guide.
The Netherlands
The Dutch belastingdienst (tax office) instates a flat rate applicable to all motor vehicles, as well as bicycles. You can use this flat rate to claim tax-exempt travel costs for business/work-related travel based on the detailed trip logbook. Reimbursing similar costs made by public transportation is calculated differently and is based on the distance traveled and an amount of workdays in the week in which public transportation is used. It also requires original receipts/transcripts issued by the transit provider in order to be exempt from income tax up to a certain maximum amount.
Sweden
The Swedish Tax Agency publishes yearly guidelines regarding allowances and tax-exempt reimbursements, including travel-related expenses. Commuting from home to work is tax-deductible if the distance between your home and your workplace is larger than 50 KM. Travel by public transport is fully tax-deductible based on actual receipts. If public transport is not available you may deduct travel expenses for driving your own car to work based on standard mileage rates.