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Written by:
Bas Hollenberg


Tax-free travel allowance

It is permissible for employers to award their employees a tax-free travel or commuting allowance of up to € 0.19 per kilometre even if the employee in question has hitched a ride with a co-worker. The reason for this is that the tax-free travel allowance applies to all forms of transport.  

A private limited-liability company whose business was school photography was presented with additional tax assessments for 2004 and 2005 owing to travel allowance. The company’s director during the years in question had engaged in school photography work, partly in collaboration with the actual photographer, and had been awarded a tax-free travel allowance for the kilometres he had travelled. 

Although the Inspector of Taxes had taken the view that the travel allowance was to be regarded as part of the director’s wages as the director had occasionally travelled as a passenger in the photographer’s car, the Court of Appeal by contrast considered it plausible that the director’s use of his car in aid of the photographic duties had caused him to incur expenses, which expenses according to the Court formed part of the category of costs relating to proper performance of employment, so that the travel allowance qualified as tax-exempt. The Court of Appeal went on to point out that “transport” should not be confined to the director travelling using his own car, but should be taken to extend to business trips made by the director as a passenger in the photographer’s car. The company had been right when it had treated the travel allowance as not forming part of the director’s wages.

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