Kilometric expenses: definition and basic rules
Whether you're an entrepreneur or an employee, you're all affected by mileage expenses, whether they're calculated or reimbursed.
Whether you're looking for a definition of mileage allowance (IK), a mileage tax scale or information on this tax advantage granted by the French government in the context of your professional activity, we've got it covered!
Follow the guide!
What are mileage expenses?
Kilometric expenses: definition and scale
Kilometric expenses are part of business expenses.
They cover the actual cost of using a personal vehicle for business travel, such as the journey to a seminar, a worksite or an off-site meeting.
The amount of the mileage allowance, set out in the tax authorities' mileage scale (updated each year), covers the cost of :
- vehicle wear and tear,
- fuel
- insurance,
and is calculated according to the distance covered and the type of vehicle (horsepower).
These expenses are exempt from contributions.
🔎 On a business expense statement , mileage allowances and ancillary expenses may be included side by side, including :
- parking fees,
- toll charges.
Kilometric expenses: conditions
All vehicles, even electric ones, are covered by mileage expenses:
- cars,
- motorcycles
- scooters
- bicycles, etc.
The vehicle may be owned, leased or loaned by the employee. However, it is up to the employer to provide proof of the professional use of the personal vehicle, with supporting documents.
As for employees, all of them without exception - even trainees and volunteers - can incur mileage expenses and claim reimbursement.
Calculating actual expenses between home and work
Kilometric expenses also apply to travel between home and work, up to a maximum of 80 km per day AR (specific exceptions for certain activities are provided for by law).
When filing their tax returns, some employees prefer to use theUrssaf mileage scale to deduct their actual expenses, instead of the less advantageous 10% flat-rate deduction.
In this way, these mileage expenses are deducted from taxable income when they choose to be taxed on actual expenses, or "au réel" as it is often called.
However, any tax reduction obtained must be justifiable. The General Tax Code stipulates that supporting documents may be requested.
Once again, the employer may also be asked to justify :
- the means of transport used by the employee,
- the distance between home and work,
- the tax rating of the vehicle,
- the number of journeys made each month.
Calculating business expenses and mileage allowances
A vehicle costs more than its fuel consumption over a given number of kilometers.
Among the costs to be taken into account are :
- annual depreciation,
- rent if the car has been leased, for example,
- loan interest, if the vehicle was purchased on credit,
- insurance premium,
- fuel costs,
- parking and garage expenses,
- maintenance and repair costs, including tires....
In addition, some entrepreneurs have a vehicle for mixed personal and professional use. They may prefer to use the tax scale for fuel expenses rather than the one for mileage expenses, after determining a share between business and personal use. In this case, all expenses, including fuel, tolls, insurance, etc., are declared on an actual basis.
But whatever the calculation method and the most advantageous scale, equipping yourself with a professional tool can save you precious time by :
- connecting your Google or Outlook calendar to an application that imports appointments,
- automatically calculating distances and mileage,
- generating expense reports in just a few clicks.
You can try out an expense management software like Izika, or read the following article to find out more! 😉
Article translated from French