REIMBURSEMENT OF BUSINESS TRAVEL EXPENSES
What is Mileage Allowance?
Mileage allowance is the reimbursement of expenses incurred by an employee when using their own vehicle (personal car, motorcycle, etc.) for business purposes. Most commonly, this refers to:
- business trips (e.g., client visits, meetings outside the workplace),
Mileage Allowance Amount (Tax-Exempt Reimbursement)
According to the Decree on the Tax Treatment of Expense Reimbursements and Other Income from Employment (Official Gazette of the Republic of Slovenia, No. 140/06 with amendments), the tax-exempt reimbursement amounts to:
- €0.43 per kilometer for the use of a personal car on a business trip.
- For a motorcycle or moped, it is lower (usually around €0.24 / km).
The employer may also pay a higher amount, but the difference above €0.43/km is considered taxable income (salary).
Conditions for Mileage Allowance Payment
For mileage allowance to be justified and tax-exempt, several conditions must be met:
- The business trip must be ordered (verbally or in writing).
- The employee must submit a travel order specifying the purpose of the trip, date, location, number of kilometers, etc.
- A personal vehicle is used, not a company vehicle.
- Reimbursement is paid based on the actual distance traveled.
Commuting Expense Reimbursement
This is not mileage allowance, but a different category of reimbursement:
- The employer reimburses the cheapest public transport or, if not possible, €0.21/km (or another amount according to the company’s internal rules). The current cheapest public transport between municipalities exceeding a distance of 20 kilometers is a bus ticket costing €70.00.
- These reimbursements are also tax-exempt up to certain limits.
What a Travel Order Must Contain
To be valid and tax-recognized, it must contain:
- Employee’s Name and Surname
- Date and Time of Departure and Arrival
- Start and End Location of the Trip (Route)
- Purpose of the Trip (Business Reason)
- Vehicle Type (Personal / Company)
- Number of Kilometers Traveled
- Mileage Allowance Amount and Any Other Expenses
- Employee’s Signature and Approved Supervisor
Important
- Without a travel order or clear record of kilometers traveled, mileage allowance is not considered tax-recognized and may be taxed as salary.
- The employer must keep travel orders for at least 10 years (for tax audits).
Summary from Article 5 of the Decree on the Tax Treatment of Expense Reimbursements and Other Income from Employment
(1) Reimbursement of travel expenses on a business trip is not included in the tax base of income from employment up to the amount of actual costs for public transport, for transport carried out with a personal car or combined vehicle for commercial purposes, or for renting a personal car.
(2) Reimbursement of travel expenses on a business trip also includes reimbursement of fees (airport taxes, platform tickets, etc.), reimbursement of fuel costs if a company vehicle is used, tolls and parking fees, and reimbursement of costs for transporting and carrying items or luggage.
(3) If the employee uses their own means of transport, the reimbursement of travel expenses on a business trip is not included in the tax base up to €0.43 per kilometer traveled.
(4) Reimbursement of travel expenses on a business trip is not included in the tax base if documented with a travel order and invoices. The travel order must show the employer’s approval for the specific type of transport.
(5) Public transport means, under this decree, a means of transport used for public transport. Public transport, under this decree, is transport that is accessible to all users of transport services under equal conditions and is carried out for commercial purposes.
Source of article: PisRS
EXPENSE REIMBURSEMENTS FOR MANAGERS
Expense reimbursements for managers who perform managerial duties under a management contract are, up to the limits and under the conditions of the Decree on the Tax Treatment of Expense Reimbursements and Other Income from Employment, exempt from income tax advance payments, similar to the taxation of employees under an employment contract. However, the payer must calculate social security contributions on these expenses, as applies to income from other legal relationships. Therefore, the reimbursement of managers’ expenses is subject to social security contributions, where the basis for contributions is gross income (including expense reimbursements), reduced by 10% of standardized expenses.
The payer registers the manager for insurance with form M12 at the start of the (remunerated) legal relationship under this contract and deregisters them upon termination. Upon payment, form REK-O with income type code 1144 and form iREK-O with income type code 1109 must be submitted.
DAILY ALLOWANCES
(1) If a business trip in the Republic of Slovenia (hereinafter: Slovenia) lasts over 12 to 24 hours, a daily allowance up to €27.81 is not included in the tax base of income from employment; if a business trip in Slovenia lasts over 8 to 12 hours, a daily allowance up to €13.88 is not included in the tax base; if a business trip in Slovenia lasts over 6 to 8 hours, a daily allowance up to €9.69 is not included in the tax base.
(2) If a business trip abroad lasts over 14 to 24 hours, a daily allowance up to the amount specified for each country or region in the regulation of the Government of the Republic of Slovenia governing expense reimbursements for business trips abroad (hereinafter: Government regulation) is not included in the tax base of income from employment; if a business trip abroad lasts over 8 to 14 hours, a daily allowance up to 75 percent of the amount from the Government regulation is not included in the tax base; if a business trip abroad lasts over 6 to 8 hours, a daily allowance up to 25 percent of the amount from the Government regulation is not included in the tax base.
(3) If the nature of the work is such that it is predominantly performed outside the employer’s registered office and the work is performed in Slovenia, and the employee returns daily to their place of residence, the reimbursement of meal expenses during work, up to the amount and under the conditions specified in Article 2 of this decree, is not included in the tax base of income from employment, regardless of the provisions of the first and second paragraphs of this article.
(4) Notwithstanding the first paragraph of this article, for receipts intended to cover daily allowance expenses, when payment is made to an individual who, by appointment, performs the function of a member of an election committee under election regulations, the full-day daily allowance is €48.00 for each day of voting.
Article 6 (Overnight Stays on Business Trips)
(1) Reimbursement of overnight stay expenses on a business trip is not included in the tax base of income from employment up to the amount of actual accommodation costs.
(2) Reimbursement of overnight stay expenses on a business trip is not included in the tax base if documented with a travel order and invoices.
(3) If the costs of an overnight stay on a business trip in Slovenia, lasting over 8 to 12 hours, also include breakfast, the daily allowance amount from Article 4 of this decree, up to which it is not included in the tax base, is reduced by 15 percent; if the costs of an overnight stay on a business trip in Slovenia, lasting over 12 to 24 hours, also include breakfast, the daily allowance amount from Article 4 of this decree, up to which it is not included in the tax base, is reduced by 10 percent.
(4) If the costs of an overnight stay on a business trip abroad, lasting over 8 to 14 hours, also include breakfast, the daily allowance amount from Article 4 of this decree, up to which it is not included in the tax base, is reduced by 15 percent; if the costs of an overnight stay on a business trip abroad, lasting over 14 to 24 hours, also include breakfast, the daily allowance amount from Article 4 of this decree, up to which it is not included in the tax base, is reduced by 10 percent.
SOURCE: Racunovodja.com