How does the use of personal car for business work?
Using personal car for business use gives employees the flexibility and convenience to perform work-related tasks.
Employees can agree with their employer to use their own car instead of a company car paid for by the employer. It can be practical for carrying out specific tasks such as meetings or customer visits.
You can register correct mileage automatically with Acubiz
Track driving in real-time via our integration with Google Maps, where you can also register and approve work-related driving on the go – directly from your phone.
The rate for driving your personal car
If you choose work-related driving in your own car, you are entitled to tax-free mileage reimbursement with a rate for driving your own car (also known as driving allowance). The rate should not be confused with a driving deduction.
The following rules apply before you are entitled to the reimbursement:
- The car must be registered in the employee’s name or privately leased by the employee.
- If the car is registered in the name of a spouse/partner, it is also considered to be their own car if they have joint finances.
If you borrow a car from a friend, you are not entitled to tax-free mileage reimbursement.
State rates for driving your personal car:
The state rate for driving your own car is calculated based on the number of kilometers driven and the applicable rate for driving your own car. In 2023, driving deduction and transport allowance rates increased due to an expected higher gasoline price in 2023 and rising energy prices in 2022.
Here are the rates for tax-free mileage reimbursement in 2023:
|Driving up to 20,000 kilometers||3.73 kroner per kilometer|
|Driving over 20,000 kilometers||2.17 kroner per kilometer|
|Driving using your own bike, moped, 45-moped, or electric scooter||0.61 kroner per kilometer|
If more than the state rates for mileage reimbursement are paid, the employee must pay tax on the entire amount. The tax must also be paid if the employee receives a fixed amount independent of the number of kilometers driven.
Control of tax-free mileage reimbursement for work-related driving
A company must maintain control in a mileage log of the number of kilometers driven for business purposes so that the employer can pay tax-free mileage reimbursement to the employee.
The following must be controlled:
- Purpose of the drive
- Goals and any sub-goals for the drive
- Kilometers driven
- Calculation according to the applicable rates
- That the drive is in the employee’s own vehicle
Do you want to know more?
With Acubiz, you can digitize and automate travel expenses, making it easier to track work-related driving.
It is a fast way to a correct travel expense report because the rules and rates of the Danish Tax Agency are automatically updated and calculated.