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Increasing gas prices leads to a change in rates for mileage tax deduction and allowance

Increasing gas prices has resulted in the Tax Council deciding to increase the rates for mileage tax deduction and mileage allowance.
Phone in car with company mileage

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Everyone with a car feels the rising gasoline prices every time the car needs to be refueled. For this reason, the Tax Council has extraordinarily decided to increase the rates for the mileage deduction and the mileage allowance. This decision affects the many thousands of users who use Acubiz every day to get reimbursed for business travel in their own vehicle. There is no need to worry – Acubiz will automatically update the rates for tax-free travel allowances as of May 1st.

The reason behind the changes in rates

The reason behind the change in rates is the increasing gas prices. This is quite uncommon as it is only the third time in 30 years that the rates have not been adjusted in the middle of the year.

Every year in November the Tax Council announces the rate for mileage tax deduction. They are based on an estimate of what it will cost to keep a car in the following year. The most important figure to look at is gas prices. This year gas prices have increased a lot more than originally anticipated back in November of 2021. Now, it is estimated that the average gas price will be DKK 15.77 per liter in 2022. This is why the Tax Council decided to adjust the rates in the middle of the year.

Below are tables that show the new rates for 2022.

Mileage tax deduction

YearRate for mileage between 25 and 120 kmRate for mileage above 120 km
Former rate 2022DKK 1,98 pr. km.DKK 0,99 pr. km.
New rate 2022DKK 2,16 pr. km.DKK 1,08 pr. km.

Mileage allowance

YearRate for the first 20.000 kmRate for mileage exceeding 20.000 km
Former rate 2022DKK 3,51 pr. km.DKK 1,98 pr. km.
New rate 2022DKK 3,70 pr. km.DKK 2,17 pr. km.

We are seeing an increase of 18 Danish øre per km. for mileage tax deduction (if mileage is between 25 and 120 km) and an increase of 19 Danish øre per km. for the mileage allowance (if mileage is less than 20.000 km. per year).

The new rate for mileage tax deduction is valid for the whole year of 2022. However, the new rate for mileage allowance will be in effect from the 1st of May 2022.

The change in rates for mileage allowance does not take place retroactively because it is considered difficult to deal with the administrative implications this will cause.

What do these changes mean if you register mileage with Acubiz?

Companies using Acubiz smart company mileage tracking feature, do not have to worry about these changes. The rates for mileage allowance will be automatically updated in Acubiz from Sunday, May 1st.

Of course, Acubiz uses the date of the mileage to set the rate and not the date of registration. If an employee post-registers a trip from the month of March in May, the previous rate of DKK 3.51 per km. will be used and not the new rate of DKK 3.70 per km.

Read the Tax Council’s press release here

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