Taxable and tax-free transport allowance

You enter the tax-free transport allowance in field 48 and add type of income (indtægtsart) 0109.

However, if you have paid your employee the transport allowance along with fees, you should enter it in field 36 or field 38.

You can choose to apply rates higher or lower than those in the table:

• Higher rates. If you give your employees an allowance based on higher rates than those in the table, the entire allowance is taxable - unless the part exceeding the fixed rates is taxed as ordinary income tax.
• Lower rates. If you give your employees an allowance based on lower rates than those in the table, the allowance is tax-free.

An employee is not entitled to both deduction for transport between home and work and transport allowance. If you do not give your employees a tax-free transport allowance, they can claim a deduction for transport between home and work.

You calculate the allowance based on the actual kilometres the employees have travelled. If the employees are given a fixed allowance irrespective of the actual number of kilometres they have travelled, the allowance is taxable as ordinary salary.

You cannot give your employees a tax-free transport allowance if you have agreed to reduce the salary of your employees in return for the transport allowance.

The tax-free transport allowance does not include expenses for ferry tickets, toll roads and/or toll bridges or parking for work purposes. Therefore, you can choose to pay the expenses as per account rendered. The employees must give you the original vouchers.

You can only give your employees a tax-free transport allowance for driving their own vehicle between home and work, if they observe the 60-day rule. If the employees work from home and drive from their workplace at home to the business, it will not be considered transport between two workplaces.

Read more about the 60-day rule.

You may give your employees a tax-free transport allowance for driving between their holiday home and their workplace but the number of kilometres may not exceed those between their ordinary home and their workplace.

If the employees have two homes (not including holiday homes), they are only entitled to a tax-free transport allowance for the actual number of kilometres they have driven. An example could be if the employees work far from their home and therefore have to pay for accommodation (a hotel room, a room or a flat) closer to their workplace.

Example of transport to and from two homes

Paul lives in Holte and his employer sends him to work in Ribe for three months.

He drives from his workplace in Ribe and to his home in Holte on Friday afternoon and he drives back on Monday morning. The rest of the week, Paul drives 20 km from his accommodation outside Ribe and to his workplace in Ribe and back. In this case, all five working days are included in the 60 days as Paul drives to and from the same workplace on a daily basis.

If, on the other hand, Paul lives in the workplace during the week and therefore only drives from his home in Holte to his workplace in Ribe on Mondays and from his workplace to his home on Fridays, it is the drive to and from his workplace twice a week that is included in the 60 days. As a result, two days will be counted per week even though Paul does not drive both to and from his home both days.

Usually, you may give employees a tax-free transport allowance for driving to and from a course or a training location. Supplementary training keeps the employees up with the education they already have.

Please note that the training must take place on the initiative and in the interest of the employer. Usually, the training should be related to the job performed by the employees.

You have to report the tax-free transport allowance in field 48 in E-income and add the type of income (indtægtsart) 0109.

You cannot give your employees a tax-free transport allowance if they take on further education. Further education is either education to upgrade their education or an entirely new education.

Individuals who have B-income (income not taxed at source) are not entitled to a tax-free transport allowance. This applies to lecturers or artists, for example, who earn a fee.

Individuals who have A-income (income taxed at source) can be given a tax-free transport allowance. This applies to certain members of boards of directors, of councils and of commissions.

Associations may give a tax-free transport allowance to unpaid board members or to volunteers, unpaid assistants who provide help as part of the association’s tax-free activity.

You may give your employees a tax-free travel allowance for food, accommodation and petty acquisitions when they travel for work purposes.

Read more about the tax-free travel allowance.