The tax authority has clarified that mileage allowances paid to company members for business travel using their own vehicles are subject to corporate tax only if these expenses are not invoiced to clients.
In a formal response published on the Finance Portal, the Tax and Customs Authority (AT) outlined how commercial entities should handle mileage allowances paid to managing or non-managing partners using their own cars on company business.
The Corporate Income Tax Code stipulates an autonomous tax rate of 5% on costs related to mileage allowances and compensations for personal vehicle use unless invoiced to clients. A business inquired if this policy extends to company members.
In this instance, one individual is an investor, the other a managing partner, and neither receives a regular salary.
The AT stated that managers or managing partners are considered akin to regular employees. Regarding the autonomous corporate tax on reimbursed expenses, the AT emphasized that whether mileage expenses are invoiced to the client is significant.
If such expenses are clearly itemized in an issued invoice, they are exempt from autonomous taxation.
If not invoiced, autonomous taxation applies, according to AT.
Further, the tax services clarified that although companies can determine compensation amounts for personal car use for company business, these amounts are considered dependent work income if they exceed legal limits or do not meet state employment conditions.
This rule is based on a provision in the Corporate Income Tax Code (Article 2) treating as income for category A those allowances that exceed legal limits or fail to meet state employee conditions, alongside unjustified expenses for travel or representation at fiscal year-end.
Consequently, companies must report these amounts in the Monthly Salary Declaration (DMR) submitted to tax authorities.
Additionally, the AT explained that when a managing partner is compensated for mileage, even without a regular salary, these payments can be accounted as expenses or losses.
However, the tax authority cautioned that non-invoiced expenses are not deductible for taxable profit determination unless the employer maintains a record for tracking these trips.
