What is mileage?
The correct understanding of the term is complicated because there are two different meanings of mileage in parallel. We will briefly talk about each of them.
The first explanation says that mileage is a record of vehicle mileage, kept for the purpose of charging expenses incurred in the operation of a car as a deductible expense. This mileage consists of several pieces of information, including: the number of kilometers traveled, a description of the route traveled, the date and time of departure and arrival, as well as the status of the odometer.
The use of mileage records allows the entrepreneur to deduct 100% of travel expenses incurred and 100% of VAT. This is the case when an entrepreneur uses a vehicle only for business and wants to take advantage of the ability to deduct 100% of the costs associated with the operation of the car.
Important!
It is worth remembering that trucks (with a GVW of 3.5t and above) are, as a rule, used for business activities – so you do not need to keep mileage records in such a case. This obligation applies only to passenger cars.
The second meaning of mileage, closer to the one discussed in this article, employee mileage, is the rate an entrepreneur must pay an employee for each kilometer that the employee has traveled on behalf of the company using his own vehicle.
Employee mileage – rules
In order for an employee to use a private vehicle for business activities, he or she must enter into a vehicle use agreement with the employer. Supervision of the proper completion of mileage is carried out by the employer – it is up to him to ensure that all calculations are correct and documentation is complete. It must also keep an eye on the applicable limits.
Local travel limit
The Road Transport Law provides for a limit on the maximum number of kilometers traveled by an employee using a private vehicle for business purposes. Limits are set by the Decree of the Minister of Infrastructure dated. March 25, 2002. On the conditions for determining and the manner of reimbursing the costs of using for business purposes passenger cars, motorcycles and mopeds not owned by the employer. In 2023, they are as follows:
- residents of a municipality with a population of up to 100,000 can drive a maximum of 300 kilometers per month in their official capacity;
- For residents of a municipality with a population of 100,000 to 500,000 , the applicable limit is 500 kilometers per month;
- An employee living in a municipality with a population of more than 500,000 can travel 700 kilometers on official duties in a month.
Important!
There are two exceptions to the above rule:
- First: if the vehicle is used for forest service purposes, the limit increases to 1,500 kilometers per month, regardless of the size of the municipality.
- Second: if an employee uses a private vehicle for emergency services or other relevant institutions, but only in the event of a natural or environmental disaster emergency or recovery, the limit rises to 3,000 kilometers per month.
Other charges along the route
The employer’s obligations do not end with not properly accounting for the cost of the trip itself. If the employee on the route also incurred other costs, such as highway tolls or parking fees, the financial responsibility is still with the employer – but in this case it is necessary to provide proof of payment by the employee.
Kilometric tax – current rates
Mileage amounts have not changed for many years – since 2007, despite rapidly changing fuel prices, cost of living or inflation, the mileage allowance has remained unchanged. Finally, in October 2022. A draft regulation appeared, and by January 2023 the changes had already gone into effect.
As of January 2023, the mileage is:
- For mopeds: PLN 0.42/km (previously PLN 0.1382/km);
- For motorcycles: PLN 0.69/km (previously PLN 0.2302/km);
- for passenger cars with engines up to 900 cc: PLN 0.89/km (previously PLN 0.5214/km);
For passenger cars with an engine area of pow. 900 cc: PLN 1.15/km (previously PLN 0.8358/km).
How to calculate an employee’s mileage?
If you want to check how much reimbursement an employee can count on, simply multiply the number of kilometers driven by one of the rates listed above – depending on the mode of transportation reported by the employee in the statement.
According to the example we presented above, the employee does not have to show the employer invoices documenting the costs incurred – so there is no need to collect invoices for fuel or vehicle maintenance. It is enough to submit a statement, and once it is accepted, the employer must reimburse the costs resulting from the settlement. An important point is that the employer cannot account for higher costs incurred by the employee as a deductible expense.
Example
Ms. Catherine commutes to work on a motorcycle (in this case, engine capacity does not matter). For business purposes, she drove 1,200 kilometers in the previous month and included this number in her statement.
Since the mileage rate for motorcycles is PLN 0.69 for each kilometer driven, Ms. Catherine can expect a refund of PLN 828.
It is worth mentioning here that for the same route driven a year ago, the reimbursement due would have been only PLN 276.24!
When is mileage for electric cars?
The more electric cars on the market, the more legitimate the question: what about mileage for electric cars? There is no denying that traveling in an electric vehicle also generates costs, and not necessarily less than driving an internal combustion car. Current regulations do not provide for mileage for an employee driving an electric, hybrid or hydrogen-powered vehicle. This, however, is about to change.
The Infrastructure Ministry is already working on an amendment to the Road Transport Law. The planned changes are expected to discard the engine capacity criterion for determining mileage rates, and thus include electric cars, but the ministry’s announcements vainly seek a specific date for the changes – we will certainly still have to wait for those.
Summary
After nearly fifteen years, employees and employers have lived to see positive change, although many had hoped for a higher mileage rate increase. It is possible that the current limits are only temporary, but the possible next increase remains for the time being in the realm of conjecture.
However, in the coming months, work is expected to progress on including alternative fuel vehicles (electricity, hydrogen) in employee mileage billing. If the ministry is preparing further rate changes, it should introduce them at the same time as updating regulations that take electric cars into account.
