Higher Tax-Free Mileage Allowance From 2023 in the Netherlands

2 min read
Jan 26, 2023

Updated January 2023

The Dutch Cabinet has increased the tax-free commuter mileage allowance one year earlier than originally planned, after ending the fixed commuter allowance at the end of 2021. This measure was part of the recent Spring Memorandum and partially incited by the sharp rise in fuel costs in Spring 2022.

Mileage allowance in the Netherlands

In 2022, employers could reimburse commuting employees up to 19 cents per kilometre, tax-free. This maximum amount has increased to 21 cents per kilometre in 2023 and may reach 23 cents in 2024. It is the first increase in the mileage allowance in the country since 2006.

The proposed increases were urged forward by the House of Representatives following the sharp hike in fuel prices this Spring.

Employers can choose to increase the mileage allowance

While the government sets the maximum tax-free mileage allowance, it is up to the employers' discretion whether to apply it. This means that companies can choose to reimburse their employees the maximum tax-free rate, or to apply a lower or higher rate.

State Secretary Marnix Van Rij has called upon companies to make use of the new reimbursement caps to ease the financial burden of commuting on workers.

Mileage allowance increase set to cost government 200 million euros

Bringing forward the mileage allowance increase by a year is expected to cause an estimated loss of income of 200 million euros for the government. A cost that the government had originally planned to sustain starting in 2024.

This increase of the tax-free mileage allowance for commuters opens up the discussion regarding the “new way of working”. It is hoped to make it less of a burden for employees to work from the office, more often.

The decision was made to raise the allowance after employees expressed concerns regarding the cost of commuting. A cost which many employers have declared themselves willing to cover if it means getting more people back in the office.

Measures to reduce the cost of fuel

Back in March 2022, the House of Representatives first examined increasing this travel allowance following the sudden increase in energy and fuel prices which have sharply affected the finances of those commuting by car.

While excise duties on fuel were reduced earlier in 2022, this did not fully cover the prior increases. As a result and to attempt to contain fuel cost increases, the government reduced the VAT rate of gas and electricity. Starting July 1st 2022 and until the end of the year, the VAT rate of natural gas, electricity and district heating was reduced from 21% to 9%.

Automate mileage allowance compliance

Expense management solutions maintain the relevant allowances and mileages rates proactively, so that you don't need to worry about how to apply them for your employees. This ensures that your expense report compliance is always guaranteed, without you having to think about it.

For companies wanting to make the most of the available tax-free allowances in the Netherlands, we recommend finding an expense solution that can guarantee allowance compliance in the country or countries where you do business - so that you can focus on what matters.