€0.55

per kilometre, own car

€54

full per diem, trip over 10 h

€25

partial per diem, 6–10 h

€13.50

meal allowance

What four cents cost over a year

On a single trip you would never notice. A hundred kilometres now pays €55 instead of €59 — four euros less. Over a year the picture changes, because business kilometres accumulate quietly: customer visits, site rounds, material runs. Each one is short, but there are many of them.

This is not a tax increase. The allowance tracks the real cost of running a car, so when fuel gets cheaper the rate follows it down. For the employee the effect is the same either way: the same driving puts less money in the account.

The mileage add-ons

The base rate covers your own car with no load. Two add-ons sit on top of it, and both are regularly left unclaimed simply because people do not know they exist.

• ·€0.04/km for every work-related passenger you carry. Two colleagues in the car lift the rate to €0.63 per kilometre.
• ·€0.09/km for towing a trailer. A caravan or a heavy load carries a higher add-on.
• ·The add-ons are counted for the whole trip, not only the leg where the passenger is aboard — so if you drive a colleague out and return alone, agree the method with your employer in advance.

The per diem depends on the clock, not the distance

The per diem covers the extra food and incidental costs a trip causes, and its size depends on how long the trip lasts. A trip over ten hours pays the full per diem of €54; a trip of six to ten hours pays the partial €25. A trip under six hours pays no per diem at all, however many kilometres it covers.

For trips longer than a day, whole days and the remainder are counted separately: a remainder over two hours earns a partial per diem, and one over six hours a full one. In practice a three-day trip ending on Friday evening often produces one more per diem than the traveller expects.

Over 15 kilometres — and over five from both

The per diem is tax-exempt only when the trip goes to a special place of work more than 15 kilometres from your home or your regular workplace, and more than five kilometres from both. An ordinary commute from home to the office never qualifies, however far it happens to be.

The same logic applies to mileage: it is tax-exempt only for business driving. The trip between home and a permanent workplace is the employee’s own cost, and it earns the commuting deduction in the tax return — a different and considerably smaller thing.

The maximum is a ceiling, not an entitlement

The Tax Administration decision says how much an employer may pay tax-free. It does not require paying anything. The obligation comes from a collective agreement or the employment contract, and many agreements tie the allowance directly to the tax-exempt maximum — which is why the cut to €0.55 flowed straight into pay at the start of the year.

If an employer pays more than the maximum, the excess counts as taxable pay. Withholding and employer contributions apply to it exactly as they do to salary. Paying over the limit is not illegal; it is simply expensive.

A sole trader cannot pay themselves a per diem

A sole trader is not an employee of their own business, so they cannot pay themselves tax-exempt allowances. Instead they take an additional deduction in the tax return: the same €0.55 per kilometre for business driving, and an amount matching the per diem for trips that meet the same conditions. A mileage log is effectively mandatory here, because the deduction rests entirely on your own records.

A limited company is different. The owner-entrepreneur is employed by their own company, so the company can pay them mileage and per diem on exactly the same terms as any employee. This is one of the most tangible advantages of the Oy form in a small business: the allowances move from company to owner without tax or social contributions.