How to deduct your transportation costs from home to work in your taxable income
In this blog, we discuss how to deduct your transportation costs from home to work from your taxable income.
Relevant tax rates used for this blog
|Year||Rate for 0-24 km roundtrip per day||Rate for 25-120 km roundtrip per day||Rate for 120+ km roundtrip per day|
|2021||0 DKK||1,90 DKK per km||0,95 DKK per km|
|2022||0 DKK||2,16 DKK per km||1,08 DKK per km|
How to determine if you are eligible for a tax deduction?
To determine whether or not you can deduct your transportation from your home to your work in your personal taxable income (this type of deduction is called “befordringsfradrag” in danish), then you need to calculate the total amount of kilometers, that you drive every day from your home to your company.
If this roundtrip distance is 24 kilometres or less, then no tax deduction is given.
You must exceed 24 kilometres roundtrip per day, in order to get a tax deduction – in other words, the distance from your home to your work must be more than 12 kilometres one-way.
If your roundtrip distance is more than 24 kilometres, then the tax deduction given is 2,16 DKK (2022) per kilometre for the 25th kilometre and up to 120 kilometres.
If you exceed 120 kilometres per day, then the tax deduction in 2022 drops to 1,08 DKK (2022) per kilometre, for each kilometre driven above the first 120 kilometres.
You can use an app
One way to document the number of driven kilometres is to download an app to your phone so that you can show the tax office (in case of questions), how many days you actually made the trip from your home to your company.
You can also write it down on paper, but the apps can be much more convenient.
This app here is quite popular in Denmark:
What if you drive 2 times per day to the company?
If you drive 2 times per day from your home to the company, you may be eligible for a double tax deduction, but again the documentation must be in order.
This double tax deduction may be relevant to those, who f.ex. own a restaurant and drive in the morning to open the restaurant, and again in the evening to close it.
Example on how to calculate the tax deduction
A person drives 40 kilometers from his home to his company and home.
It gives a total of 80 kilometers round-trip per day.
For the first 24 kilometres, no tax deduction is given.
So from the 80 kilomters we remove the 24 kilometers (which are not tax-deductible) = 80 kilometers – 24 kilometers = 56 kilometers
He gets 2,16 DKK per kilometre (2022 rate) in tax deduction, so his total deduction per day is 56 kilometres * 2,16 DKK = 120,96 DKK per day in tax deduction.
This amount is to be declared on the annual tax return.
Do you drive to clients in your private car for your company during working hours?
If you drive to clients in your own private car during working hours then you have to follow a different set of rules.
These rules will give you a much higher reimbursement of transportation costs.
Do you drive to clients in a company car?
If you drive to clients in a company car where the company is paying for the costs you cannot claim any tax deductions on your personal income tax return.