Many light entrepreneurs have to travel long distances using their own car. If you want to receive tax-exempt reimbursements for incurred travel expenses or deduct them in your taxation, you must keep a driving logbook. We will tell you more about the use and role of the driving logbook in taxation.
What is a driving logbook?
A driving logbook is an important tool for light entrepreneurs, which makes it easy to monitor the time spent driving, the length of trips, and expenses. A driving logbook is particularly important in terms of taxation, as it allows tax-exempt expense allowances or the deduction of travel expenses in taxation.
The logbook can be kept on paper or electronically, for example, with a smartphone app. In both cases, it consists of the date, the place and time of departure and arrival, the distance travelled, the vehicle used and the possible itinerary. In addition, the purpose of the trip, such as a customer meeting and the name of the customer, must also be recorded in the logbook.
Driving logbook in taxation
It is important to keep a driving logbook in a timely and complete manner. This means that all trips must be recorded immediately after they have taken place, and that all necessary information must be fully recorded. This ensures that the driving logbook is also reliable evidence in the eyes of the Tax Administration.
Tax-exempt expense allowances
As a light entrepreneur, you are entitled to tax-exempt expense allowances only if they are invoiced separately and are directly related to your work. You can take advantage of tax-exempt expense allowances directly in connection with salary payments by invoicing the travel expenses to the customer on a separate line.
The amount of tax-exempt expense allowances is defined in the annual decision of the Tax Administration. In 2023, the maximum amount of tax-exempt kilometre allowance is 53 cents per kilometre in business travel when driving your own car. The amount is larger, for example, when towing a trailer or driving on forest roads under the conditions determined by the Tax Administration.
Travel expenses are expenses incurred during a business trip, such as accommodation expenses or travel tickets. If the expenses are directly related to the performance of duties and they are invoiced to the customer separately, they are reimbursable expenses. Depending on your occupation and the length of your business trip, you may also be entitled to per diem allowances or meal allowances.
If the expenses are not invoiced separately to the customer, they cannot be reimbursed to the light entrepreneur as tax-exempt expense allowances. However, in this situation, you can deduct the expenses incurred as expenses for the production of income on your own tax return in accordance with the Tax Administration’s instructions.
If you do not invoice your travel expenses separately to your customer, you will not be able to take advantage of tax-exempt expense allowances as a light entrepreneur. However, you can claim kilometre deductions as income production expenses on your personal tax return.
Please note that the expenses for the production of income have a deductible of EUR 750. Expenses for the production of income exceeding this amount reduce your taxation.
The amount of the tax deduction is EUR 0.30 per kilometre driven. For example, if a light entrepreneur drives 20,000 kilometres per year for business purposes, they can deduct EUR 6,000 in taxation.
What is recorded in the driving logbook?
The driving logbook is free-form, but in practice, at least the following information should be entered for each work-related trip:
- Driving start and end time
- Points of departure and arrival
- Length of the trip
- Purpose of the trip
- Odometer reading at the beginning and end of the trip
- Possible itinerary
Does a light entrepreneur need to keep a driving logbook?
In conclusion, the driving logbook is an important tool for light entrepreneurs. It helps to keep track of travel time and expenses and enables tax deductions and tax-exempt expense allowances. However, light entrepreneurs must remember that the driving logbook must be filled in carefully so that the proportion of work-related driving can be verified. If you want to take advantage of tax-exempt expense allowances as a light entrepreneur, you must invoice your customer for travel expenses separately.
Here are some useful links:
Light entrepreneur’s kilometre allowance
Tax return & tax deductions: match made in heaven – tips for checking a light entrepreneur’s tax return