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Mileage Reimbursement in Spain – A Guide for Overseas Employers

Every country has different rules when it comes to reimbursing travel expenses, and if you are hiring employees in Spain it is important to learn how expenses are treated in that country.

How will you know the allowable mileage reimbursements if you are new to Spain?  What are the tax implications for your employee if you exceed the allowed reimbursement amount?

This quick overview can get you started, but as with many parts of foreign employment, at some point, you may need in-country experts to assist you to avoid unexpected tax liability.

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Using a Company Car in Spain

When you offer your employee use of a company car, it is not a taxable benefit as long as there is no personal use.  All travel related car expenses that are reimbursed (fuel, tolls, parking) are exempt from social security and income tax for the employee.  For this exemption, the employee must provide receipts or written invoices of the expenses.

Case Example: Employee Using Own Transportation in Spain

Issue:

We had a client with employees in Spain that needed to know how mileage reimbursement could be handled when they used their own vehicle.  The employer was currently offering a 0.37EUR per kilometer as reimbursement, and they wanted to know if that amount was tax free.

Solution:

After consulting with our local partner in Spain, we let them know that the allowable tax-free mileage reimbursement in Spain is 0.19EUR per kilometer.  The employer can reimburse more than that rate, but the excess will be included in compensation as a benefit subject to tax and social security.

Need More Information about Spain?

This is one example of how we can support your international employment.  Through our local employer of record and in country resources, we can help you get the information that you need and provide a complete employment solution when hiring overseas.

Let us help your employees:

Calculate the allowable tax-free mileage reimbursements

Ensure that all travel expenses have the required receipts or documentation

Include the taxable portion of reimbursements in payroll to maintain compliance

With expertise and local partners in most global markets, we make international employment simple in the areas of payroll, tax, immigration and employee benefits.

 Need more information about employing in a new country? Learn more about:

Looking to Hire an Employee in Spain? Get in touch.

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