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Mileage Reimbursement in Sweden – A Guide for Overseas Employers

Your employees in Sweden may find it necessary to travel for work by car, and in that case, you will need to know how mileage reimbursement will work for both personal and company provided cars.

How will you know the tax -free reimbursement limits if you are new to Sweden?  What will be the reimbursement difference if the employee is using their own car rather than a company car?

Here is a brief overview of the rates for both company and personal car mileage rates, as well as the deductible amount if the employer does not reimburse the employee for mileage.

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Mileage Reimbursement Rates and Permitted Deductions in Sweden

The tax free mileage reimbursement rates and permitted employee deductions are as follows:

Employee’s Personal Car

SEK 18.50 per 10 kilometers is the allowable reimbursement rate, and also the deductible amount if there is no employer reimbursement.

Company Provided Car

The rate is SEK 6.50 per 10 kilometers if the car runs on diesel, or SEK 9.50 per 10 kilometers if it runs on fuels other than diesel (gasoline, electric, ethanol).

These amounts are the same for either reimbursement or deduction purposes.

Client Case

Context:

Our client in Sweden needed to confirm the allowed reimbursement rates, as well as the process for documenting the mileage and trips.  They were currently reimbursing at SEK 18.50 and requiring the employee to list all business trips separately in writing, with the destination, purpose and number of kilometers traveled.

Solution:

We advised them that their reimbursement rate was allowable, and that the trips needed to be strictly business, so the employee would have to keep a travel log to register the mileage and trip details to insure tax exemption under the Swedish rules.

Need More Information About Sweden?

Mileage reimbursement may not seem like a major compliance issue for your company, but if you were to reimburse more than the allowable rate then your employee could face unexpected taxation of for the excess amounts.  Avoiding these issues is why our clients use the GEO local employer of record to answer essential questions like:

How will you ensure that the employee’s trips are solely for business, and that the mileage reimbursement is within allowable limits?

If you don’t reimburse, how will your employee calculate their deduction for non-renumeration?

When our clients are employing overseas, we assist them with every part of payroll, immigration and compliance with local regulations.  We make international employment simple.

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