Do you know what the mileage rate is for Spanish companies? This is a very common question among companies and workers who have to travel for work, as they subsequently have to account for them. ¡Price of mileage!
The price of mileage is an expense that depends both on the collective bargaining agreement and the company’s labour policy. Each company is free to follow its own criteria.
That’s why in this article we’re going to clear up any doubts you may have about mileage rates. Read on!
What is the mileage rate?
A mileage rate is the rate that is set to cover the cost of a vehicle for business trips. Employees should be informed of these rates and other travel-related expenses. The best way to do this is to establish an expense policy, taking into account the limits set by the tax office for deductible expenses.
The price of mileage includes not only mileage as such, but also wear and tear on vehicle parts, oil costs, car insurance, road or registration taxes, tolls and parking fees, etc. On the other hand, not all costs can be included or fall under this cost policy. For example, if an employee gets a traffic ticket, he or she will be responsible for the payment and not the company, even if the trip was for work-related reasons.
These rates and expenses are created to compensate employees who travel for work-related reasons. Every year, companies must review this policy, as the Inland Revenue re-establishes the maximum and minimum that a company can charge for mileage. ¿Price of mileage?
So how do we calculate the mileage rate?
As we have just mentioned, the price is not fixed and each company can decide the price of mileage according to its expense policy. Thus, we will find companies that pay up to 1 €/km and others that adjust to the minimum of 0.20 €/km established for 2020. However, another factor to take into account when establishing the price of mileage for our company is taxation: when the limit of €0.19 per kilometre is exceeded, these travel expenses or business trips are taxed at IRPF (personal income tax).
What are the possible management methods? One possible model is to draw up an expense sheet for each employee and then have the employee verify it with the company with each of the receipts and supporting documents. However, this method has a disadvantage, which is that the expenses are not reimbursed until after the trip, so that the employee must initially use his or her own money for the trip.
Another method is to set a fixed amount of money that each employee can use for business travel, which is quicker to implement, but can also lead to a lack of attention to the amount of money being spent and overspending.
Finally, it is true that modifications and systems can be made that bring together both methods, establishing a value of money that can be, but at the same time requesting receipts and supporting documents from employees for business travel expenses such as mileage rates. ¡Price of mileage!
Keys to good mileage rate management
Accounting and recording expenses manually can be complicated or tedious, not to mention that errors are more likely to be made when entering expenses. Some common mistakes are duplicate expenses, miscalculated mileage prices, blurred receipts or invoices… ¡Price of mileage!
Therefore, having an expense management software makes the task much easier because it is a simple and quick way to control expenses; establishing a price per kilometre and favouring the taking of important decisions.
Implementing a well-defined travel expenses policy, as we are observing, makes the management processes much easier. What information should this document contain? It is essential that it contains the method of payment and justification of these expenses, the types of per diems available, mileage management, updates, etc.
- The proper management of mileage rates has multiple benefits for the organisation, such as:
- Saving time for employees by digitising processes.
- Prevention of internal fraud and improvement in the management of the department as it is approved by the Tax Agency.
- Greater sustainability by digitising this process, thus avoiding the use of paper and helping to protect the environment.
- Finally, efficiency by integrating new systems and software that boost the company and help it to be more competitive in its market.
Xpendor, the solution for managing mileage expenses
A digital tool or solution such as Xpendor optimises and facilitates the management of business travel expenses such as mileage. How does it work? It’s very simple, the employee only has to enter the app and select Mileage. Once inside, they decide whether to register a cost for their own vehicle or a company vehicle.
In the case of own vehicle, the kilometres are registered and the app calculates the price of the mileage depending on the variables that have been previously established. On the other hand, if it is a company vehicle, the application will display a list of vehicles and you simply select the one that has been used and register it. In this way, everything is accounted for and processed instantly and without errors.
Not forgetting that this solution is approved by the Tax Agency, so it is legally valid. In short, if you want to know everything and more about the price of mileage, through the business expenses management app you will be able to access real and updated reports that will help you manage and optimise your company’s expenses policy and management.
Do you have any questions about our Xpendor app? If your company does not yet have a digital solution, call us on 919 917 009 or leave us your details here and we will call you back. ¡Price of mileage!