How does mileage allowance work in Bulgaria in 2024?
- Industry standards: mileage rates might differ between industries. For example, sales representatives who drive extensively might receive a higher rate than office workers making occasional business trips
- Vehicle type: companies might offer different rates depending on the type of vehicle used (car or motor vehicle)
- Company budget: the overall budget for employee travel can influence the set mileage rate
- Fuel costs: this is the primary expense reimbursed, aiming to compensate employees for the cost of gasoline, diesel, or other fuel used during authorised business trips
- Wear and tear: business travel puts extra strain on an employee's car. The allowance accounts for this increased wear and tear due to business use.
- Below a threshold (set by the employer): the allowance is generally tax-free for the employee
- Above the threshold: the portion exceeding the threshold may be considered taxable income for the employee and subject to social security contributions
Car use for business purposes in Bulgaria involves two main scenarios: company cars and employee-owned vehicles with car reimbursement programmes. Let's look at the tax implications for both:
Company cars
- Tracking hours: the company tracks the number of hours the employee uses the car for personal reasons
- Mileage tracking: the company keeps records of mileage driven for personal trips compared to business travel
- Fixed percentage: a predetermined percentage of total car expenses is considered the private use portion and taxed accordingly
Private cars and motor vehicle
- Fuel costs: covering the expense of fuel used for business trips
- Wear and tear: accounting for the increased wear and tear on the employee's car due to business use
- Maintenance costs: this could extend beyond just oil changes to cover routine maintenance like tyre rotations or air filter replacements, depending on the policy
- Parking fees (limited): as mentioned earlier, some companies might offer a limited allowance for business-related parking costs, especially in urban areas
- Tolls and fees: in some cases, companies might reimburse employees for tolls and other unavoidable fees incurred during authorised business trips (e.g., bridge tolls and road use charges)
- Depreciation: a small allowance to account for the decrease in the car's value due to business use. This is less common but can be offered by some companies
What is not included in the mileage allowance?
- Personal travel: mileage allowance is meant for authorised business trips, not commutes to and from work or personal errands
- Parking fees (generally): most companies don't reimburse for general parking expenses, especially for personal errands or all-day parking during work hours. However, some might offer a limited allowance for business-related parking, particularly in urban areas.
- Tolls and fees (unless specified): tolls, bridge fees, and other road charges aren't always covered within the base mileage allowance. Some companies might offer separate reimbursement for these expenses, depending on their policy.
- Daily allowance or subsistence allowance: this aims to cover basic living expenses like meals and incidental costs incurred during the work trip. There are two main categories for daily allowances in Bulgaria:
Daily Allowance (BGN)
Daily Allowance (EUR)
Overnight stay (secondment)
BGN 40
€21
No overnight stay (daily business trip)
BGN 20
€10.25
How can I file a mileage allowance claim in Bulgaria?
- Complete a dedicated company form: this could be a paper form or an online form accessible through a company portal
- Submit an electronic record: Some companies might have online systems where you can directly enter your travel details
- Attach scanned receipts: if your company requires receipts for specific expenses, ensure you scan and attach them to your electronic claim or include them with your paper form
- Track expenses in your expense management platform: set up a digital system to help your employees track their expenses on business trips.
- Establish a process: determining whether reimbursement will be added directly to payroll or handled as a separate expense reimbursement
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Frequently asked questions about mileage allowance in Bulgaria
How does Bulgaria's mileage allowance compare to other European countries?
Is there a tax law for exceeding the mileage allowance in Bulgaria?
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