Mileage allowance in Bulgaria: everything you wanted to know

Mileage reimbursement in Bulgaria differs from the flat-rate systems common in other European countries (like Norway, Croatia, Czech Republic, Hungary and Luxembourg to name a few). Here, companies reimburse employees for the actual fuel cost incurred during business trips using their personal vehicles. Here's a breakdown of how it typically works:Who decides the rates? There isn't a single, nationally mandated mileage rate in Bulgaria. Instead, employers set the reimbursement rate within their company policies. This means you, as the employer, can determine the reimbursement rate for employees within the internal policies. Consider factors like:While there's no set rate, some employers often use rates established by international organisations (like the UN) as benchmarks when setting their internal policies. The UN rates range from $45 cents to $28 cents per mile (€0.45 to €0.26) per kilometre.What’s covered? Mileage allowance typically covers the following:What about tax implications?The tax treatment of mileage allowance depends on the amount offered by the company:

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:

When a

company provides a car to an employee

for both business and personal use, tax considerations come into play for both the company and the employee. Here's a breakdown:Company's tax on expenses (10%): the company is liable for a 10% tax on the expenses related to operating, maintaining, and repairing the car. This aims to capture the business benefit the company derives from providing the car.Employee's tax burden: the personal use of the company car is considered a taxable fringe benefit for the employee. To account for this, Bulgaria has a "weekend tax". As of January 2022, this tax is 3% (down from 10%) on the portion of car expenses allocated to the employee's private use.Taxable base: the tax applies to the calculated value of the private use. Companies can determine this using different methods:Note: The "weekend tax" essentially aims to ensure the employee pays tax on the benefit they receive from using the company car for personal needs.

The core purpose of mileage allowance in Bulgaria is to reimburse employees for:Some companies might extend their car reimbursement program beyond these core elements, depending on their policies:Always check your company's car reimbursement policy to understand the specific details of their mileage allowance programme, including the reimbursement rate per kilometre, any limitations on mileage or car types and tax implications of the allowance.

While mileage allowance helps with business travel expenses, it doesn't cover everything. Here's travel allowances that are not typically included:

The first step is keeping detailed records of your business trips. Some companies might ask for receipts for expenses like parking fees or tolls incurred during business travel. This is especially true if these expenses are not explicitly covered by the company policy. Hold on to any travel expense receipts to submit alongside your mileage allowance claim.Each company has a preferred method for handling mileage allowance claims. You might need to:

Planning a business trip to Bulgaria can be exciting, but juggling flights, hotels, and all that paperwork can quickly become stressful. TravelPerk is a favourite for businesses little and large looking to book

corporate flights

,

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car rentals

with access to a global travel inventory.Plus,

TravelPerk integrates with popular expense management tools

, including Airbase, Circula, and Payhawk. So, your employees can easily track and submit expenses incurred during their business trips, whether that’s in Bulgaria or somewhere else.Don't just ride shotgun on business trips—get in the driver’s seat with TravelPerk!