Mileage allowance and car reimbursements in Portugal: the lowdown

In Portugal, as in many other European countries, employers can provide their employees with reimbursements if using a private car to make business journeys. Any trip made for business purposes counts, from client visits to conference travel.

Whether you’re based in Portugal or just visiting, this article will give you a full rundown of the Portuguese system of mileage allowance payments, from fuel rates to type of vehicle permitted.

Seatbelt buckled? Pastel de nata on board? Let’s go.

How does mileage allowance work in Portugal?

So, first things first. What is mileage allowance? It’s the amount employees can claim to cover the cost of fuel, insurance, road tax, and the general wear and tear of their own car (specifically not a company car).

Journeys that qualify might be taken for business trips and purposes, excluding commuting allowances and personal journeys. The amount paid will be tax deductible for the business, as long as it doesn’t exceed government guidelines.

It’s a win-win for employees and employers alike: car mileage allowance benefits workers who might pay for travel expenses out of their own pocket, and helps businesses enjoy tax relief on company journeys.

Mileage reporting is an essential tool for companies that have a fleet of vehicles or whose employees use their own vehicles for work-related purposes. It provides a number of benefits, from reducing company travel expenses to increasing staff safety.

Approved mileage often depends on vehicle used and distance covered, as rates and conditions vary from country to country. To get the most out of the mileage reimbursement system, it’s important for employees and employers to understand the different rates applied in each country.

Let’s move onto mileage allowance rates in Portugal.

What are the mileage allowance rates in Portugal in 2024?

As of 2024, an employee can reimburse an employee travelling in Portugal up to 0.40€ /km, up from 0.36€ /km the previous year. This is a flat rate for employee-owned cars. This information is published annually by Portugal's tax authority, Autoridade Tributária e Aduaneira.

Type of transport

Per kilometre allowance from 2024 onwards

Own vehicle

0.40€ /km

Public transport

0.11€ /km

Non-car motor vehicle

0.14€ /km

Rental vehicle (1 employee)

0.34€ /km

Rental vehicle (2 employees)

0.14€ /km each

Rental vehicle (3+ employees)

0.11€ /km each

These rates are fixed for the public sector, but the private sector largely uses them as a reference. In other words, these defined limits are only the maximum tax-exempt limits for private companies: an employer can therefore choose to pay a higher rate per kilometre, but the amount exceeding the defined rates will be considered part of the employee’s taxable income.

It’s also good to know that in Portugal, the benefit obtained from the private use of a company car is only liable for tax if there is a written agreement on the subject.

The law defines a maximum value for subsistence allowances for each trip. Again, while fixed for the public sector, these values are a non-binding reference for the private sector.

In Portuguese territory:

General public sector workers - €50.20

Administrators, managers, members of the Government and senior staff - €69.19

Abroad:

General public sector workers - €89.35

Administrators, managers, members of the Government and senior staff - €100.24

The Portuguese rates are generous compared to neighbouring Spain, which currently sits at 0.26€ /km. Recently increased from 0.36€ /km, Portugal’s tax-free mileage rates are some of the highest in Europe, up there with Austria (0.42€ /km) and Italy (0.42€ /km).

Assembling your corporate travel policies? Check out our guide to writing a car allowance policy.

Per diem allowances in Portugal for 2024

In addition to business mileage remuneration, employers can also pay their employees a daily (per diem) travel allowance covering costs including accommodation and meals. There are two types:

Daily travel, if the distance covered is greater than 20 kilometres, counting from the usual place of work

Travelling over successive days, where the minimum distance required for the reimbursement of expenses is 50 kilometres

As with mileage allowance, private companies can use different values to those defined for the public sector. However, if the reimbursement exceeds the referenced values, a company becomes subject to personal income tax (IRS).

The amount per day for daily trips is:

25%, if the trip takes place (in full or in part) between 1pm and 2pm or between 8pm and 9pm

50%, if the trip involves accommodation

For trips of successive days, the percentages to be paid by the employer are different depending on the day:

On the day of departure:

100%, if the departure takes place before 1pm

75%, if the employee starts travelling between 1pm and 9pm

50%, if the employee leaves after 9pm

On the day of arrival the prices are:

0% if the employee arrives by 1pm

25% if the employee arrives between 1pm and 8pm

50% if the employee after 8pm

On the remaining days, the bonus is paid in full (100%).

The same applies to employees travelling from another country to Portugal. For example, if an employee is travelling to Lisbon for work from the United Kingdom, their employers can reimburse any actual costs up to £74.50, plus room rate, which is £106.50.

Have a look at the HMRC page to see how rates vary from Oporto to Portimão.

Portugal’s guidelines for self-employed workers

A common question concerns tax-deductible travel reimbursements for the self-employed. Well, if you’re working as a freelancer in Portugal, you’ll have to choose between two accounting schemes: simplified and organised.

Determining your taxable income and resulting tax liability, this accounting option will impact costs for your self-employment, from internet to meals and even travel expenses.

In Portugal, you can claim car-related expenses, including fuel costs, when used for professional purposes, if under organised accounting. This is the case in many European countries, including France and Germany, but in other countries such as Finland, it’s up to the company to determine how much they pay.

It’s vital for corporate travellers and digital nomads to know what’s what, to avoid the annual headache at the end of the tax year.

What is not included in the mileage allowance?

It’s important to remember that not all journeys carried out during an employee’s business hours will be covered by Portugal’s business mileage allowance. The most common types of trip which are not included in an employee’s travelling allowance are:

Personal trips that are not directly associated with the employee’s role, even if an aspect of work is included such as making calls or running errands

Commutes, or journeys between an employee’s home and their normal place of work

Parking fees: parking costs during your trip typically fall outside the mileage rate

Tolls: any tolls you might pay for while travelling for business are usually separate from the mileage reimbursements

How can I file a mileage allowance claim in Portugal?

In the majority of European countries (including Denmark, France and Sweden), companies handle their mileage allowances internally. This means that you usually don’t have to fill out a specific government form. However, it’s still advisable to check government guidelines regularly, as these are updated on an annual basis.

When a business compensates their employees for travel or accommodation expenses, they must do so in one of two ways:

In advance

Within 30 days after the employee has presented their proof of expenses

Proof of expenses take the form of invoices, referencing the company’s respective taxpayer identification number, or Número de Identificação Fiscal (NIF).

Streamline travel expenses with TravelPerk's business travel management platform

Whether it’s Portugal, Denmark, Sweden or somewhere outside Europe you’re heading to, keeping track of travel expenses is key. One of the easiest, most efficient ways to keep a hand on it is to connect your expense management solution to a dedicated business travel management platform—like TravelPerk.

With an array of third-party integration s from Divvy to Expensify, TravelPerk can take your business travel management to the next level by keeping your expenses all in one place and a tight grip on your company’s travel budget.

Most important of all, it avoids headaches on both sides of the corporate travel process, ensuring that employers and employees alike can enjoy a seamless travel experience.

Mileage allowance and car reimbursements in Portugal: the lowdown (2024)

How does mileage allowance work in Portugal?

What are the mileage allowance rates in Portugal in 2024?

Per diem allowances in Portugal for 2024

Portugal’s guidelines for self-employed workers

What is not included in the mileage allowance?

How can I file a mileage allowance claim in Portugal?

Streamline travel expenses with TravelPerk's business travel management platform

See how to save your company time and money on business travel.

Make business travel simpler. Forever.

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Per diem rates in Spain: a brief guide (2024)

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