Latvia, a land of mediaeval towns, breathtaking coastlines, and a vibrant cultural scene, is a frequent destination for business travellers. But for finance managers, ensuring smooth business trips extends beyond just ensuring valid employee visas, booking flights and hotels. 

A crucial aspect to consider is mileage allowance and car reimbursements for employees using their personal vehicles.

In this guide, we answer all your questions so your employees cruise through Riga (and their expense reports) with ease.

How does mileage allowance in Latvia work?

While the Cabinet of Ministers governs financial regulations in Latvia, they do not set a fixed rate for mileage allowances. Unlike other European member states (Norway, Croatia, Lithuania, Hungary, and Luxembourg, to name a few), Latvia does not have a single flat rate for mileage allowance.

So, who decides the rate?

The reimbursement rate per kilometre is usually negotiated between the employer and the employee. This means you, as an employer, can establish a clear company policy for outsourced employees or negotiate rates within an individual employment contract.

What's covered?

The mileage allowance typically aims to compensate employees for the costs associated with business travel. Consider the following factors to ensure fair car reimbursement compensation:

• Fuel costs: reflect current fuel prices to ensure employees are fairly compensated for travel expenses
• Vehicle depreciation: consider the wear and tear on the employee's personal vehicle
• Vehicle type: electric vehicles have lower fuel costs so might require a different rate
• Frequent travel: offer higher rates for employees who frequently use their personal vehicles for business purposes
• Incentives: encourage environmentally friendly practices by offering rewards  for using electric or hybrid vehicles

What about taxes?

As long as the mileage allowance is reasonable, documented properly, and adheres to Latvian tax regulations, it's generally tax-free for the employee—not subject to social security contributions or income tax. 

To help with this, employers must maintain clear records and ensure that the rates set are justified based on actual travel expenses and avoid potential tax liabilities.

It's important to check your company's car reimbursement policy for specific details on what's included and excluded.

Our guide to corporate travel policies walks you through how to write a car allowance policy step-by-step.

What is not included in the mileage allowance for Latvia?

Mileage allowances aren't all-encompassing. Before you rev that engine, here's a detailed breakdown of what isn't included in a mileage allowance in Latvia: 

• The wear and tear on your car: mileage allowances focus on the variable costs of your specific trip, not the general wear and tear your car experiences over time. Think of it like reimbursing the extra gas you use for the business trip, not the oil changes your car needs anyway.
• The value of your car over time: the gradual decrease in your car's value due to age and use (depreciation) isn't factored into mileage reimbursements
• Personal use: mileage allowances are strictly for business travel. They won't cover your daily commute or weekend coffee runs
• Per diem: this is a daily allowance to help you manage your living expenses while travelling for business. Per diem typically covers food and incidentals (laundry, internet, tips), but the specifics can vary by company policy and location.
• Public transportation: mileage allowances reimburse car-related expenses, but wouldn't typically cover costs like bus tickets, train fares, or other forms of public transportation used during your trip
• International travel: if your business trip extends beyond Latvia, the mileage allowance might not apply, and separate policies for international travel should be checked with your employer

Want to protect your business and empower your employees when on the go? Create a clear corporate mileage reimbursement policy with our guide.

How can I file a mileage claim in Latvia?

Since mileage reimbursement rates and policies are set by individual companies in Latvia, there is no standard government form for this process.  However, here are some key things to consider to ensure a smooth reimbursement experience: 

• Consult company policies: this is the golden rule! Every company in Latvia has its own mileage reimbursement policy. This policy will outline all the specifics you need to know for filing a claim, including:
  • Deadlines for submitting claims (don't miss them!)
  • Acceptable forms of proof for your expenses (receipts are usually key)
  • The specific mileage reimbursement rate your company uses

• Gather your receipts: hold onto receipts for every business-related expense you incur during your trip. This includes fuel, tolls, parking fees, and anything else your employer's policy allows for reimbursement. Remember, receipts are your evidence for a successful claim.
• Fill out the required form: depending on your employer's policy, you might need to complete company-specific mileage claim form
• Don’t miss the deadline: every company sets deadlines for submitting mileage claims. Be sure to meet these deadlines to avoid any rejections and delays in reimbursement. 

Remember, you need to keep track of receipts and follow your company's specific rules for filing. But this can be confusing and time-consuming. 

A travel management company can provide a smooth and automated approval process. Managers, supervisors, and your finance team can all access the platform to review and approve expenses on-the-fly. This eliminates the need for paper trails and streamlines the entire reimbursement process for all stakeholders: from traveller to finance manager. 

Always consult your employer's guidelines for any additional requirements or specific processes.

Make managing business trips a breeze in Latvia, and beyond, with TravelPerk

Managing mileage allowances and employee travel logistics in Latvia, or anywhere else for that matter, can be time-consuming. From calculating travel expenses and managing expense reports to ensuring compliance with local policies—it can quickly become too much to handle.

The solution? TravelPerk.

TravelPerk’s intuitive platform makes it easy to book corporate flights and accommodations at negotiated rates so you get the best value for every business trip.

The platform also offers a powerful corporate travel tracking tool that acts like a real-time GPS for your team. This helps travel managers keep tabs on employee locations and trip details. It provides real-time updates and alerts directly to your phone, along with a 24/7 travel assistance team ready to help with any necessary changes to travel plans.

Let TravelPerk handle the backseat paperwork, so you can focus on the open road!

Frequently asked questions about travel allowance in Latvia

Which other countries don’t have a flat rate for mileage allowance like Latvia?

How do the mileage rates in Latvia compare to other European countries?