Bongu! Calling everyone working in Malta. Are you an employee using your own car for business trips? Or an employer looking to manage your employee travel? Either way, you’ve come to the right place. In Malta, there is a system in place which allows employers to reimburse their employees (tax-free up to a certain amount) when using their own vehicle for business purposes. It might be for a client visit, a conference, or a team-building trip—whatever the reason, it must be strictly business-related. We’ve compiled all the information you need to understand the ins and outs of the Maltese mileage reimbursement system, so that you can travel easy and keep compliant.Seatbelt buckled? Let’s go.
How does mileage allowance work?
Mileage rates establish how much an employer is allowed to reimburse an employee—without it counting as taxable income. The amount is used to cover travel costs including fuel, insurance and road tax. The process differs from country to country. Each system has its own allowances, some have higher rates than others, some include motorbikes, others include daily trips to the office. It’s important to stay clued up on each country’s specific requirements. Take neighbouring
Italy
for example, which doesn’t use a flat rate but depends on municipality or make of car. In Malta, there are two ways employees can claim reimbursement when using a vehicle for work purposes. First is the mileage reimbursement rate, which applies a flat rate to the number of kilometres driven.The alternative is a cash car allowance, which is considered a (taxable) fringe benefit in Malta.Let’s look at the 2024 rates. What are the car reimbursement rates in Malta in 2024?
In Malta, the tax-exempt mileage allowance for employees is €0.35/ km.Where reimbursements are made to an employee for using their own car for business based on number of kilometres travelled, this subsidy is not considered a fringe benefit, if:If any one of these conditions is not met, the full reimbursement value will be considered as a fringe benefit and will be subject to the same valuation criteria as a car reimbursement.Now we’ve covered the Maltese car reimbursement rates, let’s take a look at the country’s fringe benefits.
- Payments only cover the business use element
- The log book is retained by the employer for at least 6 years
- The amount does not exceed state defined rates (i.e. €0.35 per kilometre)
- All reimbursable travel is recorded in a logbook readily available at any time for verification by the CFR
Fringe benefits in Malta
The Maltese tax agency defines fringe benefits as “any benefit provided by an employer to an employee.” Laid out in Article 4)1)b) of the If any of the requirements above are not met, the full cash allowance is taxable.
Income Tax Act
are the tax rules for fringe benefits, which apply to all gains or profits from an employer. This is regardless of whether they’re given in cash or in kind, or whether they’re received in terms of the normal conditions of the contract of service or by way of a special or ex gratia allowance.According to theMaltese government website
, if an employee receives a cash allowance for using their own car for business, it counts as a fringe benefit. The annual fringe benefit value is the cash allowance amount reduced by 50%, but the reduction cannot exceed €1,170 in any calendar year.Certain conditions apply for these reductions:- The employee must use their own car
- The allowance must be specified in a collective agreement or the employee’s contract
- The employee must not be a director, partner, or in a controlling position in the company or partnership
- The employee must not benefit from using another car owned by the employer
Reimbursement for fuel
Any reimbursement for fuel (including vouchers, credit cards, or something else) for an employee already receiving a car cash allowance is added to this amount. The total amount (allowance + reimbursement) is then subject to the same 50% reduction.
Multiple car cash allowances
If an employee receives multiple car cash allowances (from the same employer, associated employers, or separate employers), the 50% deduction (up to €1,170 as before) can only be applied once. This means it can only reduce one of the cash allowances, not each one separately.Here’s an example scenario:Regardless of how many car cash allowances an employee receives, the reduction benefit (50% or up to €1,170) can only be used once. Staying compliant is key.Good to know: if an employee who already receives a car cash allowance starts receiving another from a different employer, it is the employee’s responsibility to inform the new employer about the existing allowance.
- One employee has two, separate allowances:
- Allowance 1: €3,000 from Employer A
- Allowance 2: €2,000 from Employer B
- Applying the deduction:
- The employee can choose to apply the 50% deduction or the €1,170 maximum to only one of these allowances.
- If applied to Allowance 1 (€3,000), the fringe benefit would be €1,830 (€3,000 - €1,170).
- If applied to Allowance 2 (€2,000), the fringe benefit would be €830 (€2,000 - €1,170).
- Informing employers:
- If starting with Employer B, the employee must inform Employer B about the car cash allowance from Employer A. This ensures that both employers understand the single deduction limit and apply it correctly.
Streamline travel plans and ensure compliance with TravelPerk's business travel management platform
Understanding the complexities of the Malta vehicle reimbursement scheme may seem like a large onboarding, but it’s essential to do so in order to remain compliant—for employers and employees to get the most out of the benefit.To make your corporate travel even more efficient, you can connect your expense management solution to a specialised business travel management platform, like TravelPerk. You can set up your workflow in seconds, and save hours of work down the road—excuse the pun.Connecting your expense management tools has never been easier: with a selection of
third-party integrations
from Divvy to Pleo, TravelPerk integrates quickly and easily into your company’s existing tech stack, helping you level up your business travel management, while keeping people on the move.Ready to start making business trips that much simpler? We’re ready when you are.
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