Keep an eye on the mileage allowance
The Corona crisis' work-from-home days and remittances mean that many have to adjust deductions for driving between home and work. Both employers and employees need to be aware.
When an employer reports employees' salaries to Skat/eIndkomst, the employee's commuting deduction (commonly known as mileage deduction) is usually automatically calculated and included in the annual statement - especially if employees generally report to the same place every day.
But during the lockdown of Denmark, many people have replaced the daily drive from home to work with the route between the coffee machine and the home office. This of course affects the mileage deduction, which must be corrected on the withholding tax return for 2020 and later on the annual tax return.
Automatic calculation of transportation deductions
Employers are obliged to report to the Tax Agency if employees have had home working days or have been sent home. Employers can fulfill this obligation by typing "No" next to "Automatic calculation of transportation deduction" in field 11 in eIncome.
If the field is marked "No", no transportation deduction is calculated for the entire income year. In this case, the employee must calculate and report the deduction themselves.
Employers who use payroll systems where reporting to Skat/eIndkomst is more or less automatic will achieve the same (no automatic calculation of transportation deductions) if they register the employee as having a changing workplace/varying workplace. This is done by checking this field in the payroll system under the employee's master information.
However, if field 11 is not marked with "No", a commuting deduction is automatically calculated on the employee's annual tax return for the entire income year.
The system at Skat calculates a commuting deduction for 18 days per month. This corresponds to 216 commuting days per year.
The employee is responsible for correct mileage deductions
It is possible to change the report if an error has occurred, but it is worth being aware that it is ultimately the employee who is responsible for ensuring that the information is correct.
If you ignore an incorrect transportation deduction on your pre-printed annual statement, you could be penalized for violating the Tax Control Act, so it's important that you check that everything is as it should be.
Employers may be subject to an administrative fine if the offense is deemed to be responsible and negligent.
More information
Here you can see the Danish Tax Agency's guidance on how to report in field 11.
If you have any questions or need advice and guidance on tax, VAT and duties, you are welcome to contact inforevision'stax department.
