A company car is, in all its simplicity, a car that a company can make available to their employees if their work tasks involve many hours on the highways and country roads - or for the unlucky ones; the city center during rush hour. This also means that the employee can use their private car for work purposes and thus not be implicated by the same set of rules as for company cars - not to say that there aren't also a set of rules when the employee uses their private car as a company car. Below we'll tell you everything you and your employees need to know before you decide to offer a company car as part of your company's employee benefits or before you offer your employees to use their private car as a company car.
First, we need to establish what kind of car we're talking about and decide whether you want to offer your employees a company car or a "free car". Do you or your employees need to travel a lot around the Kingdom of Denmark, or do you have a long commute to and from work? Then you as a company can offer different solutions to best meet your employees' needs. First of all, you can offer them a company car that can and should only be used for work purposes. This means that the company car must be returned to the company at the end of the day - it can't be used to pick up a liter of milk from the local grocery store.
If you want to let your employees use the company car for private use, this is called a "free car". The employee must pay tax on this. The value of the "free car" must be reported to SKAT in connection with the calculation of the employee's salary. Read more atSKAT.dk.
A logbook serves as a record of the number of kilometers you have driven in your private car for work purposes. It can also be called a driving report or a mileage log, and SKAT has a number of requirements for those who use a logbook. We'll get to those later. First, we need to understand the difference between mileage allowance and mileage deduction.
Mileage allowance is a financial benefit that your employer can pay you tax-free if you use your private car for work purposes. This allowance will be transferred with your salary. If you work in a company where your employees drive back and forth to customer meetings on a daily basis, they can apply for reimbursement from you as their employer. This is primarily for gasoline expenses, but in some cases it can also cover insurance, road tax, etc.
It is a legal requirement that the employee has completed a logbook so that you can see exactly how far they have driven and what it has cost.
Requirements that must be met in order to receive mileage reimbursement:
The employee must be employed at a company where it is possible to receive salary and mileage allowance together
The income must be A-income and must not be B-income, as the employee is then not eligible for mileage allowance
The mileage allowance must reflect the actual number of kilometers you have driven for work purposes
This must be recorded in your logbook
What should a logbook contain?
Employee's full name
The employee's address
The employee's CPR or work number
The starting destination and the final destination
Number of kilometers
Date of the drive
A calculation of how much the employee has driven
The rate the employee has used
The purpose of the driving
As an employer, it is your responsibility to check that the above information is correct. Otherwise, this could result in a tax deduction for the employee and you as an employer. You approve the driver's logbook by signing or stamping it, as long as it is clear that you have read through the logbook.
Mileage deductions, on the other hand, are legally required to be paid to your employees, as they are entitled to reimbursement if they drive more than 24 kilometers to and from work - both in their own car and by public transport. You can only claim expenses for the days you actually drive to and from work, not on homework days, training days, sick days, during leave, etc. The overview of the total days spent on transportation must be provided by the employee in their advance statement. You can read more about the advance statement for mileage deductionshere.
Basically, it's not important whether the employee's logbook is done manually or electronically - both are equally good. It just needs to be reliable, consistent and completed daily, and also contain the correct calculations. The important thing is that the logbook meets the above requirements in order to be approved by SKAT.