Mileage deduction as self-employed

How the self-employed mileage deduction works

When you're self-employed, there are a number of business-related expenses for which you can claim a tax deduction and therefore deduct from your taxable income. This includes driving in connection with work - but how exactly does driving deductions work as a self-employed person?

What is mileage deduction?

Mileage deduction, sometimes also called mileage allowance or kilometer allowance, is a deduction that self-employed people can get for driving for work purposes.

To claim mileage deductions as self-employed, you must drive your own car on white plates in connection with your business activities. However, there are certain requirements that must be met for you to benefit from the mileage deduction as self-employed, which you can read more about below.

Generally speaking, a deduction is an expense that you can deduct from your income so you pay less tax. In this case, a mileage deduction would cover expenses for driving your own private car for work purposes.

How does mileage deduction work and how much is it?

As a self-employed person, you must account for your mileage as deductionand the deduction rate can vary depending on whether you drive more or less than 20,000 km per year.

How much you can get in mileage deductions as self-employed

The rate for mileage deduction or mileage allowance is continuously adjusted by the government. You can read more about the rates here.

In 2022, the rate for the mileage deduction is DKK 3.51/km before 1/5 and DKK 3.70/km after 1/5 for driving less than 20,000 km/year.

If you drive more than 20,000 km/year, the rate for the mileage deduction before 1/5 will be 1.98 DKK/km and after 1/5 2.16 DKK/km.

Exceptionally this year, the Tax Council has chosen to raise the rates in the middle of 2022, which is why you can currently find two different rates for this year.

To calculate your mileage deduction, simply multiply the number of kilometers driven by the rate that applies to your driving.

Report mileage deductions as self-employed

Most accounting programs have a function or template called "Mileage deduction" where you can easily fill in the amount for the total mileage deduction - the number of kilometers multiplied by the rate.

Your mileage deduction is then booked and will appear as a deduction in your accounts and thus an amount that you do not have to pay tax on.

Keep track of your mileage allowance as self-employed

In order to claim mileage deductions as a self-employed person, you are required to keep a logbook that you fill in regularly. This is a book or place where you record the number of kilometers and other information about your driving, which is required in order to book the driving as a deduction.

You decide how this is done, but there are certain requirements for the content. The logbook must contain the following information:

• Name, address, CPR or CVR number
• Date of the drive
• Number of kilometers of the car at the start of the drive
• Number of kilometers of the car at the end of the drive
• Destination of the journey and any intermediate stops
• Total number of kilometers
• Mileage rate
• The actual calculation of the mileage allowance

Some choose to keep track of information electronically, for example in an excel sheet, while others prefer to have a physical logbook. Whatever you choose, it's just important that you record all the information related to driving in your business.

Other things to know about self-employed mileage deductions

In addition to driving in your own private car and remembering to keep a logbook to be eligible for the mileage deduction, it's also a good idea to check the Danish Tax Agency's rules for what counts as work-related driving or business-related driving.

For example, if you have a fixed office that you usually work from, the kilometers from your home to the office do not count towards the deduction, as this is considered private driving.

In general, commercial driving can be characterized as one of the following:

• Driving between different workplaces for the same employer or customer. However, if your workplace is at your private residence, driving from there to another workplace will not count.
• Driving within the same workplace in your own private car.
• Driving between home and work for a maximum of 60 days within 12 months (60-day rule)

By checking what the tax authorities define as business mileage, you can be sure that only the kilometers that are actually deductible are recorded in your mileage log.