An employer in Portugal can reimburse employees for using a personal vehicle for business journeys. An example of a business journey is a client visit.
There is a maximum mileage allowance per kilometer that the employer can reimburse tax free. This maximum amount depends on the type of vehicle and is defined by the Decree-Law no. 106/98 of 24 April, Ordinance no. 1553-D/2008, of 31 December, article 4, no. 4 of Decree-Law no. 137/2010, of 28 December and Circular DGCI 19/93, of 20 August. The last update to the maximum rates was in 2010.
| Type of transport | Per kilometer allowance |
|---|---|
| Car | €0,36 |
| Non-automotive motor vehicle | €0,14 |
| Public transport | €0,11 |
| Rental car (1 employee) | €0,34 (each) |
| Rental car (2 employees) | €0,14 (each) |
| Rental car (3 employees) | €0,11 (each) |
The employer can decide to pay a higher rate per kilometer. However, the part exceeding the defined rates will be considered part of the employee’s taxable income.