Tax free mileage allowance in the Netherlands increased with retroactive effect from 1 January 2026
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Higher mileage allowance with retroactive effect: how does it work?
At the end of May 2026, it was announced that employers may grant their employees a higher tax‑free mileage allowance as from 1 January 2026: € 0.25 instead of € 0.23 per business kilometre.
What is striking is that this measure applies retroactively, even though the decision was only published at the end of May 2026 and the law has not yet been formally amended.
What is changing?
In anticipation of a legislative amendment, employers are permitted — contrary to the current statutory rules — to grant their employees a higher travel expense allowance. As a result, the maximum tax‑free mileage allowance is increased from € 0.23 to € 0.25 per kilometre.
Although this increase follows the sharp rise in fuel prices, it is not a temporary measure. The higher allowance is intended to be structural.
The approval applies:
- to business travel, including commuting between home and work;
- retroactively from 1 January 2026;
- without creating an obligation for employers, unless employment agreements stipulate that the employee is entitled to the maximum allowable tax‑free reimbursement.
The intention is for this amount to be formally incorporated into legislation at a later stage.
Timing of the announcement
What makes this measure unusual is not so much the increase itself, but the timing of its announcement. Employers were informed at the end of May 2026 that they may grant a higher allowance for travel expenses that were already reimbursed up to five months earlier at the lower maximum rate then in force.
This raises practical payroll questions, because:
- reimbursements for the first months of 2026 have often already been paid;
- payroll administrations have been closed and reported;
- employment conditions and reimbursement schemes were based on the maximum amount applicable at the time.
How does retroactive effect work in practice?
In this context, retroactive effect does not mean that employers are automatically required to correct or adjust past reimbursements. It simply means that an additional reimbursement may be granted.
In short:
- mileage reimbursed tax‑free up to € 0.23 per kilometre remains tax‑free;
- the difference up to € 0.25 may still be reimbursed tax‑free;
- only if the employer chooses to do so.
The approval therefore in most cases creates an option, not an obligation.
Want to know more?
Would you like to know more about expense reimbursements and how they relate to the Dutch Work‑Related Costs Scheme (Werkkostenregeling – WKR)? The WKR is a Dutch tax regime that allows employers to provide certain benefits and expense reimbursements to employees tax‑free within defined limits.
Read more:
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