Country guide · Malta

One cent over 35, or one journey missing, and the whole reimbursement is a fringe benefit

Malta's rule removes the value of a mileage reimbursement only where every one of its conditions holds. Fail one and it is not the excess that is charged — it is all of it.

A ceiling, not a rate

0,35 € per kilometre is not an entitlement and not a figure anybody must pay. It is the maximum at which a per-kilometre reimbursement for business use of an employee's own car escapes fringe-benefit treatment, under the Fringe Benefits Rules, S.L. 123.55. The figure has stood since 1 January 2008, when Legal Notice 409 of 2007 replaced "15 cents" with "35 cents" in rule 18(5)(b).

What happens above it is the part worth getting right.

Three conditions, and they are joint

Rule 18(1) values the allowance at "the total amount so paid". Rule 18(5) removes that value — deems it to have none — only where all of the following hold:

• The travel is business use
• The reimbursement is "made by reference to the distance actually covered at a rate not exceeding 35 cents per kilometre"
• "the employer has logged the details to which any such reimbursement refers, including the purpose, destination and distance of each journey"

The Malta Tax and Customs Administration's own guidelines put the consequence in as many words: "If any one of these conditions is not met, the full reimbursement value will be considered as a fringe benefit."

Not the excess. One cent over 35, or one journey absent from the log, and the entire payment is in charge — valued under the car-reimbursement rules as if the conditions had never been met at all. It is an unusually sharp edge, and it cuts on the record as readily as on the rate.

Rule 47(1) gives those guidelines the same effect as the Rules themselves, so "only guidance" is not an available reading.

Readily available at any time

The guidelines add a fourth condition to the three in the Rule: the log must be "readily available at any time" for verification. That is a requirement about retrievability rather than about content — which is an odd thing to fail, and an easy one, if the record lives in a folder somebody has to be asked for.

What is not a "vehicle"

Rule 8 defines a vehicle as "any mechanically propelled vehicle constructed or adapted as a means of transport for individuals" and then removes five things: a vehicle over 3 500 kg, a motor cycle, a vehicle specially built or adapted for a severely disabled person, a van, and anything else the Commissioner specifies.

Two consequences, pointing opposite ways. The 35-cent safe harbour of r. 18(5) is for a vehicle, so a mileage payment for an employee's own van or motorcycle has none — the r. 45(1) fallback values a cash payment at "the amount so paid". And on the employer's side, rule 16 deems private use of those same categories to have no value.

A self-employed person has no per-kilometre figure anywhere

Established exhaustively: kilometre, kilometer, mileage, per km, cents per and motor vehicle return zero hits across the whole Income Tax Act. And the guidelines shut the door in terms — payments in kind to a self-employed person are taxable, but "the manner in which they are to be valued and accounted for is not regulated by the Fringe Benefits Rules."

What is left is art. 14(1) actual cost, with five-year straight-line wear and tear.

Six years, nine years, and a sanction that is not a fine

Six years for the employer's mileage log, and it is hard law rather than guidance — S.L. 123.55 rule 48(3): "All records referred to in this rule and all supporting documents… shall be kept for a period of not less than 6 years", with rule 48(2)(a) bringing in the rule 18(5)(c) log.

A self-employed person keeps their own records nine years, and the clock is per transaction, not per year — ITMA art. 19(5), "after the completion of the transactions, acts or operations to which they relate." Malta therefore requires records for four years longer than it can assess on them, since assessment is time-barred after five.

And the sanction is not money. Under art. 31(5)'s proviso, a person who fails without reasonable excuse to produce records within thirty days of a written notice "shall not be allowed to produce such records… before the Administrative Review Tribunal or in any Court of law."

A log produced late is not late. It is unusable.

Why an app rather than a notebook

Nothing above requires software; three fields per journey is not a demanding list. What software changes is the consequence of one gap, and Malta is the country where one gap is not proportional to itself.

What goes missing is never the distance. It is the journey nobody logged because it was short, and the purpose of a visit eight months ago — and either of those, on this rule, puts the whole year's reimbursement into charge rather than reducing it.

DriveHub records every drive in the background and asks afterwards which were business, so a journey is in the record whether or not anybody remembered it at the time. The report prints all three prescribed items for each row — the purpose in your own words, the destination and the distance — and the identity block names the employee the log belongs to.

A cash car allowance is a different animal and none of this applies to it: a flat sum rather than a per-kilometre payment is taxable as a fringe benefit at the allowance less 50 %, capped at €1 170 a year and aggregated across employers. It is not mileage, and a mileage log does not help with it.

This page states what the Rules themselves say, and names the rule so you can check. It is not tax advice. It can't account for your circumstances. Where money is involved, ask your accountant — and bring the log.