You are normally allowed to claim expenses by the least expensive means of transportation. If you drive to work, your car expenses are not deductible unless specific conditions apply.
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The e-Service has opened 8.3.2018 for the taxpayers whose personal deadline date for filing a tax return is 3.4.2018 (self-employed traders and self-employed professionals). For other taxpayers, the opening date is at the end of March.
Public transport is usually the least expensive
Your total deductible commuting expenses are the result of a calculation that includes the number of days worked, the means of transportation, and its prices.
- You must apply the lowest commuter fares even if you in fact paid a higher fare or drove to work.
- If you could ride on more than just one form of public transportation – for example, you could commute either by train or by bus – you must sum up your expenses using the lowest available commuter fares.
- The cheapest fares are usually available when monthly unlimited-ride passes (including their extension prices for some areas) or regional or 44-day bus passes or train passes are used.
- Assuming you work all year, the number of months is normally 11, because you cannot claim expenses for vacations/holidays.
- Don't forget to adjust: flexiwork days when you work from home cannot be included, days when you are on job-rotation leave likewise, days on an assignment to a different location etc. You must claim your actual expenses that relate to the trips you in fact made.
Example: Antti lives in Juva but his job is located in Varkaus. He drives to work. His daily round-trip commute is 100 kilometres. Commuting by car cost him €6,600 per year, but Antti is not entitled to deduct as much. This is because he could commute by public transport between Juva and Varkaus.
He could buy the unlimited-fare 30-day commuter bus ticket. Because the tax rule is that you only can claim the expense that the least expensive method of transportation would cause, the calculation must be based on the unlimited-fare ticket although he didn't buy it and drove his car instead.
Antti had a summer break for the entire month of July: this means there were no expenses. The price of the ticket is €86.00 per month, so his deductible commuting equals 11 × €86.00 = €946.00.
For information on commuter fares, visit the matkahuolto.fi website and other sites, including the websites of municipalities and transport companies.
Deducting your car expenses
If you drive your car for the commute, you are entitled to deductions only if one of the following conditions is satisfied:
- There is no public transport available at all.
- One-way walking distance to the nearest bus stop or station is at least 3 kilometres. For example, if you have two kilometres to walk to the bus stop from your home and when you step off the bus you have another two kilometres to walk to your job, the one-way walking distance equals four kilometres in total.
- The waiting time (which does not mean the travel time) during your round-trip commute would be at least 2 hours.
- You leave your home — or come back home from work — between 00:00 and 05:00 (midnight and 5:00 am).
You should note that for tax purposes, the following reasons are not accepted for claiming any car expenses:
- It is faster to drive to work than to ride on public transport.
- You need the car during the day in order to perform some job duties.
- You drop off your children to daycare or school on your way to work.
How much can you claim when using other than public transportation?
If you don't ride public transportation for your commute, the calculation for the 2018 withholding as printed on the tax card (and for the tax return for 2017) is based on the following values:
- €0.24 per kilometre for driving your own car
- €0.19 per kilometre for driving a company car
- €0.15 per kilometre for riding a motorcycle
- €0.09 per kilometre for riding a moped
- €85.00 per year for riding a bicycle.
Example: Markku lives in Kangasala. He works all year in Orivesi where his job is located. Markku drives his car for the commute because there is no public transport service linking Kangasala to Orivesi that would suit his working hours. The daily round-trip distance is 80 kilometres.
Markku is entitled to car expenses for the entire year. Setting aside one month of vacations or holidays every year, the calculation must include 11 months. The average number of work days per month is 22.
As a result, Markku can deduct 11 months × 22 days × 80 Km × 24 cents = €4646,40 for the entire year.
Next year Markku has a flexiwork arrangement and he works from home two days per month. Then Markku can deduct 11 months × 20 days × 80 Km × 25 cents = €4,224 for the entire year.
Threshold of 750 euros in 2018
There is an amount defined as the individual taxpayer's own liability i.e. the threshold when the deduction starts to take effect. For tax year 2018 (and 2017), your own liability threshold is €750. The maximum deduction to be granted is €7,000. This means that you get the maximum deduction when you have paid €7,750 for travel or commuting in the course of the year. You must fill in the full amounts, do not subtract the own-liability amount yourself.
If you have had a period of unemployment in the course of the year, the threshold is adjusted downward. Each full month when you have received unemployment allowance (= 21.5 days) reduces it by €70. However, €140 is the lowest possible threshold. The Tax Administration calculates the deductions given to the unemployed: this means that also in this case, you must not subtract that amount from the expenses.
The expenses are subtracted from income, not from tax
Commuting expenses (travel expenses) reduce your taxable earned income. This way, they do not reduce your taxes directly. For example, if your total expenses amount to €4,400, it does not mean that you would get €4,400 as a tax refund. It only means that your taxable income is reduced by the accepted net deduction. The resulting refund depends on your tax rate: you can estimate the size of your refund by multiplying the deduction by the tax rate.
Example: Markku makes €40,000 a year. If he didn't have any other deductions than those granted automatically by the Tax Administration to all taxpayers who earn income, his tax rate would be 25% and he'd pay 25% × €40,000 = €10,000 every year in income tax.
However, his commuting expenses amount to €4,400 adjusted by the €750-threshold; resulting in €3,650 as deductible commuting expenses. His net taxable earned income equals €36,350 (€40,000 minus €3,650). Now his tax rate is 21% and he pays 21% × €40,000 = €8,400 in income tax.
This way, Markku's €4,400-commuting expense reduced his annual income tax by €1,600 (€10,000 minus €8,400). If he had wanted to get an estimate in advance, he could have multiplied the expense amount by the percentage printed on the tax card as the additional withholding rate (lisäprosentti; tilläggsprocent), which is 42% on his tax card (42% × €3,650 = €1,533).
Tax values of employer-provided commuter tickets pre-printed on the tax return
If you pay for the commute with an employer-provided ticket, you must report the expenses without subtracting the ticket value from them. Your employer informs the Tax Administration of the tickets provided to employees. This is taken into consideration in the assessment of your income and expenses.
Example: Pekka's employer gave him a commuter ticket worth €2,400. His commute by rail has cost him €320 per month, making total annual commuting expense reach €3,520 (11 months × €320).
His employer informs the Tax Administration that Pekka received an employer-provided benefit in the form of a commuter ticket worth €2,400. Under current tax rules, the resulting taxable income is €450. The remainder is tax-free. The Tax Administration performs the calculations in order to differentiate between the taxable income, the tax-free benefit and the deduction in your tax assessment, which in this example is: €3,520 – €1 950 = €1,570.
More information on employer-provided tickets (read chapter 9, only in Finnish and in Swedish).