Vehicle Expenses for Contractors
If you use a car for business, you can deduct vehicle expenses in your skattframtal — but Skatturinn requires proper documentation. Estimated monthly deductions without logs are rejected. This guide explains the accepted methods.
Two accepted deduction methods
Skatturinn accepts two methods for vehicle expense deductions:
- Mileage method (akstursferill): log business kilometres and deduct at the official rate per km
- Actual cost method: deduct the business-use percentage of fuel, insurance, maintenance, and depreciation
Choose one method and use it consistently. Mixing methods for the same vehicle is not allowed.
Mileage log requirements
A valid mileage log (akstursferill) must record for each business trip:
- Date
- Destination and purpose
- Kilometres driven
- Odometer reading (start and end)
Keep logs contemporaneously — reconstructing trips months later is not accepted. Fustle provides a digital mileage log tool.
Business vs personal use
Only business use is deductible. Commuting from home to a regular workplace is generally personal, but travel between client sites is business.
If you use the actual cost method, determine your business-use percentage (e.g., 60% business, 40% personal) and apply it to all vehicle costs.
What Skatturinn rejects
These practices are not accepted and can trigger back taxes and penalties:
- Flat monthly car expense estimates without documentation
- Claiming 100% of vehicle costs when the car is also used personally
- No mileage log or incomplete records
- Deducting lease payments for a personal vehicle without business-use proof
Fustle helps you maintain compliant records that withstand audit.
Related guides
Official resources
Frequently asked questions
Can I deduct my entire car payment?
Only the business-use portion. If your car is 60% business use, deduct 60% of lease, fuel, insurance, and maintenance costs.
Is commuting deductible?
Generally no. Travel between client locations during the workday is deductible, but home-to-office commuting is personal.
Does Fustle have a mileage tracker?
Yes. Log business trips in Fustle and export your mileage summary for skattframtal at year end.
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