Traveling on business as an employee in Germany? Then expenses per diem are the only way to tax-free reimburse you for your personal meals. What costs are covered as expenses per diem (or ‘Tagespauschale’ in German)? And what should you pay attention to? We give you a quick insight into these daily allowances within the German legislation.
The definition of expenses per diem.
While traveling for work as an employee in Germany, some costs you’ll make should be reimbursed by the company. However, these costs are expected to be covered per day, so the receipts don’t have to be claimed separately but are rather included in the “allowance”. This allowance, the so-called expense per diem is a specific amount of money, set by the German government, the employer gives an employee per day to cover living expenses when traveling for work. Per diems are the only way to reimburse you as an employee for personal meals tax-free while traveling on business.
What costs are covered by per diem?
The expenses per diem are a collection of a specific amount of money per day an employee is allowed to spend, without claiming all receipts separately.
- Personal meals: you may use per diems to cover for your additional meal costs when traveling on business.
- Overnight stays: Besides a daily rate that covers your meals, the option of a separate rate for overnight stays exists. Whilst using per diems for personal meals is the only tax-free reimbursement option, overnight stays on private locations can either be reimbursed on actual invoices or on per diems. Please check with your ultimate employer on their internal policy in this regard.
Other costs while traveling, like flights, transport to the airport, meals and other costs while meeting clients are not covered by per diem. These costs could be included in an expense claim.
The complexity of expenses per diem.
Per diems are quite complex, since the exact amount of the daily allowance can vary per country, city or region, all according to the individual estimated cost of living. These are updated annually and reflect the maximum amount to which you can be reimbursed tax-free. Please note that lower rates can be agreed upon, as per internal policy. Depending on the number of employees, this could result in a lot of administrative work for the employer.
Expenses per diem for employees and employers.
Apart from the administrative work, per diems have benefits for both employees and employers. Employees don’t have to keep documentation for every sandwich they buy while traveling. It eliminates a detailed expense report that needs receipts to document the amount spend on each day. They only have to stay within the limits of the amount per day. Expenses per diem are convenient for employers too since they have certainty and predictability in their travel expenses.
Current per diem rates 2020.
For the first time in five years, the rates for expenses per diem have changed. These are the lump sums for 2020 for traveling in Germany:
Between 8 and 24 hours (or day of arrival/departure)
Minimum duration of 24 hours
The categories for food allowances for business trips in Germany and abroad apply equally. However, the rates of reimbursement may differ significantly depending on the country you’re traveling to. Click here for the international per diem amounts.
Of course, there are exceptions..
When meals during periods of travel are offered at no cost, or when meals are provided as part of the reimbursable travel or lodging, a percentage needs to be deducted from the per diem on that specific day. An example of this could be that breakfast is included in the overnight stay, or a complimentary dinner is offered at a conference or you take out a client for a business lunch. If breakfast is included (in the hotel fee, for example) 20 percent of the flat rate will be removed for the day. If lunch or dinner is provided, 40 percent of the rate will be deducted. When all meals are provided, the allowance will be reduced to zero.
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