Employees in Germany are entitled to per diems to compensate for the additional costs of meals and accommodation incurred during business trips. These per diems are not considered part of an employee’s regular salary and are therefore tax-free up to a legally specified limit. In Germany, per diem expenses are calculated using daily-based rates.
Deductions
If the employee receives a free meal, it must be deducted from the per diem allowance. For example, this applies if the hotel provides a complimentary breakfast. Here are the standard deduction rates for provided meals:
20% of the per diem must be deducted if breakfast is provided.
40% of the per diem must be deducted if lunch is provided.
40% of the per diem must be deducted if dinner is provided.
Specifics
The following guidelines outline important details and special cases related to per diem allowances, business travel durations, documentation requirements, and tax-free reimbursements in Germany.
If an employee undertakes multiple business trips within the same calendar day, the total hours from all trips can be combined.
If an employee has both a domestic and an international business trip on the same day, the per diem rate for the international trip applies to the entire duration of travel, even if the time spent abroad is less than 8 hours.
All expense invoices must be issued to the company’s corporate address. For invoices exceeding 150 EUR, they must also include the employer’s name, address, and the applicable VAT amount.
All original expense documents, such as receipts and invoices, must be stored, either physically or digitally, within the EU.
Domestic trips
For domestic business trips, per diem rates are determined by the length of the trip, which is measured by the total time the employee is away. It does not matter whether the trip begins from the employee’s home, primary workplace, or another work location.
For example, an employee is traveling from Berlin to Stuttgart in Germany and has filled in the following trip details:
In the Payhawk template, based on the data entered by the employee, the corresponding columns will be populated in the following way:
Destination. Germany
Destination code. DEU-Stuttgart
Currency. EUR
Half day. 14
First/Last day. 14
Full day. 28
Breakfast. Lunch. Dinner. 5,6. 11,2. 11,2.
In this case, the system calculates the rates in the following way:
Half day: 14 EUR will be calculated and included in the per diem expense amount, because this rate is applied if the employee stays in a city between 8 and 24 hours, and in the current example they've spent 12 hours in the destination location.
Breakfast: 5,6 EUR will be deducted for the breakfast from the per diem, because this expense has already been covered.
Lunch: 11,2 EUR will be calculated and included in the per diem expense amount.
Dinner: 11,2 EUR will be calculated and included in the per diem expense amount.
Trips abroad
When employees travel internationally, different regulations apply. The per diem allowance depends on the specific destination country.
The rates are defined in a regulation based on the German Income Tax Act.
For example, an employee is traveling from Berlin, Germany to London, the UK and has filled in the following trip details:
In the Payhawk template, based on the data entered by the employee, the corresponding columns will be populated in the following way:
Destination. United Kingdom
Destination code. GBR-London
Currency. EUR
Half day. 44
First/Last day. 44
Full day. 66
Breakfast. Lunch. Dinner. 13,2. 26,4. 26,4.
In this case, the system calculates the rates in the following way:
First/Last day: 88 EUR total will be calculated and included in the per diem expense amount for the first and last day of the trip - July 16 and July 17, respectively.
Breakfast: 13,2 EUR will be calculated and included in the per diem expense amount.
Lunch: 26,4 EUR will be calculated and included in the per diem expense amount.
Dinner: 26,4 EUR will be calculated and included in the per diem expense amount.