In Denmark, employers are allowed to provide employees with per diems to reimburse expenses incurred during business trips. Per diem expenses in Denmark are calculated using daily-based rates.
Employees can receive tax-free daily allowances for accommodation, food, and minor expenses, up to set limits. These maximum amounts are updated annually and published by the Danish Customs and Tax Administration.
Conditions for tax-free per diems
Per diems are not treated as part of an employee’s salary and are therefore tax-free, provided the following conditions are met:
The employee must stay overnight away from home.
The employee must be away for at least 24 hours.
The employee cannot reasonably commute between their regular residence and the temporary work location, making it necessary to stay overnight.
The trip must be for business purposes. This includes cases where the employee:
Is required to be on call and must remain at or near the temporary workplace during the on-call period.
Must stay at a specific location in the evening due to work-related team-building activities.
Works long or irregular hours, which results in a short interval between the end of one workday and the start of the next.
The per diem is only tax-free up to a specified maximum amount.
Any reimbursements or daily allowances that do not meet these criteria, or that exceed the maximum tax-free limit, are considered taxable income.
Food and petty acquisitions allowance
The tax-free food allowance is granted on a daily basis and only applies after 24 hours of travel. If the trip exceeds 24 hours, a proportional allowance can be added for the extra hours.
For example, 40 hours of travel entitles the employee to one full daily rate plus a portion for the additional 16 hours. No allowance is paid for trips under 24 hours.
If meals are provided by the employer or included, for example, in hotel stays, the allowance must be reduced accordingly:
Breakfast - 15%
Lunch - 30%
Dinner - 30%
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.
For example, an employee is traveling from Copenhagen to Aarhus in Denmark 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. Denmark
Destination code. DEN-Aarhus
Currency. DKK
Full day. 256
First/Last day. 128
Breakfast. Lunch. Dinner. 38,4. 76,8. 76,8.
In this case, the system calculates the rates in the following way:
First/Last day: 256 DKK total will be calculated and included in the per diem expense amount for the first and last days of the two-day trip.
Breakfast: 38,4 DKK will be calculated and included in the per diem expense amount.
Lunch: 76,8 DKK will be calculated and included in the per diem expense amount.
Dinner: 76,8 DKK will be calculated and included in the per diem expense amount.
Trips abroad
When employees travel internationally, different rates apply. The per diem allowance depends on the specific destination country.
For example, an employee is traveling from Copenhagen, Denmark to Barcelona, Spain 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. Spain.
Destination code. ESP-Barcelona
Currency. DKK
Full day. 597
First/Last day. 597
Breakfast. Lunch. Dinner. 0. 0. 0.
In this case, the system calculates the rates in the following way:
Full day: 597 DKK will be calculated and included in the per diem expense amount for the full day from the trip.
First/Last day: 1194 DKK total will be calculated and included in the per diem expense amount for the first and last days of the three-day trip.
Breakfast: 0 DKK will be calculated for the per diem expense amount.
Lunch: 0 DKK will be calculated for the per diem expense amount.
Dinner: 0 DKK will be calculated for the per diem expense amount.