Travel Expense Reimbursement for Employees from a Tax Perspective in Germany (2024)

Travel expense reimbursement is a key topic in payroll management, particularly due to its tax implications. Understanding the correct reimbursement methods and limits is crucial for employers to ensure compliance with tax laws and optimize benefits for both the company and employees.

Types of Travel Expenses

1. Transportation Costs:

  • Public Transportation: Reimbursements for costs incurred using public transport are tax-free if supported by receipts (§3 Nr. 16 EStG).
  • Private Vehicle Use: Employers can reimburse employees at a rate of €0.30 per kilometer for business travel using their private vehicles (§9 Abs. 1 Nr. 4 EStG).

2. Accommodation Expenses:

  • Employers can reimburse actual accommodation costs tax-free if these expenses are documented with receipts. This is compliant with the guidelines for tax-deductible business expenses.

3. Per Diems for Meals:

  • Domestic Travel: For trips within Germany, the per diem rates are €14 for trips lasting between 8 and 24 hours, and €28 for trips lasting more than 24 hours (§4 Abs. 5 Nr. 5 EStG, BMF-Schreiben from 21.11.2023, BStBl I S. 2076).
  • International Travel: Per diem rates vary by country and are published annually by the Federal Ministry of Finance. For example, the per diem for France is €58 per day for Paris and surrounding departments, while it is €53 for other regions of France (BMF-Schreiben, 2023).

4. Incidental Expenses:

  • Minor incidental expenses such as tips and telephone calls can be reimbursed tax-free up to specified limits, as defined by the employer’s travel policy.

Reimbursement Methods

1. Actual Cost Reimbursement:

  • Employees submit receipts for all incurred expenses, and the employer reimburses the exact amounts. This method requires meticulous record-keeping and ensures full tax deductibility for the employer.

2. Per Diem Allowances:

  • Employers may provide fixed daily allowances for meals and incidental expenses. These allowances are tax-free up to the prescribed limits (§3 Nr. 16 EStG), simplifying the administration process.

Maximum Allowable Amounts

1. Kilometer Allowance:

  • The maximum tax-free reimbursement rate for using a private vehicle is €0.30 per kilometer.

2. Meal Allowances:

  • Domestic: €14 for 8-24 hours, €28 for more than 24 hours.
  • International: Varies by country; for instance, €58 in Paris and €53 in other parts of France.

3. Accommodation Costs:

  • Reimbursements are tax-free if they do not exceed the actual documented expenses.

Double Housekeeping (Doppelte Haushaltsführung) and Family Home Travel (Familienheimfahrten)

1. Double Housekeeping: 

  • If an employee maintains a second household for work reasons, the costs can be reimbursed tax-free. This includes rent, utilities, and commuting expenses between the primary and secondary residence (§9 Abs. 1 Nr. 5 EStG).
  • The tax-free reimbursement is subject to certain conditions, such as the necessity of the second household due to job location and significant distance from the primary residence.

2. Family Home Travel:

  • Employees can receive tax-free reimbursements for travel expenses incurred for weekly trips home. The tax-free amount for using a private vehicle is also €0.30 per kilometer (§9 Abs. 1 Nr. 5 EStG).
  • Public transportation costs can be reimbursed tax-free if documented by receipts.

Company Car and Travel Expenses

1. Use of Company Car:

  • If an employee uses a company car for business trips, the employer can cover all related expenses (fuel, maintenance, insurance) tax-free.
  • For personal use of a company car, a monetary benefit must be calculated and taxed accordingly. The commonly used method is the 1% rule, where 1% of the car’s list price is added to the employee’s taxable income per month (§6 Abs. 1 Nr. 4 EStG).

2. Mixed Use:

  • For mixed-use (business and personal), the employer must differentiate between business and personal use to determine the tax-free reimbursement portion accurately.
  • Employees should maintain a detailed logbook to substantiate the business use percentage.

Tax Compliance and Documentation

Employers must maintain detailed records of all reimbursed travel expenses, including receipts and travel itineraries, to substantiate the tax-free treatment of these reimbursements. Proper documentation is essential for compliance with tax regulations.

Legal Provisions and References

  • Income Tax Act (Einkommensteuergesetz – EStG):
  • § 3 Nr. 16 EStG: Tax-free reimbursement for transportation and accommodation costs.
  • § 4 Abs. 5 Nr. 5 EStG: Deductibility of travel expenses for business purposes.
  • § 9 Abs. 1 Nr. 4 EStG: Kilometer allowance for private vehicle use.
  • § 9 Abs. 1 Nr. 5 EStG: Double housekeeping and family home travel reimbursements.
  • Federal Ministry of Finance (Bundesministerium der Finanzen):
  • Annual updates on international per diem rates and other travel expense guidelines (BMF-Schreiben from 21.11.2023, BStBl I S. 2076).

For more detailed information or personalized advice, contact WW+KN, a Baker Tilly Company, at info@payrollgermany.de. We are here to assist you with all your payroll and tax-related queries.