What is per diem?
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At the moment, per diem allowances are only available in Germany.
German Per Diems (Tagespauschalen)
Per diem payments are payments to employees to compensate them for time spent away from their usual place of work. As the name literally means "per day" these payments are calculated on a daily basis.
In Germany, unlike most markets, per diems have their own regulatory framework and a complex set of rules that determine a travelling employee's eligibility for a tax-free payment.
The two types of German per diem payments are the meal allowance per diem (Verpflegungsmehraufwand) and the hotel allowance per diem (Übernachtungspauschale).
In Germany, the tax-free per diem amount an employee is eligible for depends on their duration of travel, their destination, and whether or not the employee had meals and/or accommodation provided to them by their employer.
The German government routinely publishes the different per diem allowances employees are eligible for depending on their destination of travel. An example can be found here for 2019. It's not possible to adjust the allowance amounts or to change the rates. We use the ones published in the German regulation and they are automatically updated.
Meal Allowance Per Diems (Verpflegungsmehraufwand)
German meal allowance per diems are payments to employees to cover their meal costs when travelling. This is the most frequently used type of German per diem, so much so that Verpflegungsmehraufwand and Tagespauschale are used interchangeably.
There are two different meal allowance per diem allowances, the half-day allowance and the full day allowance :
Half-day per diem meal allowance
Employees are compensated at this allowance for:
- - Work travel lasting at least 8 hours, without an overnight stay;
- - The day of departure and the day of arrival back home, work for trips that span multiple days.
The half-day allowance in Germany is €12.
Full day per diem meal allowance
Employees are compensated at this allowance for work travel spanning at least two nights for days except for the arrival and departure days.
Deductions for meals covered by the employer
If a travelling employee receives meals paid for by their employer (e.g. hotel breakfast, expensed lunch), the tax-free meal allowance per diem allowance must be reduced. This applies for breakfast, lunch and dinner.
Hotel Allowance (Übernachtungspauschale)
This is the per diem allowance employees are eligible for if their employer does not cover the cost of their overnight accommodation, such as hotels.
Per diem calculation
The statutory per diem meal allowance payment a German employee is eligible for is calculated as the sum of each eligible day's per diem amount, with exceptions for the day of departure and the return day.
- - departure day = half-day allowance - deductions for breakfast/lunch/dinner
- - day n = full day allowance - deductions for breakfast/lunch/dinner
- - return day = half-day allowance - deductions for breakfast/lunch/dinner
Deductions for expensed meals
The per diem amount an employee is eligible for reduces if the employee is provided with free or expensed meals for either breakfast lunch or dinner. The deduction is calculated as a percentage of the full allowance meal allowance per diem, at the following allowances:
- - 20% for breakfast
- - 40% for lunch
- - 40% for dinner
This means that if a worker has lunch covered by their employer while travelling domestically (e.g. they expense lunch, or their hotel provides it), their per diem meal allowance will be reduced by 0.4 * €24 = €9.6.
This means that if the worker was eligible for a half-day per diem of €12 (e.g. for 10-hour same-day business trip), their per diem allowance would be €12 - €9.6 = €2.4.
- - Travel away from primary place for work for at least 8 hours qualifies the employee for a half-day allowance per diem payment, which is €12 in Germany.
- - If the employee goes on multiple day trips during the same day, all hours can be added together.
Single night trips
On a single night trip, the traveller is compensated with two half-day allowance payments.
Multiple locations on the same day
Last location of a traveller before midnight determines allowance applied for that night.
For example, if the travelling employee arrives in Paris for the first day of their trip but transfers to London at 10 pm, the London half-day allowance will apply for that day of travel.
Long term travel
Employers can only offer per diem meal allowances to employees for three months of continuous business travel. This period can be restarted after a four-week break. This is known as the “3-Monatsfrist” or “3-Monatsregelung“.