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Travel and Mileage Reimbursement in Germany

One ongoing issue for multinationals with employees abroad is how to reimburse travel and mileage expenses.  It can be fairly straightforward for travel within the country of employment, but becomes more complicated when employees are traveling to other countries on business.  How will you know which expenses are reimbursed or taxable in the countries where your employees are either working or traveling?

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German Travel Expense Rates

If you have employees in Germany that travel domestically or internationally, you will want to learn the reimbursement rates and types of eligible expenses, as well as mileage rates.  The first rule to know is that meals are not reimbursable to the employee based on receipts, and therefore per diem rates must be relied on to cover those costs. 

The per diem rate for trips within Germany is 24 Euros per 24 hours (12 Euros for single day trip of 8 hours).  There is also a maximum number of per diems allowed per day if more than one employee is traveling.

Mileage costs are a tax free reimbursement for employees (within limits), but if a car allowance is offered that is taxable benefit to the employee.  In Germany it is fairly common to offer both, so it best to separate those two expenses for payroll and tax purposes.

Rental cars and fuel are fully reimbursable for employees, provided they are used for business purposes.

Client Case Example: Travel Reimbursement in Germany

One of our clients with employees in Germany wanted to know what the per diem rate would be for trips abroad.  They had been applying the domestic per diem rate of 24 Euros, but that was not sufficient in some countries like Japan or Israel where costs are higher.

Solution:

We informed them that they could not reimburse direct meal expenses, and instead had to apply a per diem rate to all types of travel for German employees, including international trips.  However, they were not limited to the domestic rate for trips abroad, and could apply a per diem rate that was set by Germany for the destination country.  For example, the per diem rate for trips to Japan is 66 Euros.

The per diem rate is only intended to cover ‘subsistence’ or meals, and other expenses such as taxi, hotel and client entertainment can be reimbursed separately with receipts.

Do you need more information about Germany?

If you are hiring employees in Germany, you may need more information such as:

Where can I find the listing of different per diem rates for other countries?

If we reimburse employees more than the allowed per diem rate, how can we offset the taxable portion in payroll?

Does the full per diem rate apply if the employee spends less than the allowed amount?

Answering questions like these is how we support our clients’ foreign employment, including processing employee expenses, tax compliance, running payroll and meeting immigration requirements.  We make international employment simple.

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