The year 2020 showed how difficult it can be to plan in a crisis-ridden year, especially in business. But this involuntary disruption has also brought us many thought-provoking good ideas. Companies recognized the possibilities and benefits of the home office, and outdated processes got a much-needed push to be revised or replaced. Even if this crisis has not yet been overcome, 2021 brings new hope for a successful new beginning. This year will be an exciting time for business travelers in particular, as we have to ask ourselves whether a return to the normal as we knew it before the Corona crisis is even possible.
The Finance Ministry's Decision
On November 25, 2020, the Federal Ministry of Finance (BFM) published a new document containing new and updated information in relation to travel expense law. This replaces the version released by the BMF in 2014.
The 65-page document addresses the tax treatment of employee travel expenses and focuses on the following topics:
- First place of work, external activities, extensive areas of activity
- Additional allowance for meals (Verpflegungsmehraufwendungen)
- Simplification of tax reporting of meals provided by the employer during an external activity (auswärtige Tätigkeiten)
- Accommodation costs
- Additional travel expenses
This article will give you an insight into this new decision and the latest amendments published.
As a reminder, travel expenses within the meaning of the wage tax guidelines are costs that are incurred almost exclusively as a result of an employee's professional activities outside of his or her home and a location-based first place of work. Travel expenses include travel costs, additional travel costs, accommodation costs (domestic/foreign) and additional meal expenses (domestic/foreign).
First Place of Work
A first place of work is a facility separate from the home that serves as a workplace for the activities of the employer, an affiliated company or a third party designated by the employer. A place of work must be used in a location-specific manner. A large area such as a plant, company premises, train station or airport can also be considered a first place of work. It is important that this first place of work must have been assigned to the employee by his employer. In addition, it is necessary that the employee has to perform activities at the location of the first place of work, at least to a small extent, which he owes under his employment contract or under service law and which belong to the job description he performs. The assignment by the employer can also be made verbally outside the service or employment contract. Therefore, no documentation is required. The employee's home office is not an operational facility of the employer or a third party and therefore cannot be a first place of work.
Example provided by the BFM:
The sales employee, Müller, is responsible for the Berlin location and he has to travel once a week to the company headquarters in Brandenburg, to which he is assigned. There he is to carry out the necessary office tasks and take part in business meetings. Brandenburg is the first place of work on the basis of the assignment under employment law. It is irrelevant that Müller has to work predominantly in Berlin, and not in Brandenburg.
Additional Meal Allowance
For out-of-town activities (lasting one day) without an overnight stay, a lump sum for additional meal expenses of €14 can be taken into account, in cases with absences of more than 8 hours from the home and the first place of work. This also applies if the employee works away from home overnight, i.e. on two calendar days, but does not stay overnight, and is therefore absent from home and the first place of work for more than 8 hours in total. If the employee works away from home several times on one calendar day or overnight on two calendar days without an overnight stay, the periods of absence of these activities can be added together and taken into account for the calendar day in the case of the overnight activity (§ 9 Absatz 4a Satz 3 Nummer 3 2. Halbsatz EStG).
A meal provided by the employer during a work-related away-from-home activity is valued at the official non-cash remuneration value pursuant to § 2 of the Sozialversicherungsentgeltverordnung.
AA meal whose price does not exceed €60 is considered "customary"; beverages are to be included (§ 8 Absatz 2 Satz 8 EStG). The price limit of €60 applies regardless of whether the meal is provided in Germany or abroad. It must be mentioned here that the employee does not have to have actually eaten the meal provided.
If the employer provides the employee with a customary meal up to €60, the per diem meal allowance is to be reduced daily as follows:
- 20% for a breakfast, and
- 40% for each lunch or dinner.
Example provided by the BFM:
Vernon, the sales manager, leaves his apartment in Berlin at 8:00 a.m. and visits a customer first until 12:00 p.m.. From 12:30 p.m. to 2:30 p.m., he is in his office, his first place of work. He then travels from there to a conference in Brandenburg and returns to his office in Berlin at 7:00 p.m. for another hour. The times from leaving home until arriving at the first place of work (office) at noon and from leaving the first place of work (office) until returning there are counted. Vernon worked away from home twice on business and was absent from his home and his first place of work for a total of more than eight hours. He therefore meets the requirements for the per diem meal allowance for a one-day away activity (€14).
Thus, the employee can claim the additional expenses actually incurred for meals as income-related expenses or receive a tax-free reimbursement in the corresponding amount from the employer. The amount of the lump-sum meal allowance is adjusted according to the time the employee is absent from his home and his first place of work. The characteristic "additional expenses actually incurred" expresses the fact that the lump-sum meal allowances no longer apply if the employee is "catered" by the employer during his work away from home. If a meal is provided to the employee by his employer or by a third party at the employer's instigation, the deduction of income-related expenses is reduced on a daily basis. For out-of-town activities in Germany, this reduction corresponds to the respective lump-sum meal allowance of €5.60 for breakfast and €11.20 for lunch and dinner. This lump-sum reduction of the per diem meal allowance is to be made on a daily basis and up to a maximum of € 0.
Within the three-month period, issuing meal vouchers by the employer in the context of an away-from-work activity does not constitute a meal provided, but merely a benefit of a meal paid for by the employee himself. After the expiry of the three-month period, the meal vouchers issued to these employees in the form of meal vouchers or restaurant checks are to be valued at the applicable non-monetary remuneration value.
Example provided by the BFM:
The employee Laffert is on a three-day excursion. The employer has booked and paid for two overnight stays for the employee at a hotel, each with breakfast, as well as lunch and dinner on the day in between. The employee Laffert does not receive any other travel expense reimbursements from the employer. The employer does not have to pay tax on any non-cash benefit for the meals. The employee can claim the following per diems for meals as income-related expenses for the external activity:
- Day of arrival: 14.00 €
- Intermediate day: 28.00 €
- Reduction: Breakfast -5.60 €, lunch -11.20 €, dinner -11.20 €
- Remaining for intermediate day 0.00 €
- Departure day: 14.00 €
- Reduction: Breakfast -5.60 €
- Remaining for departure day 8.40 €
Additional travel expenses for travel
Additional travel expenses include actual expenses, for example, for the transport and storage of luggage, telecommunications and correspondence, professional content, road and parking use and damage repair as a result of traffic accidents, loss of items lost or damaged during the trip which the employee had to use during the trip, private telephone calls, as long as they can be attributed to professional purposes. These additional expenses must be substantiated by suitable documents or made credible. For an employee who spends the night in a vehicle belonging to the employer while working away from home, a lump sum of €8 for each calendar day on which the employee could claim a lump sum for meals, has been taken into account uniformly since January 1, 2020 to compensate for the necessary additional expenses (§ 9 Abs. 4a S. 3 Nr. 1 und 2 sowie S. 5 zu den Nrn. 1 und 2 EStG). The lump sum may also be claimed by accompanying employees who also spend the night in the vehicle if the employer does not make any further reimbursements for overnight expenses or the employee does not claim any further overnight expenses as income-related expenses. Incidental travel expenses do not include, for example, costs for personal living such as daily newspapers, private telephone calls, massages, minibar or pay TV, administrative fines, warnings and penalties imposed on an away activity, loss of money or jewelry, acquisition costs for clothing, suitcases or other travel equipment or meal vouchers, for example in the form of rest stop or car station vouchers.
Example provided by the BFM:
The truck driver, List, works away from home for more than eight hours on one day. He has lunch worth €8.50 at a freeway service station and pays €6 in cash at the cash desk and the rest in vouchers, which he received in connection with the parking fee reimbursed by his employer. The truck driver is entitled to an unreduced per diem meal allowance of €14.
You can read more about the changes mentioned above and additional ones in the document released by the Federal Ministry of Finance (BFM) here: