Tax-Free Reimbursement of Business Travel Expenses: Per Diem, 30% Ruling or Fixed Allowance?

Employers in the Netherlands have several ways to reimburse employees for costs incurred during business trips:

• Using fixed allowances based on government rates

• Applying the 30% ruling for posted workers

• Reimbursing actual costs based on receipts

• Using a substantiated fixed allowance

Each option comes with its own conditions and tax implications.

The Dutch government applies fixed and maximum allowances for civil servants under a collective labour agreement. These cover expenses such as accommodation, meals and small daily costs during business trips.

Private sector employers may also use these allowances, provided that employees are comparable to civil servants from a cost perspective.

This means that employees should not have excessive additional expenses, for example due to structural overtime or different working conditions abroad.

For business trips within the Netherlands, tax-free reimbursements are capped. The following maximum amounts apply for 2024:

• Small daytime expenses 5.93 euros

• Small evening expenses 11.86 euros

• Breakfast 13.88 euros

• Lunch 11.88 euros

• Dinner 29.82 euros

• Accommodation 140.57 euros

Only the allowance for small daytime expenses is always tax free. The other reimbursements require specific conditions to be met.

For international travel, higher allowances apply based on country-specific rates. These allowances are divided into:

• Accommodation costs, which are reimbursed based on actual invoices up to a maximum

• Other expenses, which are fixed and calculated based on time spent during the trip

The fixed allowance for other expenses is calculated as follows:

• 1.5 percent per hour of travel, up to 36 percent per day

• 12 percent for breakfast periods between 06:00 and 08:00

• 20 percent for lunch periods between 12:00 and 14:00

• 32 percent for dinner periods between 18:00 and 21:00

If a business trip exceeds 60 consecutive days, only 50 percent of the allowance for other expenses remains tax exempt.

If employees are not comparable to civil servants, employers may use the 30% ruling for posted workers. This allows employees to exchange 30 percent of their gross daily salary for a tax-free allowance of the same amount.

Key advantages:

• No additional payroll costs for the employer

• No formal approval required from the Dutch tax authorities

• No maximum salary threshold or fixed duration

However, there are also important conditions:

• The employee must be posted to specific regions such as parts of Asia, Africa, Latin America or certain European regions

• The posting must last at least 45 days within a 12-month period

• The period must consist of blocks of at least 15 consecutive days, with limited exceptions

Keep in mind that this arrangement may affect pension accrual, social security benefits and holiday allowance. It is therefore important to agree this properly with employees.

If the above options are not suitable, employers can reimburse actual costs based on receipts. These reimbursements are fully tax exempt but administratively burdensome. An alternative is a fixed daily allowance based on research. This requires:

• A representative group of employees to track actual expenses over a period of at least three months

• Calculating the average cost per day based on this data

This average can then be used as a tax-free fixed allowance. Different allowances may be applied based on job roles or travel destinations.

When setting up a reimbursement policy, it is important to:

• Choose the method that best fits your organisation and travel patterns

• Ensure proper documentation and substantiation

• Regularly review whether the arrangement still complies with tax rules

• Communicate clearly with employees about the impact on their net income and benefits