What is the daily allowance for travel abroad in Finland?
If your work includes business travel, you might be entitled to a daily allowance (aka per diem). Whether you’re traveling to Finland or from Finland, here’s an extensive overview of the daily allowance for traveling abroad.
Key points of daily allowance for travel abroad
Daily allowance, also known as per diem, is a monetary reimbursement of expenses related to business travel.
Employers may not be legally required to pay a daily allowance to employees.
Daily allowance practices vary by country.
For travel abroad, the per diem rate may depend on the destination country.
What is a daily allowance (aka per diem)?
Daily allowance is a monetary reimbursement for expenses that an employee incurs when they travel on business. It covers costs like food, drink, and other incidental expenses.
In many countries, there’s a maximum non-taxable rate set by tax officials or other relevant authorities. This means that the employer can pay out that sum to the employee without withholding taxes. Daily allowances aren’t considered part of the salary.
How do you calculate per diem for travel days?
Simply put: multiply your travel days by the per diem rate. But, unfortunately, the calculation isn’t always that simple.
How to calculate daily allowance varies by country and their practices. There might be different conventions and rules for calculating the per diem, for example, when the first or last travel day is less than a full day. You may be entitled to partial reimbursement for those travel days.
And to make things a bit more complicated, if you’re traveling by your own car, you may be entitled to mileage allowance (or allowance per km), too.
The good news is that you rarely have to solve these math problems by yourself. There are apps and softwares that you can use to calculate and claim travel expenses.
What is included in the daily allowance?
This varies by country.
In some cases, the daily allowance covers mainly just meals and other incidental expenses. The employer is expected to pay for other expenses, such as travel tickets and accommodation.
The alternative is that the per diem allowance includes all expenses incurred on a business trip. In this case, the employer won’t make other reimbursements.
A company credit card comes in handy for business travel costs
A company credit card is the most convenient way to cover business travel costs, such as hotel bookings or airline tickets. If the employee’s job requires travel, it’s easier both for them and the employer to give the employee a company-owned credit card.
This way, the employee doesn’t have to spend their own money on business expenses nor wait for the reimbursement afterward. And the employer benefits as well; business expenses are always up-to-date, and the finance team no longer has to process expense claims.
If a daily allowance is paid (on top of direct expenses, like accommodation), the credit card won’t cover that. But luckily there are modern digital tools that can make the process of filing and processing expense reports and daily allowances a lot easier. Nowadays it is possible to integrate to your company credit card to some of these tools. In these cases the employees can use the same tool both for filing the receipts of credit card purchases and claiming daily allowances. For example Pliant offers company credit cards that can be fully integrated to Bezala.
Is it mandatory to pay travel allowance for employees?
Again, this depends on the country.
In Finland, for example, paying travel allowance for employees isn’t mandated by law. But it is a widely established way of reimbursing travel expenses. Even if not a legal requirement, it can be part of collective employment agreements. And this way it is binding to the companies following the agreement.
Either way, it’s a good idea to include travel expense reimbursement practices in the employment agreement. This way, once the first business trip rolls around, both parties know how the expenses will be reimbursed.
On top of the daily allowance, the employer can pay for direct travel costs, such as travel tickets and accommodation. In some countries, these expenses might have their own maximum totals that can be reimbursed tax-exempt.
When in doubt, ask your accountant.
Daily allowance abroad: Travel rates depend on the destination country
There might be different daily allowances for travel abroad. Again, the practices vary from one country to another, but in many places it’s typical to have different travel rates depending on the destination country.
And not only that, the maximum amount of per diem may even vary between cities or regions.
Let’s take an example. You’re traveling from Finland to the United States in 2023.
The daily allowance rate for business travel from Finland to the US is €92 in 2023. But if your destination is New York, Los Angeles, or Washington, the per diem rate is €100. After all, these are all big cities with a high cost of living.
Distinction: Daily allowance for travel abroad from Finland and to Finland
Now, it’s important to make a distinction here. Are you living in Finland and traveling abroad from Finland, or are you living in another country and traveling to Finland on business?
Next, let’s take a look at daily allowance rates for business travel from Finland to abroad. And after that, a few examples from selected countries and their daily allowances for business travel to Finland.
Travel rates for business trips from Finland to abroad in 2023
If you live and work in Finland and your work requires travel abroad, you may be entitled to daily allowances. It isn’t mandated by law, but as mentioned earlier, daily allowances are quite established in Finnish workplaces.
There is no one flat rate for all daily allowances for business travel abroad. The maximum amount of the per diem depends on the country that you’re traveling to.
Bear in mind that the daily allowance rates determined by the Finnish tax authorities are the maximum tax-exempt amounts. Meaning: you don’t have to pay taxes on them. In theory, your employer could choose to pay more or less than that, but usually companies stick to the official rates.
Let’s take a few examples from around the world:
Finland to Sweden: €66
Finland to Germany: €71
Finland to India: €64
Finland to Canada: €86
Finland to Chile: €55
You can find all countries and their daily allowance maximums on the Finnish Tax Administration’s website.
Remember that the Tax Administration reevaluates the daily allowance rates every year. The rates presented here apply in 2023.
A few examples of daily allowance when traveling to Finland in 2023
What if you’re traveling to Finland from another country? Then your daily allowance rate is determined by the practices of the country you live in.
But let’s take a few examples from selected European countries.
Sweden to Finland
In 2023, the daily allowance for traveling to Finland from Sweden is SEK786 (~70€). Accommodation is not included in the rate.
You can find all Swedish daily allowance rates here.
Germany to Finland
The German tax office determines individual daily allowance rates for different countries. There are three different types of allowances, and their rates for Finland in 2023 are:
Full day of 24 hours: €50
Date of arrival or departure: €33
Overnight stay: €136
If the employer provides meals (or, for instance, breakfast is included in the hotel booking), there will be some deductions to the per diem rates.
Find all travel rates for German business travel here.
The United Kingdom to Finland
In the UK, there are different rates for different types of subsistence. For each 24-hour travel day in Finland, the employer can reimburse a rate of €82.
Learn more about the UK's daily allowances for travel abroad.
Spain to Finland
In Spain, the daily allowance for travel abroad is the same regardless of your destination. For overnight business trips abroad, the employer can pay a daily allowance of up to €91.35.
You can learn more about the Spanish daily allowance practices here.
If there’s one thing we’ve established, it is that the daily allowance for travel abroad depends on where you live. Yet, the same principle prevails across countries: daily allowance covers the extra costs that occur during travel.
Filing an expense report and claiming daily allowances isn’t exactly rocket science, but there are some caveats. Unless you’re an accounting professional, you probably don’t want to keep up with the latest travel rates and nitty-gritty details. The easiest way to go about it is to use a full-suite expense management software – like Bezala.
|Ella-Roosa Koivupuro is a marketing professional with a background in ecommerce and tech. She provided this article on behalf of Pliant, a modern business credit card solution that makes card management, spend control and reporting a breeze for companies.|