One of the most frequently asked questions we get asked by our clients is how to manage employees travel expenses and Germany per diem rates.
German regulations governing per diems, telecom expenses, hotel costs, meals reimbursements, mileage and so on, can often be confusing and different from an organization’s home-country rules.
Companies setting up shop in Germany are understandably concerned about how challenging it can be to stay compliant with German tax laws and want to avoid fines and reputational damage.
For this reason, we have decided to write this article with the aim of providing not only an overview on German travel expense reimbursements (as part of good expatriate management best practices) but also to dissect and explain some of the finer details surrourding the complex circumstances companies face.
Germany’s travel expense framework is governed by detailed official guidance from the Federal Ministry of Finance (BMF), set out in the Income Tax Handbook (Einkommensteuerhandbuch), which consolidates the principles for tax treatment of business travel costs.
These rules reflect broader international practices, as evidenced by OECD research on per diem systems, which examines how different countries balance administrative simplicity with accurate expense reimbursement.
According to United Nations International Civil Service Commission (UN ICSC) per diems (in German “Tagespauschalen“), from the Latin for “by the day“, are:
Daily subsistence allowance (DSA) or often referred to as per diem is an amount that is paid to both staff and non-staff members who undertake travel on behalf of a United Nations common system entity. It is meant to adequately cover accommodation, meals and incidentals during the trip.
More specifically, the law on travel expenses in Germany talks about a lump sum for meals being paid to an individual as compensation for the expenses incurred in working outside their home and main workplace.
Moreover, an employment contract (or any other company issued policy) or collective bargaining agreement may also stipulate that per diems are to be used to reimburse employees.
Tax repercussions are likely (although as we will discuss in this article, not for all expenses categories) if employers choose to reimburse employees for actual expenses above the permitted per diem’s allowance instead.
On the other hand, there is less of an administrative burden for both companies and their employees when sticking with per diem rates as there is no need to:
Now that we have a per diem definition and a law clarifying what per diem allowances are meant to cover in Germany, let us briefly look at what type of travel expenses, per diems are not meant to cover:
These types of expenses should be in fact be claimed as part of a separate expenses claim request (a template is provided towards the bottom of this article) for actual travel expenses incurred.
When employees are traveling on business within Germany the costs of subsistence (drinks and meals) is typically reimbursed according to the applicable per diem rates which currently are:
For the first and last day of travel, the applicable per diem rate is always 14 EUR.
Furthermore, there is also an overnight allowance of 20 EUR for accommodation.
In practice though, only self-employed individuals tend to claim this allowance via their German tax return as accommodation is usually fully paid by the employer for travelling employees.
To help employers and employees quickly understand the applicable allowances, the table below summarises the current Germany per diem rates for domestic business travel:
| Travel Duration | Allowance | Notes |
|---|---|---|
| Between 8–24 hours | 14 EUR | Applies to partial travel days |
| Full 24‑hour day | 28 EUR | Standard full‑day per diem |
| First and last day of travel | 14 EUR | Regardless of hours travelled |
| Overnight allowance | 20 EUR | Typically used only by self‑employed individuals |
These lump‑sum amounts are designed to simplify administration and ensure consistent tax‑free reimbursement for meals and incidentals.
We have already discussed above what is not covered by per diem allowance.
Let us now look more specifically at what are some of the conditions to be fulfilled for employees to be eligible to claim the above mentioned per diem rates in full.
The main condition is that the full per diem meal allowances will only be paid if the employee actually covers the costs of their own food.
In the case of meals that the employee took and that are included for example in a hotel invoices (breakfast, lunch, dinner) or that the employer provided, there will be a compulsory reduction of the lump sum amount entitlement as follows:
It is also worth mentioning that meals provided by the employer for trips shorter than 8 hours are treated as fringe benefits and thus taxable on the employee are the following nominal values:
The above rates change from time to time and other conditions / rules attached to the eligibility for per diem rates in Germany include:
Considering that the cost of living between countries (and sometimes even between cities within the same country) can vary significantly, the German Ministry of Finance each year publishes a table with the up to date international German per diem rates.
Many international organisations send employees to Germany under U.S. government travel frameworks, particularly those governed by the Department of State (DoS) and the Department of Defense (DoD).
These systems operate independently from German tax rules and use their own per diem schedules.
The U.S. Department of State publishes per diem rates for foreign travel, including Germany. These rates typically include:
DoS rates often differ significantly from German tax‑free per diem amounts because they are designed to reflect U.S. government reimbursement standards rather than German payroll compliance.
DoD per diem rates apply to military personnel and civilian employees travelling under DoD orders. These rates:
Whether an individual receives per diem during deployment depends on:
Deployment per diem is not governed by German tax law and is treated separately from employer‑provided per diems under German payroll rules.
Under German tax law, the limits are fixed by the Federal Ministry of Finance. Under U.S. government systems, limits depend on:
Employers should ensure they distinguish between U.S. reimbursement rules and German tax‑free allowances, as they are not interchangeable.
Although German domestic per diem rates are fixed nationwide, the cost of living varies significantly between cities.
For international organisations, especially those using U.S. DoS or DoD per diem schedules, city‑level differences are relevant.
Munich is consistently one of Germany’s most expensive cities due to:
U.S. government per diem schedules typically assign Munich one of the highest lodging and M&IE allowances in Germany.
Stuttgart is a major automotive and engineering hub. Per diem rates for Stuttgart under U.S. systems tend to reflect:
Berlin, Frankfurt, Hamburg, and Düsseldorf also appear as separate entries in U.S. per diem tables, each with its own lodging and M&IE allowances.
For German tax purposes, however, the domestic per diem amounts remain uniform across all cities.
Entertainment expenses for events in which only employees working for the same company took part are not accepted as an external party also needs to be involved.
Additionally, invoices for entertainment expenses reimbursements should clearly show the following information:
0.30 EUR/Km can be reimbursed tax-free. The lump sum rate covers all expenses related to the car such as insurance, depreciation, petrol / diesel, maintenance, car wash, etc.
Tax-free reimbursements for expenses incurred during business use for private cars can only be paid if the employees states on their expenses claims the driven KMs and other relevant details about the trip such as start / end KMs balance, details of the route taken and the reason for the trip.
Anything paid in addition to the 0.30 EUR/KM rate, will be deemed taxable.
This means that the amount will have to be split up in a tax-free part and a taxable part (taxed at individual income progressive tax rates).
If the home telephone / mobile phone / internet contracts are between the telecommunication company and the employee and not between the telecommunication company and the employer, there are 4 possibilities to reimburse these expenses:
1) The employer can pay a monthly lump sum of 20% of the invoice amount up to a max. of 20 EUR tax free to the employee. Any additional reimbursements would be taxable.
2) If the employee highlights the costs incurred for the employer on the telecommunication company’s itemized bill every month, the employer can reimburse those costs tax-free.
3) If the employee highlights the costs incurred for the employer on the telecommunication company’s itemized bill for a period of 3 months, a typical percentage of total expenses concerning the employer can be calculated on the overall total bill, which can then be compensated tax free going forward every month. Any additional reimbursements above the calculated percentage apportionment would be taxable.
4) The employees could prove they have two different mobile phones / landline numbers so that they could clearly be differentiated between the one used for business purposes and the one used for private purposes. In such a scenario, all the expenses incurred for business purposes on the dedicated line / number can be reimbursed tax-free.
Hotel stays during a business trip can be fully reimbursed tax free provided the invoice is addressed to the employer and not to the employee.
Other expenses such as flight, train or bus tickets can all be reimbursed in full tax-free.
Similarly, the following ancillary expenses can also be reimbursed tax-free for the full actual amount incurred:
To help employees with their expenses claims, they may download our travel expenses form and use it when submitting reimbursements requests (if the employer is not already providing one).
Germany’s per diem rates are reviewed annually by the Federal Ministry of Finance (BMF).
Updated rates are typically published in December and take effect on 1 January of the following year.
Employers can expect adjustments based on:
Companies with employees travelling regularly should review the updated BMF circular each year to ensure payroll compliance.
Employees can receive 14 EUR for partial travel days and 28 EUR for full 24‑hour days. An overnight allowance of 20 EUR also applies.
Per diems are tax‑free lump sums intended to cover meals and incidental expenses during business travel. They eliminate the need for itemised receipts.
The standard full‑day per diem is 28 EUR, which is the benchmark for most business travel within Germany.
Yes, provided the employee meets the eligibility criteria and no employer‑provided meals require reductions.
German domestic per diem rates are uniform nationwide, but U.S. DoS and DoD schedules assign Munich higher lodging and M&IE allowances due to its cost of living.
As with Munich, German domestic per diems remain fixed, while U.S. government per diem schedules list Stuttgart separately with its own rates.
The U.S. Department of State publishes city‑specific per diem rates for Germany, including lodging and M&IE allowances.
DoD per diem rates apply to military and civilian personnel travelling under DoD orders and are updated monthly.
Deployment per diem depends on DoD travel regulations and duty status, not German tax law.
Yes. German tax‑free per diem amounts are capped at the official BMF rates.
The Federal Ministry of Finance updates domestic and international per diem rates annually.
Daily allowance refers to lump‑sum reimbursements for meals and incidental expenses incurred while working away from the employee’s home and main workplace.
Yes, the exceeding part is considered salary and, as such, subject to taxes and social security contributions.
As in the case of salary, the employer taxes the employee at source and has to fulfill his tax and social security obligations at all times.
The employee is the debtor of the income tax but the employer deducts it from him / her.
The employer is therefore responsible for withholding the applicable income taxes and social security contributions from the employee’s pay and thus liable, in case they do not.
Failure to do so could attract penalties and interest and potentially be deemed a criminal offence pursuant to Sec. 266a StGB (Criminal Law Act).
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