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Allowances

  • 4 minutes reading
  • Last updated: 1 March, 2024

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What are travel allowances?

When you travel for work, your employer may choose to pay a tax-free travel expense to cover expenses associated with lodging, meals, and other necessities according to fixed rates. It should not be confused with mileage deductions, which are not paid.

Certain conditions must be met before you can receive tax-free travel allowance. If the conditions are not met, taxes must be paid on the travel allowance.

Easy registration and handling of allowances with Acubiz

Whether you are an employee or a part of the finance department, it should be easy to register and manage diets according to national rates.

If your employer has chosen not to pay allowance, you can choose to deduct your actual documented expenses on your tax return. You can also deduct the difference if you have already received tax-free travel allowances, but the amount is lower than the rates.

Conditions for travel allowance

Before you are entitled to tax-free travel allowances, the trip must last at least 24 hours and be a documented business trip. In addition, it is a prerequisite that the employee has a temporary workplace, a usual residence, and stays overnight away from home.

Skattestyrelsen (Danish Tax Authority) looks particularly at two factors determining whether it is a trip: distance and work. You can learn more about these below.

Distance

The kilometer distance between the temporary workplace and the usual residence determines the distance. If you have the opportunity to stay at home each night, you cannot receive an allowance. You will most likely be able to receive travel allowance if you are visiting the company’s foreign department as an employee. Here, the distance is obviously too great for you to stay at your own residence.

Work

The second factor is work, where it is a prerequisite that there is a temporary workplace. The definition of a temporary workplace is not set in stone, but Skattestyrelsen looks in particular at the period during which the employee works at the location. The shorter the period, the greater the likelihood of a temporary workplace. In addition, the nature of the work is also taken into account in the assessment. Finally, it should be noted that the employee can only receive allowance according to the standard rates for the first 12 months that the employee works at the temporary workplace. If the employee changes to a new temporary workplace, a new 12-month period begins.

Taxable Allowances

The employer must ensure that the trip meets the criteria mentioned above for tax-free allowances. Taxable allowances are incurred if the trip does not meet the requirements, but the trip is deductible. Taxable allowances are calculated as A-income for the employee.

Daily allowance rates

The daily allowance rates for business trips are as follows in 2022 and 2023:
Rates per day20222023
AccomodationDKK 231DKK 238
Food and petty acquisitions for other salary earnersDKK 539DKK 555
In addition, there is an allowance for food for tourist drivers: for travel in Denmark, the rates are 75 DKK in 2023 (unchanged from 2022). For travel abroad, the rates are 150 DKK (unchanged from 2022).

Accommodation

The allowance for accommodation covers all daily undocumented expenses related to overnight stays on a business trip. It can be a hotel stay or other options like Airbnb.

Food and incidentals for other employees

This item covers all small expenses that arise from a business trip. It can be a cup of coffee at a café, a new toothbrush on the go, or a newspaper at the airport.

Who cannot receive travel allowance?

You must be a resident of Denmark to be eligible for travel allowances. Certain groups of employees have special tax arrangements and are not eligible for allowances. These include registered commercial fishermen, certain employees sent by the Danish state, and employees in training. There are also special rules for tourist drivers.

Want to know more?

If you need further information, we recommend that you read more about allowances on SKAT’s website. If you are looking for a system that can handle travel allowances for your employees, Acubiz calculate allowance based on the current national rates which we make sure to update automatically.

Read more about how we manage travel allowances.

FAQ

What are allowances?
Allowances are tax-free travel reimbursements paid to employees at fixed rates when they travel for work purposes for at least 24 hours. The purpose of allowances is to cover expenses for meals, accommodation, and other small expenses.
You can typically receive allowances when you are on a documented business trip lasting at least 24 hours.
You can find the rate for allowances on the website of the Danish Tax Authority (Skattestyrelsen), which they are also referred to as tax-free travel reimbursements.
Travel reimbursement is a tax-free reimbursement paid for meals, accommodation, and incidental expenses related to business trips that last for at least 24 hours. Travel reimbursement is also known as allowances or per diem

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