Tax-exempt allowances in 2023
The Tax administration has published tax-exempt allowances for 2023. Employers are entitled to reimburse business trip related costs to the employees who are in the employment relationship. A business trip means, for example, visiting a customer. This article does not deal with reimbursements for business travel expenses nor volunteers of non-profit organizations. These allowances are covered by separate instructions by tax authority.
Trustees (e.g., board members) who are not employed can also be paid non-taxable compensation under the same conditions as employees. For example, a travel to a meeting may be compensated.
Please note that travel allowances are not paid for commuting, i.e., travelling between workplace and home, and that for any allowance, travel invoices and receipts must be presented.
In addition, it should be noted, that non-taxable allowances are not subject to tax withholding and employers social insurance contributions (such as pension contribution). In some collective employment agreements it may be agreed to pay higher per diems than foreseen in tax authority’s instructions. In such cases, the allowances under collective agreements are non-taxable only up to the limit outlined by the Tax Administration. From amounts exceeding the limit, taxes should be withheld, and paid as normal.
| Kilometre allowance by personal car | 0,53 €/km |
| Full per diem in Finland | 48,00 € |
| Partial per diem in Finland | 22,00 € |
| Meal allowance | 12,00 € |
Kilometre allowance
Non-taxable kilometre allowance can be paid, when an employee drives their own, a family member’s, or another car at their disposal on a business trip assigned by employer for fulfilling work tasks. Kilometre allowance is not paid for travel between the workplace and home. Basic kilometre allowance (0,53 €) is increased, if the driver has passengers or transports equipment or if the employee is towing a trailer.
Per diem
Per diem, i.e. daily allowance means compensation of meal and other living expenses incurred during a business travel. However, the daily allowance does not cover travel, e.g. travel tickets or accommodation or hotel costs. In Finland, daily allowance can be paid if the travel destination is more than 15 kilometers from the workplace or home and the trip takes at least six hours. Allowance is always paid per travel day and not per calendar day (in 24-hour periods). A business trip can also start from somewhere else than home, for example from a place of accommodation, a hotel or a secondary workplace.
Daily allowance in foreign countries is paid when traveling abroad. You can check the maximum amount of daily allowance per country on the tax authority’s website.
- Full per diem is paid when the duration of the business trip is more than 10 hours and when the last full day of travel lasts more than 6 hours.
- Partial per diem is paid, when the duration of the business trip is more than 6 and less than 10 hours and when the last full day of travel lasts more than 2 two less than 6 hours.
- If on one of the travel days in Finland the employee receives a free meal or food included in the price of the travel ticket, the daily allowance is half of the specified amount. Free meals comprise two free meals in case of a full per diem and one free meal in case of a partial per diem.
Meal allowance
Meal allowance can be paid if an employee is not entitled to daily allowance and does not have the opportunity to eat at their usual eatery. For allowance, a written report is required, for example a driving log, with all necessary receipts related to the trip attached.
Travel invoice should include the following information:
- The purpose of the trip
- Destination and traveled distance/route if necessary
- Time, starting and ending time of the business trip
- Way of travelling
- Kilometers driven, odometer readings, if kilometre allowances are to be paid
- Other expenses, receits
Some examples:
Example 1
An employee leaves home on Monday at 9:00 a.m. for the client and returns home from the client on Wednesday evening at 9:00 p.m. The business trip takes a total of 60 hours, i.e. two days and 12 hours. In this case, the employee is entitled to three full allowances. Wednesday is also fully compensated, because the travel day exceeds 6 hours.
Example 2
The employee drives in his own car to a two-day seminar paid for by the employer. The trip starts on Monday at 9:00 a.m. and ends on Tuesday at 1:30 p.m. The seminar price includes two meals on the first day and lunch on Tuesday. Without meals, the employee would be entitled to full per diem on Monday and partial per diemon Tuesday (duration of the last day of travel 5 hours 30 minutes). But since the employee has received the meals included in the price of the seminar, the amount of both full and partial per diem are reduced by 50 %. The employer also has paid for the employee’s hotel accommodation, which included breakfast. Since breakfast is included in the price of the hotel, it has no effect on the daily allowance.
Example 3
An employee uses their own car to go to work. During the working hours, he visits two customers, and from the latter , the employee drives straight home without returning to his own workplace. Kilometre allowances are paid from employee’s workplace to both customers and back home, but not for the trip from home to the workplace in the morning.
Kirjoittaja
