What are travel allowances?
When you travel in connection with your work, your employer can choose to pay tax-free travel allowance to cover the expenses associated with accommodation, food and petty acquisitions at fixed rates. Certain conditions must be met before the allowances can be paid tax-free. If the conditions are not met, the allowances are taxable.
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 does not pay travel allowance you can choose to deduct your actually documented expenses on your tax return. In 2021, you can receive a maximum deduction of DKK 29,300. If you have already received some travel allowances but the amount is lower than the rates, you can receive a deduction for the difference.
Conditions for travel allowance
The employee must be away for a minimum of 24 hours and it must be a documented business travel before you are entitled to the tax-free travel allowance. In addition, it is a prerequisite that the employee has a temporary workplace, a normal place of residence and spends the night away from home. The Danish Customs and Tax Administration (SKAT) looks in particular at two factors that determine whether the employee is considered to be travelling: distance and work.
Distance is the kilometer distance between the temporary workplace and normal place of residence considered. If you have the opportunity to spend the night at home at your residence every night, you cannot receive tax-free travel allowance. On the other hand, you are probably entitled if you are visiting your company’s foreign branch. Here, obviously, the distance is too great for you to spend the night at your own residence.
The second aspect is work, where it is a prerequisite that the workplace is temporary. But what is the definition of a temporary workplace? That is not 100 % clear, but SKAT focus especially on the period of time during which the employee works at the workplace. The shorter the period, the more likely it is that it is a temporary workplace.
Finally, it should be mentioned that the employee can only get a tax-free allowance for food and petty acquisitions at the standard rate during the first 12 months in which the employee is working at a temporary workplace. The 12-month time limitation applies to the individual workplace. A new 12-month period therefore begins if an employee switches to a new temporary workplace.
|Rates per day||2021||2020|
|Accomodation||DKK 228||DKK 223|
|Food and petty acquisitions for other salary earners||DKK 532||DKK 521|
Who cannot receive travel allowance?
First and foremost, you must be resident in Denmark. Certain groups of employees are covered by special tax schemes and are not entitled to travel allowance. This is the case for registered commercial fishermen, for certain employees stationed by the Danish state and for employees undergoing education. Special rules apply for tourist drivers as well.
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.