Kilometre and per diem allowances

Employers can pay allowance to their employees in order to cover their temporary business travel expenses. Payments are exempt from tax if their amount is exactly the same as what was actually spent, or if they are as defined in the Official Decision of the Tax Administration on Allowances for Travel Expenses.

Length and destination of the business trip affect the amounts

Your employer is entitled to pay you per diems tax free if the destination is located more than 15 kilometres away from either your home or your main place of work. What also affects the permissible amounts of per diems is the length of your trip.

Tax-exempt allowances in 2017 for business travel

Per diem allowances for 2017

  • Partial per diem: €19 (trips longer than 6 hours)
  • Full per diem: €41 (trips longer than 10 hours)
  • Per diems for trips to other countries
  • Meal money: €10,25
    • The form of tax-exempt coverage known as 'Meal money' may be paid to employees to whom no per diem allowance is paid on business trips.

Per diems are intended as a reimbursement to the employee for any meal costs that are higher than usual. If there is a free meal offered to the employee during his or her business trip, or a meal paid for by the employer, it will affect the amount of the per diem for that day.

Employers can pay tax-exempt kilometre allowances and per diems to their employees both in Finland and overseas. For more information on the permissible maximum amounts, see the Official Decision (The 2017 Official Decision on Allowances for Travel Expenses)

Kilometre allowance for using your own car

If you drive your own car on your temporary business trip your employer may pay you tax-exempt kilometre allowances. For more information on the permissible maximum amounts, see the Official Decision. For 2017, the basic allowance equals 41 cents per kilometre (43 cents per kilometre for 2016). Actual amounts depend on whether you are the owner of the car or drive a car belonging to your employer, and on factors like whether you take on passengers during the business trip.

Invoices must be drafted in order to document the expenses

Employees are required to draft expense invoices that specify their business travel expenses clearly. Enclose all the receipts with your expense invoice. Your employer can make use of the receipts in order to pay you for the exact direct travel expenses (airline and train tickets) and accommodation expenses (hotel bills). However, additional expenses are possible and it may be difficult to document them because no paper invoices, receipts or bills are available. Your car expenses may be an example of these. Nevertheless, your employer can pay you a tax-exempt allowance for additional travel expenses as well, on the condition that the amounts are as defined in the Official Decision.

Your commute is not regarded as 'travel' for tax purposes

The definition of 'business travel' for tax purposes refers to trips that you have to make because you have an assignment or job to perform in another location. When you commute from your home to your usual workplace, is not regarded as 'business travel' for tax purposes. However, you are entitled to a tax relief in the form of deductions, which depend on the assumption that you have used the least expensive means of transportation (public transportation) for your commute.

Page last updated 5/10/2017

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