The rules for tax free indemnities and travel allowance can be complicated to navigate. Here, we will give an overview of the rules and their purpose. Besides this we will show you how easily and simply to deal with tax free indemnities with a time registration system like Intempus.
There is a lot of information and nuances with the rules about tax free indemnities and travel allowance. But the set of rules are very good and makes it easier and more flexible to lead a business. If you are in doubt about what the rules contain, we will shortly mention them in the following.
What is meant by tax free indemnities?
Indemnities are relevant for those employees that are travelling or doing their work in a geographical area where they need to stay for longer than a work day and potentially accommodation. This could, for example, be a carpenter that is sent to another part of the country on a task that takes several days and therefore, they need to spend the night. Expenses for accommodation does of course not need to be paid from your own pocket and here, the employer has two ways of compensating:
- The employer can refund the employee’s expenses which requires that everything is documented with receipts.
- The employer can pay the tax free indemnities.
When paying the tax free indemnities, the one paying has to pay from their own pocket but the payment they get back is a tax free amount and this follows a steady rate. This amount will typically be higher than the actual expense so the employee actually earns a bit and the company is free from the administrative trouble of dealing with receipts. At the same time, the company can get deductions for the indemnity.
The rates for 2024 is as following:
| Rates per day | 2024 |
| Accommodation | 246 kr. |
| Dietary and small expenses of wage earners | 574 kr. |
| Dietary for tourist drivers when traveling in Denmark | 75 kr. |
| Dietary for tourist driverswhen traveling in abroad | 150 kr. |
If you want to dive longer into the many nuances that makes the system flexible, we will recommend the following three articles (the articles are in Danish):
Anette Sand: Rejsefradrag og skattefri rejsegodtgørelse 2017
John Hannover: Rejseudgifter: fradrag og moms
SKAT: Skattefri rejsegodtgørelse
Remember to document your indemnities
As mentioned, the purpose with tax free indemnities is that the employer and the employee are free from a lot of administrative trouble. Even so, you cannot avoid dealing with documentation to be able to make the tax free payment. Luckily, this is the sort of documentation that you can structure and digitalize.
It is the employer’s responsibility to keep track of the following factors:
- The trip’s business goal and subgoal
- The amount of business travel days
- The trip’s beginning and end time
- The calculation of the compensation, which rates are used
A small notice to point two and three is that you cannot necessarily interpret the amount of the travel days from the travel’s beginning and end time. For example, a business trip can be combined with a private vacation and here it will be important to separate the business part of the trip from the private.
There is no standardized form to do the control with this information, but SKAT encourages that you use the same system when reporting and calculating every time. This is the employer’s responsibility to keep track of the control but missing documentation also falls back on the employee. The compensation will no longer be tax free if SKAT asseses the trip not to live up to the terms. It is an individual assesment from case to case, so nothing general can be said about when you are entitled to get tax free indemnity. However, SKAT has some fine examples under “Eksempler på rejsesituationer”. (Danish article).
Use Intempus to report your trips
Are you looking for a digital, cloud-based solution that can deal with the registration of indemnities? Then Intempus can help you out!
Intempus’ key area is time registration, but the system has been expanded with diverse additional modules. One of them is the handling of indemnities. In the following the respective factors that have to be documented are explained.
An indemnity is paid on the foundation of a concrete work task. It can be a customer, a meeting or the like. In Intempus the registration of the indemnity is bound up with a so-called project, that will correspond to the trip’s business goal and subgoal.
The amount of business relevant travel days
The amount of business relevant travel days
As a standard, Intempus will calculate the number of total days and starting hours between the trip’s beginning and end time. But if there have been private appointments during the trip, it will be possible to adjust the calculation manually.
The trip’s beginning and end time
It will be obligatory to choose the trip’s beginning and end time.
The calculation of the compensation, including which rates are being used
On the basis of the rate Intempus will convert the reported travel days to a total compensation.
Do you often make use of tax free indemnities? Would you like to try to keep track of everything via an app? Intempus makes it easy and automatic to report indemnities and other expenses – entirely in agreement with SKAT’s requirements. Contact us to hear more about your opportunities.
Or give us a call: +45 26390400
