Tax-exempt allowances in 2012 for business travel

Decision of the Finnish Tax Administration on tax-exempt allowances for travel expenses in 2012

Under § 73 and § 75.2 of Income Tax Act (TVL) of 30 Dec 1992 (1535/1992), including the amendments by Act no 504/2010, the Finnish Tax Administration has set out the following:

§ 1

The criteria for and amounts of allowances for travel expenses, to be considered exempt from tax in the 2012 taxation, shall be as prescribed in this decision below.

§ 2

Travel expenses are the costs arising from a taxpayer's business travel in the territory of Finland or other countries.

§ 3

Business trip means any short-term trip by an employee in performing his duties to a place where he temporarily performs working tasks or conducts business, distinct from his regular place of work. If, because of the nature of his work, the employee has no regular place of work, any short trip by employee from home to a temporary place of employment is a business trip

Furthermore, trips under the following circumstances are also regarded as business trips:

1. Location of the workplace is elsewhere than inside the facilities or establishments that belong to the employer or to a closely related corporate entity within the employer’s sphere of interest;
2. Work falls into the definition of temporary work under § 72a, Income Tax Act (TVL)
3. Location is at a distance exceeding 100 kilometres from the taxpayer’s home;
4. Taxpayer has stayed overnight, due to the trip to the workplace, in temporary quarters, which are necessary because of the distant location of the workplace.

Nevertheless, travelling or commuting between home and regular place of work is not considered a 'business trip' or 'travelling in business'. This also concerns weekend travel or other similar travel between home and a temporary place of employment, during a longer work assignment spanning several work weeks.

If it is typical for the line of work that the location of employment changes frequently because of the short-term nature of work in the particular sector, daily travel from home to a temporary 2 location will only make the employee eligible to receive allowances for 'travel expenses proper' referred to in §7, §8 and §9 below, if the employee has no main or regular place of work. The employee shall, however, also be entitled to meal money (§14) if he has no opportunity to benefit from meal services arranged by his employer on the temporary location or in its immediate vicinity.

§ 4

Travel, which is made otherwise than as referred to in section 3, paragraphs 1 and 2, by an employee to his secondary workplace, only makes the employee eligible to receive allowance for 'travel expenses proper' (see §7, §8 and §9), and to receive allowance for accommodation (see §16). Secondary workplace means such ordinary establishment of the employer, or another corporation within the same sphere of interests with the employer, which is situated in another area, or another state, than the employee’s primary, main or regular place of work.

Travelling to and from an employee’s separate accommodation and his secondary workplace does not entitle the employee to receive allowance for 'travel expenses proper' when the separate accommodation is necessary because of the location of the secondary workplace.

§ 5

The main or regular place of work is the employee’s permanent place of employment. If, owing to the itinerant nature of his work, the employee has no permanent place of employment, the main or regular place of work is considered the place where he receives his assignments and keeps the clothes, tools or materials that he uses in his work, or any other location with a similar function in respect of the performance of his duties.

§ 6

A day of travel means a period of no more than 24 hours beginning from the time that the employee sets out on a business trip from his workplace or home. A day of travel ends when the employee returns from a business trip to his workplace or home.

§ 7

Allowance for travel expenses proper to be paid for business travel means reimbursement for tickets for travel, seats or sleeping car berths and other comparable expenses directly related to travel.

Allowance for travel expenses proper also includes costs for the transport of tools and other such
equipment that the employee must take with him.

§ 8

The maximum allowance for travel expenses, payable for business travel by the employee using
transport, other, than a motor vehicle owned or held by him, is the amount spent on travel expenses proper, demonstrated with receipts provided by the transport company or other reliable proof.

§ 9

The maximum allowance for an employee’s business travel using a means of transport owned or held by him shall be:

If other persons, for whose transport the employer is responsible, travel in a vehicle owned or held by the employee, the maximum allowance referred to in paragraph 1 is raised by 3 cents per Km and passenger.

If an employee, enjoying the company car benefit known as the limited benefit (käyttöetu; förmån att använda bil), referred to in the official decision of the Tax Administration on benefits-in-kind, uses this car for business travel and pays the fuel costs involved, he is entitled to a kilometer allowance of no more than 12 cents per Km.

§ 10

Per diem, i.e. daily allowance means coverage for a reasonable increase in meal expenses and other living expenses incurred by the employee during business travel. Thus, per diem does not include allowance for travel expenses proper or accommodation expenses.

§ 11

Per diem is payable only for such a day when the temporary place of employment is located more than 15 Kms away from either the employee’s main or regular workplace or his home, depending on where the travel begins. Moreover, the temporary place of employment should be more than 5 Kms away both from the main or regular workplace and from home.

§ 12

Depending on the duration of a business trip, the maximum per diem amounts are the following

For any day of travel, when the employee receives free meals, or meals included with the travel ticket, the maximum per diem is half the amount specified in paragraph 1. Free meals comprise two free meals in the case of full per diem, and one free meal in the case of partial per diem.

§ 13

The maximum per diems payable for business travel outside Finland shall be as follows:

The per diem allowance concerns one day of travel. A day of travel is 24 hours from the beginning of abusiness trip, or 24 hours of the end of the preceding day of travel.

The maximum amount of per diem is defined on the basis of the country or region where the day of foreign travel ends. If the day of travel ends on a ship or airplane, the amount should be based on the country from where the ship/airplane last departed or, if leaving Finland, where it will first arrive.

Upon returning to Finland, the employee is entitled to half of the per diem for foreign travel paid for the last completed day of travel, if the length of the business trip exceeds by more than two hours the last full day of travel, which ended in foreign territory or in a ship or airplane departing from such a territory.

If the length of a business trip exceeds, by more than ten hours, the last full day of travel, which ended in foreign territory or in a ship or airplane departing from such a territory, the employee is entitled to per diem for foreign travel for the last full day of travel. The maximum amount payable, for a day of travel or part thereof, beginning after the employee returns to Finland, should be determined as prescribed above in § 12.

For any business trip in foreign countries lasting a minimum of 10 hours, the employee is entitled to the confirmed amount for the relevant country. If the total duration of the trip is shorter than 10 hours, the amount should be paid in accordance with the provisions and amounts applicable to domestic travel.

If the employee receives free meals or meals included in the price of a ticket or a hotel room, the per diem should be reduced by 50 per cent. For the purposes of calculation of per diems for foreign travel, two free meals constitute ‘free meals’.

If a business trip outside Finnish territory is made, the work being done under exceptional circumstances at the request of an employer located in Finland, and the employee returns to Finnish territory for the night, and no per diem is being paid under § 12 above, the maximum allowance for business travel, by derogation from paragraph 1 above, is €18.00.

§ 14

Meal money can only be paid if no per diem is being paid, and the assignment prevents the employee from having a meal at his normal eating-place during his meal break. The maximum meal money amount is confirmed as €9.00. If the employee has to have two meals at a place other than his normal eating-place during a business trip, and no per diem is being paid, the maximum meal money equals €18.00.

§ 15

The maximum allowance for accommodation, payable over and above the per diem, is the amount shown on a receipt or other reliable written proof provided by the accommodation establishment.

§ 16

The maximum allowance for accommodation payable, over and above the allowance for travel to the secondary workplace, is the amount shown on a receipt provided by the accommodation establishment, or a reasonable amount shown on other reliable written proof.

§ 17

An allowance for night travel is payable only if at least 4 hours (during a day of travel for which the employee is entitled to a per diem) are between the hours of 09:00 PM and 07:00 AM, and if the employer does not arrange any free accommodation for the employee, or pay him allowance for accommodation or for a sleeping car berth. The maximum allowance for night travel is €12.0

§ 18

Seafarers: The foregoing provisions on allowances for travel expenses are applicable to the tax-exempt allowance under the law, payable to taxpayers earning seafarer’s income.

§ 19

This decision comes into force on January 1, 2012, and is applicable to business travel or part thereof taking place in 2012.

Helsinki, December 7, 2011.