Business Travel: Everything Employers Need to Know

Business trips are often a fixed part of everyday business life. Whether for maintaining customer relationships, attending trade fairs, conducting contract negotiations or coordinating projects across locations, there are many business reasons why employees may need to work away from their usual place of work. If you send your employees on a business trip for this purpose, you as the employer are bound by a number of legal requirements. The following article provides a structured overview of the key obligations and regulations you need to observe.

What Counts as a Business Trip? Definition and Cases

A business trip generally occurs when employees leave their usual place of work on behalf of the employer to perform a professional task at another location. In Austria, tax law distinguishes in particular between the 1st case, the 2nd case and business trips based on wage-setting regulations. In Germany, the term commonly used is “beruflich veranlasste Auswärtstätigkeit” – a professionally required external activity, meaning work performed away from the employee’s home and first place of work.

It is important to distinguish this from ordinary work activity. Someone who regularly travels from customer to customer within their usual area of work is not automatically on a business trip. The decisive factors are the assignment, purpose, location, duration and the applicable employment law or collective agreement provisions.

Note: This article provides a general overview. It does not constitute tax or legal advice. For specific questions, please contact your tax advisor or an employment law expert.

Business Trip: 1st Case (Austria)

The 1st case applies in Austria when employees leave their place of work on behalf of the employer to work at another location, but daily return to their place of residence is reasonable. Typical examples are appointments in the nearby area, such as a customer meeting, a meeting at another branch office or training within reachable distance.

Example: An employee normally works in an office in Vienna and travels to a customer in St. Pölten for a half-day project meeting. She returns home on the same day. This may qualify as a business trip under the 1st case. For the tax-free treatment of daily allowances, however, it is important whether a new center of activity is established at the assignment location. If work is carried out regularly at the same assignment location, specific time limits apply.

Business Trip: 2nd Case (Austria)

The 2nd case applies to business trips where employees work so far away from their usual place of work or place of residence that daily return is not reasonable. In Austria, return is considered unreasonable in any case from a distance of 120 kilometers.

Example: An employee from Vienna is sent to Innsbruck for a project lasting several weeks. Daily return would not be practical. In this case, daily allowances can be granted tax-free at one and the same location for a limited period. From the seventh month at the same location, paid daily allowances generally become taxable. If the place of work changes, the period starts again.

Business Trip Under Applicable Remuneration Regulations (Austria)

If a wage-setting regulation, such as a collective agreement, works agreement or statutory provision, contains its own definition of a business trip, this definition takes priority. This third case is particularly relevant in practice for industries with a high proportion of field service or assembly work.

Typical activities covered include field service and customer visits, driving activities such as delivery services and transport, construction site and assembly work, and temporary agency work.

Example: A fitter employed by an electrical company who travels to different construction sites in several municipalities each week is typically subject to collective agreement business trip rules. Daily allowances of up to a maximum of 30 euros per day can be paid tax-free without a time limit, as long as the collective agreement requirements are met.

Germany: In German income tax law, the term “external activity” is used when employees temporarily work outside their home and their first place of work. The tax rules for meal allowances and travel expenses are set out in Section 9 of the German Income Tax Act (EStG).

Travel Time on Business Trips: Active and Passive Travel Time

Employers who send employees on business trips also need to deal with the question: what actually counts as working time, and what does not?

The basic rule is: travel time is always working time. Whether it counts as normal working time or must be compensated as overtime depends on the applicable collective agreement, a works agreement or the individual employment contract.

Practical Note for Employers: Since the rules vary considerably depending on the applicable collective agreement, a clear contractual agreement on the compensation of travel times is recommended. Without such a rule, the entire travel time must be remunerated with full pay, which can lead to unexpected additional costs.

Travel Expenses for Business Trips: Daily Allowance, Mileage Allowance and More

If your employees incur costs during a business trip, you as the employer are generally obliged to reimburse them.

The most important travel expenses include:

• Travel costs, such as train, flight, taxi, rental car or mileage allowance
• Additional meal expenses in the form of daily allowances or meal allowances
• Overnight costs, such as hotel costs or overnight allowances
• Incidental travel expenses, such as parking fees, tolls or necessary telephone costs
• Other documented expenses if they are directly related to the business trip

The specific rates and legal bases differ by country: while collective agreement provisions are decisive in Austria, Germany is guided by the tax allowances under the Income Tax Act. Correct accounting protects against legal risks and secures tax benefits.

Daily Allowance for Business Trips

The daily allowance, referred to in Germany as a meal allowance or additional meal expense allowance, is used to compensate employees on a flat-rate basis for additional costs incurred due to meals away from home. It can be paid without individual receipts.

The calculation methods differ for one-day and multi-day business trips. For multi-day trips, the arrival day, full travel days and departure day must be considered separately.

Important for employers: employment law entitlement and tax-free treatment are not the same thing. A collective agreement may provide for higher amounts, but only the permitted maximum amount is tax-free. The remainder may be taxable.

Mileage Allowance for Business Trips

If employees use their private vehicle for a business trip, they are entitled to reimbursement of the resulting costs. The mileage allowance is a flat rate that covers all vehicle costs, including fuel, wear and tear, insurance and maintenance.

Overnight Allowance and Travel Expense Allowance

Multi-day business trips involve accommodation costs. Here, too, there are clear rules for tax treatment.

How free-com Supports Travel and Expense Accounting

In many companies, the process for travel and expense accounting is still paper-based and chaotic: collecting receipts, searching for photos in emails, filling out Excel files, looking up daily allowances, calculating mileage allowances, reminding managers, answering queries, submitting missing receipts. In short: a lot of work.

free-com helps companies handle travel requests, travel expenses and other expenses digitally and transparently. The entire process can be mapped centrally, from planning and receipt capture to approval and transfer to downstream systems.