Travel expense report

What is a travel expense report?

A travel expense report is a summary of all costs incurred by a company as a result of a business trip. Employees can use the travel expense report to claim reimbursement of the costs and expenses incurred by the company in connection with the business trip.

These include travel and accommodation costs, meals and incidental travel expenses such as parking fees.

What counts as a business trip?

It is a business or official trip if the entrepreneur, managing director or employee has to temporarily leave the business premises or private home for professional reasons. In tax law, this is called a work-related away activity.

However, not every away activity is recognized as a business trip. If the customer or business partner is located within their own city, this is not considered a business trip. Accordingly, there is no entitlement to reimbursement of travel expenses.

Usual occasions for business and official trips are:

• Customer appointments outside your own city
• Meetings with business partners outside your own city
• Trips and stays for trade fairs, training courses, congresses, seminars, etc.
• Travel to other operating sites of the company

What is included in a travel expense report?

Travel expenses include:

• Travel costs
• Accommodation costs
• Incidental travel expenses
• Additional meal expenses

As a rule, the employer pays the travel expenses. They can deduct them from tax as business expenses. In any case, it is important to keep all receipts, such as fuel receipts, hotel bills, public transport tickets, etc. and send them to the employer. It also makes sense to keep a logbook for a precise overview.

What are the formal requirements for a travel expense report?

In general, there are no formal requirements for a travel expense report. It is perfectly possible to do this by hand on a normal sheet of paper. Neither a signature nor a specific form is required.

However, the use of a standardized form is advantageous for every company. This makes auditing easier for the accounting department and also prevents unnecessary errors. A standardized form is particularly useful in companies where business trips are the order of the day.

Why is a travel expense report important?

The main reason for preparing a travel expense report is to prove the costs incurred to the tax office. Only by providing written proof of the costs will the expenses remain tax-free for the employee and only then can the company claim the costs exclusively for tax purposes. To provide this proof, the company must prepare a travel expense report with an overview of all expenses incurred as well as the corresponding receipts. This travel expense report, including all receipts, should be carefully stored and archived.

If no travel expense report can be provided, the employee is at risk of being taxed on the reimbursements and thus having payroll taxes deducted from their pay slip. The company is also unable to claim these costs as expenses for tax purposes, thereby increasing its taxable income and thus its tax burden.

Which travel expenses can be claimed?

Travel expenses are business expenses and therefore reduce the tax burden. A distinction is made between four types of costs:

1. Travel costs
2. Accommodation costs
3. Additional meal expenses
4. Incidental travel expenses

All costs should be documented and the corresponding receipts should be kept. Only in this way can the costs be claimed and input tax deducted.

What are travel costs?

Travel costs are incurred when using means of transportation other than your own company car. This includes all costs incurred in the course of outward and return journeys as well as journeys home. In particular, these are the following means of transportation:

• Private car
• Rental car
• Airplane
• Railroad
• Cab

Recording the costs for public transportation is easy thanks to the receipt provided. There are special rules for calculating travel expenses for private car use. Either a flat rate per kilometer or the vehicle-specific kilometer rate is selected.

If the mileage allowance is used, the traveler can deduct 30 cents per kilometer driven by car or 20 cents per kilometer by motorcycle or moped. If the vehicle-specific mileage rate is used, this must first be determined. The traveler must then add up the total annual costs incurred for the private car and divide them by the total number of kilometers driven.

What are accommodation costs?

These are all costs associated with the traveler’s overnight stay. These are usually

• Hotel accommodation costs
• Rent for apartments

What are additional meal expenses?

It is assumed that the traveler’s meals on a business trip are more expensive than at the place of business. This additional expense is to be compensated accordingly. Travelers have the opportunity to receive up to 28 euros per day if they are traveling within Germany. This lump sum can only be reduced, but not increased.

What are incidental travel expenses?

These include costs that are incurred incidentally during a business trip but are not directly related to personal advancement. Examples of incidental travel expenses are

• Telephone costs
• Self-paid meals
• Tips
• Tolls
• Costs for WLAN in the hotel
• Parking and toll charges
• Storage fee for luggage
• Losses on the purchase and sale of foreign currencies
• Damage to luggage
• Compensation in the context of a traffic accident
• Theft of work-related items
• Theft of private items used for professional purposes
• Personal & necessary travel items are stolen

The usual VAT rates of 19% apply here. Entrepreneurs can deduct input tax on costs for which receipts are available.

How is a travel expense report created?

As there is no obligation and therefore no formal requirements for a travel expense report, it can be created at your own discretion. A simple Excel template or specialized software can be used. However, it is important that all costs and receipts are documented in a comprehensible manner for the tax office. If lump sums are used, the calculations must be checked. It may therefore be worthwhile using appropriate software if you travel a lot.

It is recommended that the following elements be documented as part of the travel expenses:

• Name of the person traveling
• Date (including original time of start and end of the trip)
• Trip duration
• Reason / Occasion
• Destination
• List of costs incl. disclosure of taxes
• Vouchers and receipts as an attachment to the invoice
• Signature

Who may prepare a travel expense report?

All persons who undertake business trips are permitted to prepare a travel expense report. This applies to entrepreneurs as well as all employees of the company.

Is the preparation of a travel expense report mandatory?

There is no legal obligation to prepare a travel expense report. Nor can an employee force a company to do so. As a result, companies do not have to reimburse their employees for meals and overnight stays. In these cases, individuals can claim the costs incurred as income-related expenses in their income tax return.

What costs are not reimbursed?

The following costs are generally not reimbursed, as they do not correspond to the character of a work-related away activity.

• Fines (fare evasion, speed cameras, illegal parking…)
• Minibar in the hotel
• Pay-TV
• Costs for additional luggage (suitcases)
• Massages