There is a common belief that employees sent to work abroad should always receive daily allowances which constitute reimbursement of food costs and certain expenses. This view is incorrect. Indeed, foreign daily allowances are only due to a strictly defined group of workers.
1. Business travel and secondment
In order to determine the category of persons entitled to daily allowances, it’s necessary to explain the difference between a business travel and a secondment.
The notion of business travel has been defined by the legislator in Article 775 § 1 of the Labour Code. This provision states: An employee who, at the employer’s request, performs a professional task outside the city where the employer’s head office is located or outside the regular place of work shall be entitled to receivables to cover the costs related to the business travel. Therefore, a business travel is an employee’s departure outside the city where the employer’s head office or the regular place of work is located, during which the employee performs a professional task, based on the employer’s instructions.
The secondment hasn’t been defined by the legislator. The doctrine assumes that it’s characterised by a temporary change of the place of employment. This change requires the conclusion of an agreement between the employer and the worker amending the conditions of employment (the so-called export annex).
Foreign daily allowances are only available to workers on a business travel. These employees are also entitled to reimbursement of the costs of: travel, commuting by public transport, accommodation and other necessary and documented expenses, specified or recognised by the employer in accordance with justified needs. Seconded workers haven’t the right to daily allowances and other benefits related to the business travel.
2. Legal basis
The rules for determining the amount of foreign daily allowances and their payment are specified in the Regulation of the Minister of Labour and Social Policy of 29 January 2013 on the receivables due to an employee in a state or local government budgetary unit for a business trip (i.e. Official Journal of 2023, item 2190, as amended), hereinafter referred to as the regulation. The aforementioned legal act contains a regulation applicable to daily allowances and other receivables due for business travels made both in Poland and abroad. In the light of the subject of this article, we will limit further considerations to the topic of foreign daily allowances.
3. Amount of foreign daily allowances
Foreign daily allowances are used to cover the costs of food and other small expenses.
The amount of the daily allowance for a day of a business travel is specified in the annex to the regulation. For example: the foreign daily allowance for a day of work in Belgium is EUR 55, in France – EUR 55 and in Germany – EUR 49.
When determining the value of daily allowances, the destination country of the business travel matters. Indeed, foreign daily allowances are due in the amount applicable to the country of destination. If a business travel is to two or more States, the employer may determine more than one destination country.
For each full day of a foreign travel, the foreign daily allowance is payable in full. For an incomplete day of business trip, daily allowances are correspondingly lower and amount to:
- 1/3 of the daily allowance – in the event that the business travel lasts up to 8 hours,
- 50% of the daily allowance – in the event that the business trip lasts more than 8 to 12 hours,
- full daily allowance – in the event that the duration of the business travel exceeds 12 hours.
An employee who is provided with free full board is entitled to 25% of the daily allowance determined in accordance with the rules described above.
The value of daily allowances due to the employee is reduced by the cost of the free food provided to him/her. In such a case, it’s assumed that:
- breakfast constitutes 15% of the daily allowance;
- dinner constitutes 30% of the daily allowance;
- supper constitutes 30% of the daily allowance.
The rules for reducing the daily allowances by the value of meals provided to the worker don’t apply in the event that the employee uses a hotel service under which food is guaranteed.
A worker who receives money for food isn’t entitled to a foreign daily allowance. If the amount due is lower than the daily allowance, the employee should receive compensation from the employer up to the amount of the daily allowance due.
An employee who stays in hospital or other medical facility during a business travel should obtain 25% of the daily allowance for each day of stay in these facilities.
4. Taxes and social security
Due to the fact that daily allowances constitute reimbursement of the costs of food and small expenses, they were exempted from tax under Article 21(1)(16)(a) of the Personal Income Tax Act of 26 July 1991 (i.e. OJ 2024, item 226), hereinafter referred to as the Act. This provision exempts from income tax daily allowances and other receivables for the employee’s business travel up to the amount specified in separate acts or in the regulations issued by the Minister of Labour on the amount of and conditions for determining receivables due to an employee in a state or local government budgetary unit for a business trip in national territory or abroad.
Foreign daily allowances are also non-contributory. The basis for the exemption from the obligation to pay contributions is § 2 point 15 of the regulation of the Minister of Labour and Social Policy of 18 December 1998 on detailed rules for determining the basis for assessment of contributions to the pension scheme (i.e. OJ 2023, item 728, as amended), hereinafter referred to as the contribution regulation.
5. Daily allowances and secondment
As indicated earlier, seconded workers haven’t the right to foreign daily allowances. However, it should be noted that foreign daily allowances affect the amount of remuneration due to seconded employees. Indeed, the legislator provided in Article 21(1)(20) of the Act the income tax exemption of the part of the revenues obtained by workers seconded to work abroad. The part of the income being equivalent to 30% of the daily allowances and the product of the value of the days of stay abroad is exempt from tax. The exemption in question doesn’t apply to the remuneration:
- of an employee who is on a business trip outside the Republic of Poland;
- of an employee in connection with his/her stay outside the borders of the Republic of Poland in order to participate in an armed conflict or to strengthen of the forces of the state or allied countries, to participate in a peacekeeping mission, actions to prevent acts of terrorism or their consequences, as well as in connection with the acting as an observer in peacekeeping missions of international organisations and multinational forces, as long as he/she receives benefits exempt from tax under paragraph 1, point 83 or 83a of the Act;
- received by a foreign service member (Article 21(15) of the Act).
The provisions also allow for reducing the social contribution base for employees seconded to work abroad. Pursuant to § 2(1)(16) of the contribution regulation: The following revenue doesn’t constitute the constribution base: part of the remuneration of workers whose revenue is higher than the average remuneration referred to in Article 19(1) of the Act, engaged abroad with Polish employers, excluding the persons referred to in Article 18(2) of the Act – in the amount equivalent to a daily allowance for business trips abroad, for each day of stay, specified in the provisions on the amount of and conditions for determining receivables due to an employee working in a state or local government budgetary unit for a business trip abroad, with the reservation that the monthly revenue of these persons determined in this way, constituting the contribution base, can’t be lower than the amount of the average remuneration referred to in Article 19(1) of the Act.
6. Legal notice
The study is a work within the meaning of the Act of 4 February 1994 on Copyright and Related Rights (OJ 2006, No. 90, item 631, consolidated text, as amended). Publishing or reproducing this study or its part, quoting opinions, as well as disseminating in any other way the information contained therein without the written consent of Crede sp. z o.o. is prohibited.
