Term and Legal Classification of Per Diems
Definition
In German law, ‘Auslösungen’ refers to all payments granted to employees to compensate for additional expenses incurred during work-related assignments away from their usual workplace. Their primary purpose is to cover additional costs arising from business or official trips—particularly accommodation, meals, and incidental travel expenses. The legal foundation for Auslösungen is found mainly in tax law, social security law, and employment law.
Distinction from Related Terms
Auslösungen are often equated with travel expenses, allowances, or daily rates. In practice, however, there are differences. While Auslösungen receive specific tax treatment, travel expenses encompass all costs arising from business travel, such as transportation, accommodation, or additional meal expenses. ‘Spesen’ is a generic term for any reimbursable outlays. ‘Tagegelder’ refer specifically in Austria or Switzerland to lump sum payments for meals and incidental expenses.
Legal Basis for Per Diems
Tax Treatment under the Income Tax Act (EStG)
The most important statutory regulation for Auslösungen is found in the German Income Tax Act (EStG). According to § 3 No. 16 and § 9 EStG, certain Auslösungen are considered tax-free income if they are paid as compensation for actually incurred additional job-related expenses.
Additional Meal Expenses
During work-related assignments away from home, employees can claim additional meal expenses as income-related expenses or receive tax-free Auslösungen (lump sums) from their employer. The amounts of these lump sums are set out in § 9 para. 4a EStG and are updated annually.
Accommodation and Overnight Costs
In addition to additional meal expenses, the possibility of tax-free reimbursement also includes accommodation and overnight costs (§ 9 para. 1 no. 5 EStG). Employers may reimburse these costs tax-free against corresponding proof or in lump sum form.
Documentation Requirements and Tax Limits
Tax recognition of Auslösungen requires that the assignment away from the regular workplace is demonstrably work-related. Both employer and employee are obliged to retain the relevant documentation—such as travel receipts, records of activities, and billing records. If the amounts paid exceed the permissible lump sums, the excess amount must be treated as taxable wages.
Employment Law Aspects of Auslösungen
In employment law, there is generally no statutory entitlement to Auslösungen unless otherwise stipulated in an employment contract, collective bargaining agreement, or works agreement. However, entitlement can arise based on company practice or customary law if the employer regularly pays Auslösungen.
Collective Bargaining Agreements and Works Agreements
In many sectors, particularly construction and transportation, collective bargaining agreements regulate the details of Auslösungen—such as their amount, conditions, and billing procedures. Works agreements may also contain relevant provisions.
Purpose Limitation and Revocability
Auslösungen are earmarked for the reimbursement of additional expenses. Any use for purposes other than intended may give rise to an employer’s right to reclaim the amounts. The revocability of Auslösungen depends on the relevant agreements and general principles of employment law.
Social Security Treatment
From a social security law perspective as well, tax-free Auslösungen are not included in the contributable earnings (§ 1 para. 1 no. 4 SvEV). The prerequisite is compliance with the maximum limits set out in the Social Security Remuneration Ordinance (SvEV). If these amounts are exceeded, the portion above the limit is subject to contributions.
Auslösungen in Practice
Prerequisites for Entitlement
An entitlement to Auslösungen typically requires that the work activity takes place outside the employee’s primary workplace (formerly ‘regular workplace’). The defining criteria are based on the definition of ‘work-related assignment away from home,’ as described in R 9.4 LStR (German Income Tax Guidelines).
Calculation and Payment
The amount of the per diem depends on the actual additional expenses or the statutory lump sums. The employer may grant tax-free Auslösungen as an advance payment, as reimbursement against receipts, or as a lump-sum meal allowance.
Reclaim and Liability
If it subsequently transpires that the prerequisites for payment of Auslösungen were not or no longer fulfilled, the employer may assert claims for repayment. Employees are obliged to reimburse any overpaid amounts.
Particularities in Certain Industries
Construction Industry
In the construction industry, per diems are a central component of remuneration. Employees working at changing job sites regularly receive collectively bargained Auslösungen to cover their additional expenses.
Transport and Logistics Sector
Auslösungen are also common in freight transportation, as well as among taxi drivers or professional drivers, since working regularly at changing locations is inherent to these occupations.
Legal Consequences of Incorrect Handling
Tax Liability
If Auslösungen are paid tax-free beyond the permitted maximum limits, the employer is liable for any payroll taxes not withheld. Employees are also obliged to declare any excess Auslösungen as salary income in their income tax return.
Social Security Contributions
Auslösungen that are incorrectly calculated or set too high are subject to social security contributions. This can result in subsequent payment demands and, where applicable, fines.
Summary
Auslösungen are a legally complex area involving employment law, tax law, and social security law alike. The statutory framework specifies when and to what extent Auslösungen may be granted free of taxes and social security contributions. What matters is that they are both business-related and documented. Both employers and employees benefit from clear documentation of all assignments away from the regular workplace and complete accounting of all additional expenses incurred. Changes in statutory provisions and industry-specific agreements must always be considered when handling Auslösungen.
Frequently Asked Questions
When does a legal entitlement to Auslösung exist?
A legal entitlement to Auslösung generally exists when an employee, within the scope of their employment relationship, works outside their regular workplace and thereby incurs additional costs—especially for meals or accommodation. The requirements and scope of such an entitlement arise either from the individual employment contract, a works agreement, the applicable collective bargaining agreement, or, in the public sector, from the relevant statutory or collectively agreed regulations (e.g. the Federal Travel Expenses Act or TVöD). In the absence of an explicit provision, an entitlement may exceptionally arise from established company practice, particularly if Auslösungen have been paid regularly over an extended period. The employer cannot unilaterally refuse to pay Auslösungen without legal grounds if there is such a company practice.
How much are the Auslösungen and how are they calculated?
The amount of Auslösungen is not uniformly regulated by law; it depends either on the applicable collective bargaining agreement, an arrangement between the parties, or—in the public sector and for business trips abroad—on the provisions of the Income Tax Act (§ 3 No. 16, § 9 para. 4a EStG) and the publications of the Federal Ministry of Finance on lump sums. Usually, the amount is determined by the duration of absence and the location of the activity. Daily allowances for meals and separate allowances for accommodation are common. Adjustments to the amounts are regularly possible when statutory or collectively agreed changes occur. In the absence of contractual or collective agreements, practice often refers to tax law provisions.
Are Auslösungen subject to social security contributions and income tax?
Auslösungen can be tax-free and exempt from social security contributions under certain conditions. This applies if they are granted as so-called additional meal allowances or lump-sum overnight allowances, do not exceed the official lump-sum rates, and are paid for actual, business-related assignments away from home (§ 3 Nos. 13, 16 EStG, R 9.6 LStR). If the amounts paid exceed these limits or if there is no corresponding evidence of use for business purposes, the excess amounts are subject to income tax and social security contributions. In this context, employers are required to conduct a review and, if necessary, tax the amounts accordingly.
Can the employer unilaterally reduce or discontinue Auslösungen?
A reduction or discontinuation of Auslösungen by the employer is only possible if there is no statutory, collectively agreed, or contractual obligation to pay, or if the parties have expressly agreed to such. However, if there is an entitlement based on a collective bargaining agreement or an individual contract, the employer cannot unilaterally withhold payment or reduce the amount. The situation differs if the Auslösung is designated in the employment contract as a voluntary benefit with an appropriate reservation of voluntariness. Established company practice may also give rise to an entitlement that cannot be unilaterally altered. In such cases, any changes require the employee’s consent or a notice of amendment.
What happens in the case of illness or vacation during an assignment away from home?
In the event of illness during an assignment away from home, entitlement to Auslösung generally continues as long as the employee remains at the work location due to their job and actually incurs additional expenses. If the employee becomes incapacitated for work and returns home, the entitlement ends on the day of return. During vacation, there is generally no entitlement to Auslösung, since no work-related assignment away from home takes place. Exception: Collective bargaining agreements or company provisions expressly provide otherwise.
How can Auslösungen be enforced in court in the event of a dispute?
In case of dispute, Auslösungen can be claimed in the labor courts. The basis is the relevant contract (employment contract, collective bargaining agreement, established company practice, etc.) from which the payment claim arises. The employee must present specific evidence for the claim—such as proof of assignments away from home, periods of absence, and the applicable lump sums or actual additional expenses. If these cannot be substantiated, there is a risk of loss of entitlement. The court also examines whether the employer can justify any refusal of payment (e.g., in cases of abuse or lack of entitlement). Limitation periods must also be observed; these are generally stipulated by collective bargaining or statutory exclusion periods.
