Business travel is an active subject in companies of every dimensions: nowadays geographic movement is a concrete reality in a highly competitive market where exchange produces added value and business opportunities (just think about productive relocation and globalisation phenomena). Literally business travel corresponds to “changement of performances compared to that mentioned in the letter of engagement”. For this kind of working performances, expenses are reimbursed to the employee or/and he is given the socalled travel allowance: this consideration has a very particular tax and contributions system, often contractually regulated. But just go step by step.
What is a “Business travel”
A mission or business travel consists in an activity which the collaborator is asked to play out of his work place. The first assumption is the existence of a concrete place where the employee must go in order to carry out his own activity: usually the working place is mentioned in the contract or fixed by following communications of the company to the employee. Moreover, the employee must be charged to perform activities outside the working place. Finally, the third element is the temporary nature: a single travel duration has a timing beginning and ending.
When worker is on a business travel
In different cases employees performance is necessarily played outside the workplace and it is almost implicit in contractual qualification. For them, in different ways, there are different administrative systems, such as for example: meal and stay expenses reimbursement; meal and fuel tickets; km reimbursement tracked by private car; different kinds of reimbursements; and something else. We can therefore state that every company, save for a few exceptions, have staff going on a business travel. Business travels management problems, anyway, are different from one company to another and they are affected by the number of people and by the occurrence they travel; usually, this affects the amount of work necessary in order to fulfill all the administrative files, such as calculation and setting of all expenses incurred for worker’s travels.
Two elements of business travel: travel and stay
A distinction about the two travel elements is essential for all organisational, economical features and for fiscal results. Planning a travel can be difficult most of all when using means of transport such as plane: limited number of flights leaving and coming from specific destinations force you to book far in advance and to pay in case of booking cancellation; multi-route flights having more or less waitings in the airports; dates and hours constraints; possible delays in case of bad weather; high costs. These are the main reasons which can cause difficulties even to travel managers professionals such as travel agencies. Pool car fleet management can be, in some cases, very challenging: these cars are allocated time after time to the staff going to travel. Travel by train, by private car or by local publc transports of course, require a limited planning effort for travels in your area. Stay organisation can be very expensive. Hotels availability for stay is usually good because the most common and busiest places are equipped to support exceptional attendance peaks occurring only for some specific events or in some given periods. Another important element linked to stay is meal: usually it doesn’t require any planning and the collaborator directly takes care of it. Travel costs which we mentioned are the variable feature of the whole travel cost. A worker moving from Milan to Bologna and then to Cagliari will spend very different amounts for travels in the first two places while expenses for meals and stay will be comparable.
Fiscal laws concerning travel expenses, regulate expenses eligibility for company taxable income calculation: not the real earned income but that on which the company must pay taxes. This means that laws indicate which of these expenses are considered as costs and to what extent for the company, so they are admitted for incomes deduction. Every country, of course, has its own fiscal laws but all of them, in general, consider travel expenses differently from stay expenses. Usually travel expenses are fully deductible if they can be shown by the documentation required from the legislation itself. Stay expenses, instead, will be deductible within certain limits. In Italy, for example, they will be eligible in the amount of 180€ per day for national travels and of about 260€ per day for travels abroad. We think it is useful to mention another element that Italian I.R.S. takes into account in evaluating travel expenses eligibility for company income setting: the travel purpose. A travel productive activity is considered differently from an entertainment expense. In conclusion, another fiscal problem: VAT or value added tax. The price of goods and services bought by the company is generally burden by this tax which the State reimburses if the taxpayer shows the required documentation (invoices and accounting registry on which they must be transcribed). This is valid also for goods and services linked to travels and therefore to hotels and restaurants invoices etc.
According to what we mentioned previously, we can imagine that travel expenses can be due to those incurred for means of transport, meals (breakfast, lunch, dinner) and stay. Anyway, it is useful to notice that there are other expenses, usually cheaper, but that can cause high staff costs if company rules exist and if you wish to audit the right application. Here below you can find the most common ones:
- Telephone and Internet communications in the hotel
- Hotel mini-bar
- Dry-cleaners in case of short travel
- Coffees and cocktails
If you give to your employee, just for travel’s period, little daily forfait amounts covering these expenses, you have safe costs; by avoiding expenses audit, users consequently avoid the reporting of them.