An employer can reimburse employees for business related expenses.  These payments can be based on detailed expense notes (with underlying documentary evidence of the expenses). He can  also pay a lump sum expense allowance to employees, who are traveling in Belgium, to cover expenses for meals (breakfast, lunch and dinner) and lodging.

The reimbursement of business expenses is not treated as taxable income on behalf of the employee. This is also the case for these lump sum allowances, provided that certain conditions are met. The tax authorities accept the exemption, provided that the allowances are paid for actual business trips and that the amount paid by the employer does not exceed the amount of similar allowances, which are paid to government officials.

The administrative instructions state that the maximum amount of the allowances has to be determined on the basis of the function level. Employees are to be compared with government officials in order to determine their level and the related amount of cost allowance.

Short term business trips

In the past, only specific rules existed for short term business trips. In addition, the list (circular letter of 7 October 2011) of government allowances was limited to officials of levels B, C and D. There are, however, also officials of level A, and in 2011 the question was raised to the Minister of Finance, whether these higher amounts can be used by private companies for employees with similar functions.

Only recently the (new) Minister of Finance has provided further clarifications. In order to avoid discussions to arise on the application of certain allowances under the (rather complicated) old system, a standard system is introduced for both government officials and employees of private companies.

Under the new system, the highest amount, which has been determined by the government to cover business travel expenses is applied (this now also includes the allowance for officials with the levels A4 and A5) without the need for further distinctions between certain staff levels. The system is to be used under the following conditions:

• the allowance must be determined on the basis of the number of actual business travel days
• the business travel must cover at least a time span of 5 hours
• the amounts paid should  not exceed the ones as determined for government officials of levels A4 and A5, unless in case specific evidence is available, which could justify higher amounts

Business trips in Belgium

Currently (from January 1, 2013 onwards) the amounts for Belgian business trips are the following:

• for a trip within Belgium of more than 5 hours and up to 8 hours: 3,82 EUR
• for a trip within Belgium of 8 hours or more: 19,22 EUR
• for trips within Belgium of more than 5 hours, but less than 8 hours in case the 13^th and 14^th hours of the day are fully included: 19,22 EUR

For overnight stay, the allowance can be increased:

– lodging is fully paid by the employee: 43,78 EUR

– lodging is not paid by the employee: 23,04 EUR

In the past, a distinction was made between expenses for lunch, dinner and breakfast. This distinction is now abolished. The lump sum allowance is now deemed to cover the expenses for all meals and drinks, which are taken while working outside the company.

In case the above mentioned conditions are not met, the allowances will be treated as taxable remunerations on behalf of the employee, except if proof can be delivered that they are covering actual business expenses.

The new rules will be applicable from 1 January 2014 onwards and further administrative instructions will be issued.

Short term business trips

The principle that allowances can be paid out in the same way as for government officials also applies to short term foreign business trips.

For such trips a minimum daily allowance for short term business trips of  37,18 EUR can be paid out. Higher allowances are possible, based on the country list, used for government officials. In this case, the allowances depend on the country where the trip is performed. These allowances are deemed to cover expenses for meals and other small expenditures (such as local transportation, tips, local telephone communications). The following expenses are not included: lodging and transportation to and from the foreign work location.

The lump sumps for short term business trips only apply for employees, who have occasional foreign business travel and not for those employees, for whom foreign business travel is part of their regular professional activities. In addition, the allowances (including  the minimum allowance of 37,18 EUR) only apply for short business trips.  This has been defined as a trip not exceeding 30 calendar days.

Long term business trips

For longer trips, detailed evidence was up to now required to justify business travel cost reimbursements. Discussions have arisen on this topic and a number of rulings were made. Recently, new guidelines have been issued for the longer business trips (tax circular letter of 10 October 2013).

For business trips exceeding 30 calendar days lump sum expense allowances are now feasible under the following conditions:

• use can be made of either the minimum daily allowance of 37,18 EUR or of the allowance for assigned government officials (these are lower than the allowances for short term business trips);
•  lump sum allowances are only possible for individuals, working as employees or directors of companies; they can not be used by other types of tax payers (for example self employed persons) in order to calculate tax deductible business expenses;
• the individual is performing professional duties for a longer period of time abroad ; this is the case for assignments that require (for the same task) that the individual works abroad during more than 30 consecutive days and with a maximum of 24 months. This period does not include a voluntary extension of the foreign stay by the individual (for example due to holidays or other private purposes);
• the allowances can not be continued in case the employee or director is settling down in the foreign work location (in case of a long term assignment or permanent transfer);
• there can be no combination between the system of lump sum expense allowances and the so-called ABOS exemption;
• there can be no combination between the system of lump sum expense allowances with a system of reimbursement of meal expenses and the reimbursement of small expenses on the basis of expense reports and related documents (these are included in the lump sum).

In this context, it is also not possible for a director of several companies to combine (for the same overall trip) a lump sum allowance from one of these companies with a reimbursement of the fore mentioned expenses by the other company. The director can also not receive a tax exempt lump sum for a single trip from more than one company.

Reduction for day of departure/return

The full tax exempt daily amount can be paid out for each full day, spent outside Belgium. A full day is defined as the day between two overnight stays during a foreign mission. For the day of departure and the day of return to Belgium, only 50% of the lump sum can be paid out.

Content of the allowance and multiple allowances

The lump sum amount for long term business trips is deemed to cover expenses for meals and for other small expenditures. They do not include the hotel/lodging expenses nor the travel expense to and from the foreign work location. Small expenditures are costs of local transportation in the work location (metro, bus, tramway, etc…), drinks, snacks, local telephone costs and tips.

In case certain meal expenses and the small local expenses are already included in the hotel/housing expenditure, which is paid by the employer, the lump sum day allowance (determined on the basis of the list of the FOD for foreign affairs or at the minimum amount of 37,18 EUR) is to be reduced . The reduction for meals is as follows:

• breakfast: 15% of the lump sum
• lunch: 35% of the lump sum
• dinner: 45% of the lump sum
• for small local expenditures: 5%

This reduction does not apply to the lump sums for the day of departure from Belgium and of return to Belgium as the amount for those days in any way already has been reduced by 50%.

In case meal vouchers ( “maaltijdcheques”) are granted during the foreign work days, the lump sum daily allowance must be reduced by the employer contribution to these meal vouchers (with a maximum amount of 5,91 EUR per meal voucher).

The allowance for government officials differs from country to country. In case a business trip is made to several locations, the country, where the night is spent determines the amount of the daily allowance for the subsequent day.

Payment of higher amounts

In case an employer or company pays an allowance, which is higher than the above mentioned lump sums (country specific allowance or minimum allowance of 37,18 EUR), the excess amount is treated as taxable remuneration unless in case a double evidence can be delivered:

• the existence of actual higher expenses
• the use of the allowance in order to cover such expenses

The new rules have immediately become applicable and in addition can be used to resolve pending discussions or newly arising discussions on prior years.