Employers can reimburse their employees as compensation for the expenses (such as maintenance, restaurants and hotels) incurred while employees are on a business trip. In Luxembourg, the employer can choose to reimburse the employee’s actual expenses (proved by valid receipts) or pay per diems to the employee.
Up to a certain amount, per diems are not considered part of an employee’s pay and are thus tax free. These maximum amounts differ based on the destination of the business trip and will be discussed below.
A per diem includes a day compensation and a night compensation. The day compensation is granted for each day the employee is on a business trip. It is not necessary to keep and submit proof of the expenses for the day’s compensation. For the night compensation, which is covering expenses such as accommodation, breakfast and related taxes, it is necessary to submit proof of the expenses. When receipts are not submitted, the employer can only grant 20% of the full daily allowance tax free.
Domestic business trips
The maximum tax-free amounts for domestic trips are the following:
|Day compensation||Night compensation|
The rates applicable in 2022 remained the same for 2023.
Business trips abroad
As mentioned, the maximum tax-free per diem rates depend on the destination of the business trip. You can find the different rates per country that apply for 2023 below at the end of the article.
Additional notes about per diems for business trips abroad:
- A business trip is considered to be a business trip abroad when the destination is more than 25km from the Luxembourg border.
- For countries that preside over the Council of the European Union, the maximum amount of the night allowance are increased by 10 % for the duration of the presidency. You can look up the timeline and schedule of presidencies on the website of the Council of the European Union.
- Czech Republic: 1 July 2022 – 31 December 2022
- Sweden: 1 January 2023 – 30 June 2023
- Spain: 1 July 2023 – 31 December 2023
Business trips from abroad to Luxembourg
The maximum tax-free amount for employees normally working abroad and going on a business trip in Luxembourg are the following:
|Day compensation (2022)||Night compensation (2022)||Day compensation (2023)||Night compensation (2023)|
Business trips abroad: per diem rates 2023
|Day compensation (in €)||Night compensation (in €)|
|– Hong Kong||80||330|
|United Arab Emirates||80||250|
|United States of America||80||170|
|– New York||100||260|
|– San Francisco||85||230|
|– New Delhi/Mumbai/Calcutta||60||250|
|– The Hague||60||210|
|– St. Petersburg||80||240|
|Rest of the world||70||200|
Source: Government regulation of 2 December 2022
You can find the rates applicable for 2022 here.