Expense Reimbursements

Are expense reimbursements taxable?

Written by
Jonas is Product & Content Marketer at Rydoo.

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The short answer is no. Business expenses are in principle not taxable, as long as they are:

1) deductible by local law

2) substantiated, which means that they can be proved.

Deductible expenses in a business context are typically things like car rental, hotel, and meals on a business trip and typically not things like admission to the museum, fines or penalties, clothes for work, etc. If employers choose to reimburse employees for all the fun they have on business trips, most of those expenses would not qualify as “deductible” and would need to be reimbursed as taxable wages.

Second, employees must submit receipts and other necessary substantiation to prove their expense reimbursements. In a lot of cases, employees also need to submit records of how those expenses were related to the business. Dinner for example can be deductible but only when it is related to business. For an expense to be deductible, it is the employee’s job to substantiate the claim with not only a receipt but documentation of the work purpose.

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