Three-month rule

Companies can deduct the costs of business trips from their taxes via income-related expenses. Likewise, lump-sum allowances for meals, which employers can apply to travel expenses, also apply. However, these possibilities are only limited to the first three months of the business trip. In this case, the so-called "three-month period" applies. We explain all the important details of this regulation.

What does the 3-month deadline for travel expense claims mean?

The Income Tax Act stipulates that the three-month period applies when working at a place of work away from home. This means that employees on a business trip may only receive tax-free per diems from their employer within the first three months of their trip. The period begins with the day of arrival at the place of work away from home. Employees must work there for at least three days in a row for the 3-month period to be valid.

How is the three-month rule applied?

The three-month rule starts with the beginning of the work away from home. If the journey already counts as working time, the period begins with the arrival. The three-month period can also extend beyond the end of the year. If an employee starts his business trip on 29 December, the period also extends into the new year.

The three-month period is also not interrupted if employees take leave during their work away from home. The same applies in the case of illness. If employees fall ill while working away from home, the period of illness does not count towards the three-month period. Similarly, parental leave or maternity leave are not deducted from the time limit. Even if workers temporarily return to their workplace, the three-month period continues to run.

Exception 1: Only if the professional activity at the place of work away from home is interrupted by at least four weeks, due to holiday, illness or return home, does the three-month period start anew when the activity away from home is resumed.

Exception 2: If the activity at the same place of work away from home is only carried out two days per week, the entitlement to a per diem meal allowance remains. This is because the three-month time limit only applies if employees work away from their usual place of work for at least three days in a row. Companies can avoid the time limit if employees always return on the second day.

Exception 3: If an employee works for several clients away from home, the three-month period can also be can also be circumvented. This is the case if the clients are in different locations. The three-month period starts anew each time after the journey to the new client, even if the client visits are carried out within the same business trip and the trip lasts longer than three months in total.

What does the three-month period mean for the travel expense report?

Companies must pay attention to whether or not the three-month period must be applied when their employees work away from home for a longer period of time. Accordingly, they may only reimburse per diems for meals tax-free for the first three months. If the reimbursement period is longer than the time limit, employees can claim their additional costs for meals on the business trip itself as income-related expenses for tax purposes.

With the travel expense report via app you are on the safe side with the three-month deadline

The three-month rule can make travel expense reporting complicated for companies. This is especially true when several employees are on business trips and their places of work change as well as the duration of the trips varies. With Circula's travel expense software you create clarity, because the tool also takes into account legal requirements such as the three-month rule for you.