An expense report documents costs that employees advance during business trips or work-related activities and are reimbursed for by their employer. These include meals, accommodation, travel costs, and entertainment expenses — each subject to legally defined flat-rate allowances and receipt requirements. HR professionals should establish a clear expense policy to ensure compliance and reduce the administrative burden on employees.
What Is an Expense Report?
An expense report is the systematic recording and reimbursement of work-related costs that employees pay out of pocket during their professional activities — for example, on business trips, client visits, or training courses. In Germany, the term "Spesen" (expenses) is often used interchangeably with "Reisekostenvergütung" (travel cost reimbursement), though it has a broader legal meaning.
The legal basis is provided by § 670 of the German Civil Code (BGB): employees are entitled to reimbursement from their employer for all expenditures they could reasonably consider necessary to carry out their professional duties. This means expenses are not part of an employee's salary, but a reimbursement of outlays — and therefore generally tax-free, as long as they remain within statutory limits.
Expenses must be distinguished from what is known as a "non-cash benefit" (geldwerter Vorteil): if a reimbursement exceeds the statutory flat rates, or if the costs were privately motivated, income tax liability arises.
Legal Framework
§ 670 BGB: Entitlement to Reimbursement
§ 670 BGB obliges employers to reimburse employees for expenses incurred in the course of their professional duties. This civil-law entitlement exists regardless of whether a formal expense policy is in place within the company.
Income Tax Act (EStG): What Is Tax-Free?
The German Income Tax Act (Einkommensteuergesetz, EStG) defines which reimbursements remain tax-free:
- § 3 No. 13 EStG: Travel cost reimbursements paid by an employer for business-related trips are tax-free — provided they do not exceed the statutory flat rates.
- § 3 No. 16 EStG: The same applies to allowances for dual household maintenance.
- § 4 Para. 5 EStG: Entertainment costs are only 70% deductible as a business expense — and only with a complete receipt (date, venue, occasion, attendees, amount).
BMF Circular: Current Meal Allowances
The German Federal Ministry of Finance (Bundesministerium der Finanzen, BMF) publishes the tax-free per diem rates for additional meal expenses annually. These are binding for both employers and employees — any reimbursement above the flat rate must be treated as taxable income.
What Can Be Claimed?
Meal Allowances (Per Diem)
The meal allowance (Verpflegungsmehraufwand) is the most frequently claimed expense category. It is reimbursed as a flat rate — no individual receipts are required. The relevant factor is the employee's duration of absence from their primary place of work:
For international travel, country-specific flat rates apply in accordance with the current BMF table, which is updated annually on 1 January. It is recommended to check the current BMF announcement before publication.
Accommodation Costs
Overnight accommodation is generally reimbursed based on actual costs (hotel invoice in the name of the company or the employee). There is no statutory flat rate for domestic overnight stays — actual costs are deductible, provided they are reasonable.
Travel Costs
- Private vehicle: €0.30 per kilometre (statutory mileage rate per wage tax guidelines)
- Public transport: Reimbursement of the actual fare (receipt required)
- Train/flight: Reimbursement per booking receipt; companies may specify internal travel class policies
Entertainment Expenses
When clients, business partners, or job candidates are entertained, 70% of the net cost is tax-deductible (§ 4 Para. 5 No. 2 EStG). The receipt must include: date, venue, names of all attendees, purpose of the business meal, and the total amount. If any of these details are missing, the tax deductibility is at risk.
Other Out-of-Pocket Expenses
These include parking fees, taxi and rental car costs, luggage storage, or work-related phone charges — each requiring a receipt and a clear professional justification.
Expense Allowances 2025: Current Rates at a Glance
Note: Meal allowances are updated by the BMF on 1 January each year. Please check the current rates in the official BMF circular before publishing or updating your expense policy.
Receipt Requirements: What Must Be Kept?
Receipt obligations depend on the type of expense:
- No receipt required: Meal allowances (per diem) — documentation of the duration and destination of the trip is sufficient.
- Receipt mandatory: Accommodation, travel (public transport/train/flight), entertainment, and other out-of-pocket expenses.
- Retention obligation: All receipts must be retained for ten years in accordance with § 147 of the German Fiscal Code (Abgabenordnung, AO) — digital receipts are also admissible (provided they are scanned in compliance with the GoBD principles).
Practical tip: Employees should photograph or scan receipts immediately after incurring an expense. Many digital expense management solutions allow this directly via app — significantly reducing the administrative workload.
Creating an Expense Policy: How It Works
An expense policy (also known as a travel policy or reimbursement policy) creates clarity for all parties and protects the company from ambiguous reimbursement claims and tax risks. A legally sound policy should cover the following points:
1. Scope of application - Who is entitled to claim expenses? Does the policy apply to all employees, only certain roles, or also external service providers?
2. Eligible categories and maximum amounts - Clear details on which expenses are reimbursable and up to what amount — including any internal caps (e.g., hotel category, train class).
3. Receipt requirements and submission deadlines - Which receipts must be submitted in what format? How long after the business trip must the expense report be filed?
4. Approval process - Who approves business trips in advance? Who reviews and signs off on expense reports (line managers, HR, accounting)?
5. Rules for international travel - Country-specific flat rates, currency conversion, visa fees — international trips often require separate provisions.
6. Digital processing - The policy should specify whether and how expenses are submitted digitally (e.g., via an expense management system).
A written expense policy not only prevents misunderstandings but is also an important compliance document during tax audits. It should be actively communicated during the onboarding of new employees.
Frequently Asked Questions About Expense Reports
What are expenses (Spesen)?
Expenses are costs that employees advance for professional purposes and are reimbursed by their employer. Not to be confused with salary: expenses are a reimbursement of outlays under § 670 BGB — not a component of remuneration. Typical expenses include meals, accommodation, travel costs, and entertainment.
What can I claim on a business trip?
All work-related costs are claimable: meal allowances (per diem flat rate), accommodation (with receipt), travel costs (mileage rate or receipt), and entertainment expenses (70% with a complete receipt). Private expenses are not claimable, even if incurred while travelling.
Do expenses have to be taxed?
Reimbursements within the statutory flat rates are tax-free (§ 3 No. 13 EStG). If the reimbursement exceeds the flat rate, the difference becomes subject to payroll tax and must be reflected in the payroll accounting.
Do I always need a receipt?
For meal allowances (per diem), no individual receipt is required — the flat rate applies automatically upon documented absence. For accommodation, travel (public transport, train, flight), entertainment, and other expenses, a receipt is mandatory. All receipts are subject to the ten-year retention obligation (§ 147 AO).
What is the difference between "Spesen" and "Reisekosten"?
"Reisekosten" (travel costs) is the overarching tax-law term (§ 4 Para. 5 EStG), while "Spesen" is the colloquial term for employer reimbursement of outlays. In everyday use, both terms are often used interchangeably — and their content largely overlaps.
How high is the per diem in 2025?
For domestic travel: from 8 hours of absence, €16.00; from 24 hours, €32.00 per day. Departure and return days are each set at €16.00. For international travel, country-specific rates apply in accordance with the current BMF table.
What must an expense policy contain?
A complete expense policy should cover: the scope of application, eligible categories with maximum amounts, receipt requirements and submission deadlines, the approval process, and special provisions for international travel. It should be set out in writing and made accessible to all employees.
Can job application costs be reimbursed as expenses?
Travel and accommodation costs for candidates attending a job interview can be reimbursed by the inviting company. This is permissible under tax law but is not a statutory obligation. Whether and to what extent application costs are covered should be communicated clearly by the company in advance.
Conclusion
A well-managed expense process protects companies from tax risks and gives employees planning certainty on business trips. The key levers for HR professionals are: a clear expense policy, up-to-date flat rates (check annually on 1 January!), consistent receipt requirements, and — where possible — digital processes that minimise administrative effort.
Anchoring the policy in the onboarding process and keeping it regularly updated prevents future misunderstandings and ensures readiness for tax audits.
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Sources
- § 670 BGB – Reimbursement of expenses. Federal Ministry of Justice, 2024. https://www.gesetze-im-internet.de/bgb/__670.html
- § 3 No. 13, No. 16 EStG – Tax-free travel cost reimbursements. Federal Ministry of Justice, 2024. https://www.gesetze-im-internet.de/estg/__3.html
- § 4 Para. 5 EStG – Non-deductible business expenses. Federal Ministry of Justice, 2024. https://www.gesetze-im-internet.de/estg/__4.html
- § 147 AO – Retention periods. Federal Ministry of Justice, 2024. https://www.gesetze-im-internet.de/ao_1977/__147.html
- BMF circular on tax-free travel cost reimbursements / meal allowances (current). Federal Ministry of Finance. https://www.bundesfinanzministerium.de/Web/DE/Themen/Steuern/Steuerarten/Lohnsteuer/lohnsteuer.html
- Overview of expense allowances and travel cost law. Haufe Editorial Team, 2025. https://www.haufe.de/personal/reisekosten/
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