Italy Per Diem

Employers can reimburse their employees as compensation for the expenses incurred while employees are on a business trip (such as meals and hotels). In Italy, the employer can choose to pay per diem to the employee (metodo forfettario and metodo misto) or to reimburse the employee’s actual expenses (metodo analitico).

In case the employer chooses to reimburse the employee’s actual incurred expenses, the employee shall need to keep all supporting documents such as receipts. These expenses are not taxable.

If an employer pays per diems to the employee, these are not considered part of an employee’s income and are thus tax-free up to a certain amount. These maximum amounts are defined in art. 51, paragraph 5 TUIR (Consolidated Income Tax Act). They differ based on the destination of the business trip:

An employer can pay the employees more than these maximum amounts, however, the excess will be considered taxable income.

If the employer provides or reimburses the employee’s meals or accommodation during the business trip or the employee gets meals for free (e.g. included in the hotel), the tax-free allowance should be reduced.