Per Diem Allowances 2026: A Practical Guide for Business Owners and SMEs
If you have employees who travel for business - client visits, off-site meetings, construction projects or assignments in other cities - then per diem allowances are a topic you cannot ignore. Do you know the tax-exempt limits for 2026? Do you know how much you can pay without your employee paying income tax and without the company paying additional Social Security?
In this article, we explain everything in a clear, jargon-free way.
What Are Per Diem Allowances?
Per diem allowances are a reimbursement the company pays to employees to compensate for expenses incurred during a business trip: meals, accommodation, transport. It is not a salary, not a bonus - it is compensation for costs effectively borne.
The big advantage? Within legal limits, this amount is exempt from income tax for the employee and not subject to Social Security contributions. For the company, it is also accepted as a tax-deductible expense.
The 2026 Limit Values
The reference values for 2026, applicable to the public sector and frequently adopted by the private sector as exemption limits, are as follows:
| Category | National Territory | International Territory |
|---|---|---|
| General Employees | €65.89 / day | €156.36 / day |
| Administrators and Managers | €72.65 / day | €175.42 / day |
💡 Grupo Your Tip: If your company pays per diem above these values, the excess is taxed as income tax for the employee. The company is subject to autonomous taxation at a rate of 5% on the excess (or 15% in case of tax losses).
🧮 Simulate now: Use our Per Diem Simulator 2026 to automatically calculate the tax-exempt amounts for your situation.
How Is It Calculated for a Single-Day Trip?
The employee is not always away for the whole day. The law provides for partial allowances depending on the duration of absence:
| Absence Period | Allowance |
|---|---|
| Covers lunchtime (1pm-2pm) | 25% of daily rate |
| Covers dinnertime (8pm-9pm) | 25% of daily rate |
| Overnight absence (10pm-9am next day) | 50% of daily rate |
| Full day (successive days) | 100% of daily rate |
Practical example: A general employee leaves at 8am and returns at 9:30pm. Covers lunch (+25%) and dinner (+25%), but does not stay overnight. Maximum tax-exempt allowance: €65.89 × 50% = €32.95.
What About Multi-Day Trips?
When the employee is away for several consecutive days, the calculation depends on departure and arrival times:
Departure day:
- Departs before 1pm → 100% of daily rate
- Departs between 1pm and 9pm → 75% of daily rate
- Departs after 9pm → 50% of daily rate
Intermediate days:
- 100% of daily rate for each full day away
Arrival day:
- Arrives before 1pm → 0% (no allowance)
- Arrives between 1pm and 8pm → 25% of daily rate
- Arrives after 8pm → 50% of daily rate
📌 Real example: A manager departs Monday at 8am (100%), is away Tuesday and Wednesday full days (2 × 100%), and returns Thursday at 4pm (25%). Total: 3.25 × €72.65 = €236.11 maximum tax-exempt.
Personal Vehicle: €0.40 per Kilometre
When an employee uses their personal car for business travel, the company can compensate at €0.40/km - exempt from income tax and Social Security in 2026.
For this exemption to apply, the trip must be:
- Over 20 km from the usual workplace, for daily trips
- Over 50 km, for multi-day trips
Note: kilometres and routes must be recorded in properly completed and signed mileage logs.
What Does the Company Need to Do to Stay Compliant?
For per diem allowances to be accepted as tax-deductible and exempt from taxation, the company must ensure:
- Travel logs filled with dates, origin, destination and purpose
- Signature of the employee and employer on each log
- Retention of supporting documentation (toll receipts, fuel, accommodation)
- Mileage records for personal vehicle compensation
- Correct processing in payslips
⚠️ Warning: Per diem allowances not invoiced to clients and not taxed as income are subject to 5% autonomous taxation (rising to 15% in loss-making years). Good accounting oversight avoids surprises at year-end.
Summary: Business Owner Checklist
- ✅ Define employee category (general vs. administrator/manager)
- ✅ Apply 2026 exemption limits (national or international)
- ✅ Correctly calculate partial allowances for single-day trips
- ✅ Use departure/arrival rules for multi-day trips
- ✅ Record mileage at €0.40/km for personal vehicles
- ✅ Keep all logs and documents properly signed
- ✅ Check with your accountant the impact of autonomous taxation
Need Help?
Need help with payroll processing or your company's tax management? Try our Per Diem Simulator or get in touch.
Read Also
Get the latest tax news
Subscribe to our newsletter and receive articles, tax alerts and tips directly in your inbox.
Related articles
Beverage Packaging Deposit System: How It Works in Portugal
From April 10, 2025, Portugal launches a deposit system for beverage packaging. Learn how to recover €0.10 per returned container.
Fixed-Term vs Permanent Employment Contracts: Differences, Rights and When to Use Each (2026)
Hiring and unsure which contract to use? We explain the differences between fixed-term, uncertain-term and permanent contracts — with comparison tables, deadlines and practical examples for 2026.
Can a Managing Partner Not Receive a Salary? Everything You Need to Know in 2026
Are you a partner or manager wondering if you can choose not to receive a salary? We explain the tax implications, Social Security and alternatives.
