Business Expense Compliance in Germany
Keep informed of Germany’s digital expense management rules and regulations.
Last updated in January 2024.
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Rules and Regulations in Germany
Discover guidelines on VAT rates, proof of payment, mileage allowance & per diem rates in Germany.
Paperless Proof of Payment
In Germany, digitized receipts have replaced original paper receipts since the 2019 revision, enabling mobile scanning and digital storage.
For full paperless compliance, however, certain requirements must be met, which are described in the German GoBD published by the tax authorities of the Federal Ministry of Finance.
Principles
The GoBD outlines a set of principles, summarised as follows:
Traceability & verifiability: All individual business transactions as well as the settlement and posting processes must be traceable and documented.
Obligation to keep individual records: The law stipulates that cash register records must be kept individually. This means that each business transaction must be recorded individually.
Completeness: Business transactions must be recorded completely and without gaps so that all relevant data is included.
Correctness and accuracy: The business transactions must be presented in the documents correctly, following the actual circumstances, and in compliance with the statutory provisions (BFH ruling of 24 June 1997, BStBl II 1998 p. 51).
Readability: The reproduction must correspond to the original both visually and in terms of content if it is made legible (visual verifiability).
Mechanical Evaluability: Enabling a mathematical-technical evaluation, a full text search or an examination in the broadest sense.
Prompt bookings & recording: Record business transactions promptly and ensure that entries are made as soon as possible after they occur.
Order: Systematic recording of business transactions in a clear, unambiguous, and identifiable manner.
Immutability: As soon as information enters the processing procedure, it can no longer be suppressed, overwritten, deleted, changed, or falsified without its original content remaining traceable.
Availability: The information subject to retention should remain accessible for the entire prescribed retention period and must be immediately retrievable in a readable format.
Integrity: Maintaining the integrity of the contents.
Authenticity: Verification of the source. A sender can be easily identified during a business transaction.
Confidentiality: Unauthorized intrusion, both reading and writing, must be avoided.
Procedure documentation
As the GoBD also applies to internal processes and data processing, companies are obliged to create and maintain clear and comprehensive procedural documentation. This documentation should depict the process of data processing and storage. The specific content of the documentation depends on the complexity of the business operations, the organizational structure, and the systems used.
During the entire retention period, it must be ensured and proven that the process described in the documentation corresponds exactly to the practical implementation.
The procedural documentation must be clear and be able to be reviewed by an independent third party, e.g. an auditor, within a reasonable period.
Digital Proof of Payment with Klippa SpendControl
Klippa SpendControl allows employees to take pictures of the receipts and invoices or upload e-documents via email, web or mobile app.
Our user-friendly software extracts relevant document fields with 99% accuracy using Optical Character Recognition and automatically uploads data to your system.
Once submitted, authorized personnel can immediately review and approve transactions. The processed and approved data can then be booked to your accounting or ERP system using Klippa’s 20+ direct integration options.
Klippa retains all archived data for a minimum of 10 years, ensuring that your transactional documents remain easily accessible for audits and tax authorities at all times.
Our solution is developed in line with the GoBD standards and adheres to the specified principles. Our solution is an integrated solution and GoBD compliance is also addressed in the accounting & ERP systems Klippa SpendControl integrates with.
Klippa has documented the internal processing and data processing activities in it’s internal documentation.
VAT Rates
VAT in Germany is a broad-based consumption tax that is charged directly on the goods and services used by consumers. There are three VAT rates in Germany that are relevant for the management of business expenses:
Additionally, gas and heat supply are now taxed at 7% from 1 October 2022 until 31 March 2024 due to the increased energy costs for private households.
The VAT rate on meals (excluding beverages) provided in restaurants and other catering services has been temporarily reduced from 19% to 7% during the Covid-19 pandemic. This reduction ends on 31 December 2023.
There is an exemption limit for gifts. In 2024, this limit will be increased from €35 to €50.
Automated VAT Rate Extraction with Klippa SpendControl
Klippa SpendControl automatically identifies and extracts German VAT rates from various document types, seamlessly uploading them to your system.
In addition, our solution allows users to incorporate the applicable VAT rates tailored to their companies requirements. Once extracted, users can seamlessly enter the data into their favourite accounting or ERP system.
Mileage Allowance
The reimbursement for travel expenses is intended to offset the costs incurred by employees for commuting to their workplace. Here is the 2024 mileage reimbursement update for Germany.
You can compensate your employee with a tax-free mileage allowance of €0.20/km for motorcycles, mopeds or scooters and €0.30/km for cars. The maximum amount per journey is limited to 130 euros.
Although it is legal to reimburse a higher amount, any amount in excess of the approved mileage allowance must be taxed as part of the employee’s income.
Approved mileage rates for commute: Employers have the option of reimbursing employees for the cost of commuting from home to their first place of work.
While it is permissible to grant a higher reimbursement, any amount in excess of the approved mileage allowance is subject to taxation as part of the employee’s income.
Approved amount of the tax-free mileage allowance:
Additional information on the approved mileage rates for commute:
Automated Mileage Tracking with Klippa SpendControl
Klippa SpendControlallows users to easily record and reimburse mileage expenses withGoogle Maps integration. Employees simply select the start and end point of the journey, while our solution calculates the distance based on the fastest route and applies a set rate.
Following the submission of an expense claim, SpendControl can implement personalized reimbursement rules, such as kilometer allowances, assigned to specific users, departments, or categories. Subsequently, the data is forwarded for approval to the authorized personnel.
Klippa securely retains all data for a minimum of 10 years, guaranteeing that companies have access to mileage records for straightforward and precise reimbursement of employees when needed.
Per Diem Rates
Employees in German companies are provided with fixed daily rates for traveling expenses.
These rates are set by the government, which simplifies the process and frees companies from the need to develop their own policies; instead, they adhere to the established regulations.
Domestic Business Trips – Per Diem Rates
Employees in Germany receive allowances to compensate for expenses for meals and accommodation on business trips. The lump sums are tax-free up to a certain limit and are not treated as part of the employee’s regular income. They are divided into two fee rates:
1-Day Business Trips
No daily allowance for meals is paid for business trips lasting less than 8 hours. For business trips lasting between 8 and 24 hours, the reduced per diem rate for meals applies.
Multi-day Business Trip with overnight stay (longer than 24 hours)
For business trips lasting more than 24 hours, a standard meal allowance is applicable for full days, while a reduced allowance applies on the days of arrival and departure.
Additionally, there is an allowance for overnight stays during multi-day trips, covering accommodation expenses. However, when accommodation is provided and fully covered by the employer, the lump sum for an overnight stay cannot be claimed.
Business Trips Abroad – Per Diem Rates
The classifications for food allowances during business trips are consistent both within Germany and internationally. However, the reimbursement rates can vary greatly depending on the country and the local cost of living.
Consequently, an overnight stay in Barcelona, Spain, has a lump sum of €144 while in any city in the Czech Republic, the allowance is only €77.
In contrast to the fixed amounts for domestic business trips in Germany, the rates for foreign destinations are yearly adjusted.
The complete list of all lump sums for additional subsistence and accommodation costs abroad can be found here.
Automated Per Diem Reimbursement with Klippa SpendControl
Klippa SpendControl automatically processes your travel recordings and expenses, as well as allows you to set up clear limits to avoid overspending and simplify reimbursement.
With the help of expense management software, your employees can apply for reimbursement of per diems digitally and adhere to predefined spending limits for domestic per diems. This allows you to automatically reimburse expenses such as meal allowances.
All in all, our AI-powered solution streamlines expense management processes and eliminates the risks of fraudulent and outdated receipts. It simplifies expense claim submission in three easy steps and automatically transfers data to your accounting or ERP software through our direct integration capabilities.
Read About Compliance in Other Countries
Discover how to comply with national regulations on per diems, mileage allowance, VAT rates, proof of payment and more.
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