Why is using per diems an asset to your company? How does Xpenditure's platform help managing them? And how trustworthy is the platform?
In this second per diems blog post, Bjorn Poelman, Senior Manager responsible for Reward & Benefits, Tax and HR services at Deloitte Belgium, shares his knowledge on the structures and regulations of per diems in different countries and the benefits of using them within companies.
Bjorn has helped Xpenditure optimise its Per diem module and ensures the accuracy of calculation and the constant update of the different rates.
Bjorn, you’ve led the process of Deloitte giving specialist tax advice considering Xpenditure’s per diem module. What is the biggest challenge you had to overcome?
I believe the most challenging part of reviewing all per diems for all countries is that the regime is different in every country. Each country has its own local legislation on the tax and social security treatment of per diem allowances. In some countries, companies have to follow strict legislative guidelines. In other countries, companies can deviate, with possible consequences for tax and social security. For the project, Deloitte Belgium coordinated the advice with all the local Deloitte specialists to check upon the different regulations. Capturing the different rules and exceptions was probably the biggest challenge, considering they had to be brought into one framework ready for implementation by Xpenditure’s development team. But now they’re available within one single software, and that’s pretty convenient.
We’ve worked together on the per diems for Norway, Denmark, Sweden, Finland, Great Britain and Germany, which are rolling out this week. Which countries are up next?
The countries that will be up next are Czech Republic, Poland, Australia and Russia. Other countries will follow later this year as well.
Per diems are all about daily rates and they are updated every year. How are we making sure the rates stay updated?
Different countries may have a different update time for their per diems. Together with Xpenditure, we are creating a timeline to be able to stay updated for the different countries, now and in the future. We are cooperating with the local Deloitte specialists in the other countries to make sure daily rates are regularly updated.
Why is using per diems such an asset for companies? And to Deloitte specifically?
A per diem is understood to include the additional expenses incurred living away from home during the ongoing business responsibilities. The per diem is a lump sum payment and can be provided tax free (depending on assignment type) in some countries where the government (for example Belgium and the US) is publishing per diem rates for cities/countries. In practice Belgian and US organizations refer to the thresholds and align the per diem policy to these rates. We also see companies setting their own thresholds for per diems in their global travel policy if there is a lot of business travel in a certain region based on common practice.
Companies work therefore with per diems for different reasons. Firstly using per diems means less administration and processing because as a company, you don’t have to reimburse all the different expenses separately. And secondly, per diems are standardized expenses, which make it clear for the company and the employee what a normal daily expense rate is. There’s no confusion from any side about what the employee is able to spend.
And lastly, why is Xpenditure’s per diem module an asset to you personally?
I like the fact that the platform makes it really easy for the user to know what per diem allowance he/she is entitled to. For example, in some countries, prorated amounts are applicable in case the company pays for certain expenses directly. For an employee, having to check these regimes themselves when asking for a reimbursement through expense notes is rather complex. If you can indicate where you have been & whether you have had lunch/breakfast/etc, and let the system calculate the applicable amount automatically, that is so much easier for an end user. Especially for people on the go, it’s really convenient to be able to use the platform on their mobile phone and keep their per diem allowances updated on a regular basis.
If you’d like to have a try using Xpenditure and its per diem feature yourself, sign up for our free trial.
We’d also be very happy to show you how our per diems functionalities work. Click here to ask for a demo.