Official travel expenses and the right to a daily allowance in the country and abroad, in terms of taxation, are governed by the provisions of the Income Tax Act and the Income Tax Ordinance. In the case of business trips, in practice, there are many questions related to determining the amount of foreign and domestic daily allowances. In today’s article, CONFIDA Croatia provides answers to the most frequently asked questions related to the payment of daily allowances for a business trip abroad.
What is considered a business trip abroad?
A business trip abroad is a trip of up to 30 days continuously, namely:
- From the Republic of Croatia to a foreign country and vice versa;
- From one side of the country to another; and
- From one place to another on the territory of a foreign country.
How to determine foreign and domestic daily allowance?
The total duration of the business trip includes part of the business trip in the country, so the right to several daily allowances should be determined according to the total duration of the business trip. Then the total number of daily allowances is divided into foreign and domestic allowances. The Income Tax Ordinance stipulates that the right to a foreign daily allowance is determined initially and then to a domestic one, considering the total number of hours/days of a business trip.
Out of the total number of hours spent on a business trip, the hours for the foreign daily allowance are determined first, and the right to the domestic daily allowance is determined from the remaining hours. The remaining hours of the business trip abroad are added to the hours spent in the country, and the opposite calculation is not allowed.
The right to a foreign daily allowance is determined according to the number of hours spent abroad, which means that for half of the foreign daily allowance, it is necessary to spend more than 8 hours abroad, while for a full one, it is necessary to spend more than 12 hours.
When does the foreign daily allowance starts being calculated?
The calculation of the foreign daily allowance is based on the period from crossing the border of the Republic of Croatia on the way out until crossing the border on the way back. Mentioned applies to road trips only. In the case of using air transport, the foreign daily allowance is calculated two hours before the scheduled departure from the last airport in Croatia until the time of landing at the first airport in Croatia. For a ship trip, the daily allowance is calculated from the hour of ship departure from the last port to the hour of return to the first port in Croatia.
What are the rules for travelling through multiple countries?
Business trips usually have one foreign country as the final destination, so travel hours are calculated as a daily allowance for that country, regardless of whether one or more countries were travelled to. The exception is when a person stays in one of the countries for longer than 12 hours, in which case the daily allowance is calculated for that country.
By clicking on the button below, you can find an overview of the amounts of the daily allowance.
