Address of employers: Tax-free limits on daily allowances for business trips need to be renewed

The Estonian Chamber of Commerce and Industry, together with the Association of Estonian International Road Carriers, the Estonian Employers’ Confederation and the Estonian Association of Construction Entrepreneurs, addressed the persons setting up the new government and the leaders of political parties with the proposal to renew the regulation of the limit on the tax-free daily allowance for business trips, which has remained unchanged since 2016.

For companies registered in Estonia, the payment of the daily allowance for business trips abroad is regulated by a regulation of the Government of the Republic and the Income Tax Act. According to the current regulation (Regulation and Income Tax Act), the limit for daily allowance for a business trip abroad is 50 euros for the first 15 days of a business trip abroad, but not more than 15 days per calendar month, and 32 euros for each subsequent day.

In the opinion of the members of business organisations, the maximum amount of daily allowance established by the current regulation no longer corresponds to the needs of entrepreneurs, and the above regulation should be updated and new rates should be established, i.e. up to 75 euros per day for the first 15 days, and 50 euros per day for the remaining 16-31 days. An alternative option is also to eliminate the difference between tax-free days by day and to set a single limit for all days over a whole month, i.e. up to 30 days, 65 euros per day.

The economy has undergone significant changes over seven years due to crises, and Member States used various measures to support their businesses in crises. In order to remain competitive and to pursue a successful economic activity in the common market, economic operators should have as similar starting positions as possible. This is affected by the regulation on wages and taxes, as it is largely driven by the pricing of products and services.

Most of Estonia’s business trips abroad take place in European Union countries, which is why it is appropriate to rely on the changes that have taken place in these countries when raising the limit. Several countries, such as Finland, update daily allowance tax-free limits every year.