A Quick Guide to Streamlining Per Diem Allowances

Per diem allowances are a convenient and tax-efficient way for employees in Ireland to get paid for travel-related expenses, such as food, lodging, and transportation. They are designed to simplify the reimbursement process and reduce the administrative burden for both employees and employers.

However, they also come with some challenges and risks, such as compliance, fraud, overspending, and outdated manual admin processes.

In this article, we will explain what per diem allowances are, how they are calculated and used, and how you can streamline and make your per diem process more efficient.

What are per diem allowances?

Per diem allowances are fixed amounts of money that employers pay to their employees to cover travel-related expenses.

According to Revenue.ie the meaning of per diem is as follows: “travel expenses (for example, fares, mileage, and subsistence) necessarily incurred in the performance of the duties of an office or employment.”

They are completely tax-free as long as they do not exceed the Civil Service rates published by Revenue.

How are per diem rates calculated?

The rates for per diem allowances vary depending on the location, type, and length of the travel. For domestic travel within Ireland, the rates range from €14.01 to €147.00 per day, depending on the distance from the employee’s normal place of work and the duration of the absence.

For foreign travel, the rates range from €72.00 to €216.00 per day, depending on the destination country and the duration of the absence. The rates are meant to reflect the reasonable costs of accommodation, meals, and transportation for different locations and scenarios.

How are per diem allowances used across different industries?

Per diem allowances are used across different industries and situations, depending on the nature and frequency of travel.

Some examples of industries that commonly use per diem allowances are:

• Construction: Workers who are assigned to remote or temporary sites may receive per diem allowances to cover their accommodation and meals.
• Hospitality: Employees who work in hotels, restaurants, or catering services may receive per diem allowances when they travel to other locations for training, events, or meetings.
• Healthcare: Professionals who provide medical services in rural or underserved areas may receive per diem allowances to compensate for their travel costs and living expenses.
• Education: Teachers, researchers, or students who participate in academic exchanges, conferences, or seminars may receive per diem allowances to support their travel and learning activities.
• Events: Employees who attend or organise events such as trade shows, exhibitions, or festivals may receive per diem allowances to cover their travel and entertainment expenses.

What benefits do per diem allowances offer?

Per diem allowances offer several benefits for both employers and employees, such as:

• Flexibility: Employees can choose how to spend their per diem allowances, according to their personal preferences and needs.
• Convenience: Employees do not need to keep or submit receipts for their per diem expenses, saving them time and hassle.
• Tax efficiency: Employers can pay per diem allowances tax-free, as long as they comply with the Irish Revenue’s rules and rates.

The Risks and Challenges

However, managing per diem allowances can also pose some challenges and risks, especially for businesses that operate across multiple locations and industries, such as:

• Compliance: Employers need to ensure that their per diem policies and practices comply with the tax laws and regulations of the relevant jurisdictions, which may vary depending on the destination, duration, and purpose of travel.
• Fraud: Employees may abuse or misuse their per diem allowances by inflating their expenses or claiming for non-eligible items.
• Overspending: Employees may spend more than their per diem allowances, either intentionally or unintentionally, due to factors such as currency fluctuations, inflation, or unexpected costs.
• Administration: Employers and employees need to keep track of their per diem allowances and expenses, which may involve tedious and time-consuming tasks such as issuing cash advances, collecting receipts, verifying claims, and processing payments.

How to manage per diem allowances more effectively?

Per diem allowances are convenient for both employers and employees but they can be tricky, especially when outdated and manual processes are still being used. But don’t worry, there are plenty of ways to make your process more efficient and still adhere to Revenue’s regulations.

One of the best ways to manage per diem allowances is to use prepaid digital Mastercards, a modern and efficient solution that offers several benefits, such as:

• Reducing the risk of fraud, overspending, and non-compliance.
• Saving time and money on administration and reconciliation.
• Improving employee happiness and productivity.
• Gives you more control, ease, and flexibility over how you distribute and track your employee allowances.
• Allows you to issue cards to your employees in minutes, and enables them to use their cards anywhere in the world, without any fees or charges.

CleverCards can help you overcome your per diem challenges and provides you with a tax-free digital prepaid Mastercard solution that gives you more control, ease, and flexibility than any other method of distributing per diem allowances.

Here’s how it works:

• Control: You can set spending limits and categories for each card, giving you complete control over how your employees use their allowances. You can also monitor transactions, generate reports, and revoke cards at any time.
• Ease: Your employees can receive their cards instantly and activate them on their smartphones, eliminating the need for cash advances or bank transfers. If an employee needs to extend a work trip last minute, misses a flight, or runs out of funds and needs a quick top-up to cover emergency food and accommodation, you can quickly come to the rescue by configuring the employee’s existing CleverCard allowance. Finally, employees won't need to worry about carrying around cash, claiming expenses or dealing with lost receipts.
• Global: CleverCards can be used in over 210 countries and territories, with no foreign exchange fees or hidden charges. So, your employees can access the best exchange rates and spend their allowances in any currency no matter where they are in the world.

If you want to learn more about how CleverCards can help you manage your employee per diem allowances, fill out the contact form below and our team will get back to you as soon as possible.