Business Travel and Expenses for Italian Employees: Per Diems and Reimbursements FAQ

Your company is hiring in Italy and your team will travel. Who pays for the hotel? Can you give a flat daily amount? Does it count as salary? This FAQ answers the common questions on per diems and reimbursements.

What is the difference between a reimbursement and a per diem?  

A reimbursement repays the real cost of a trip. The employee spends money, shows the receipt, and the company pays it back.

A per diem is a flat daily allowance. The employee gets a set amount for each day of travel and does not need to show every receipt.

Both exist in Italy. They are treated differently for tax and social contributions, so the choice matters.

Do I have to reimburse travel costs at all?  

If you ask an employee to travel for work, the cost of that travel is a business cost. The employee should not carry it. Transport, accommodation and meals during a work trip are normally covered by the employer.

Your contract, your internal policy and the applicable collective agreement set the details. Many collective agreements have their own rules on travel allowances. They can be more generous than your own policy. You need to check which agreement applies to the role before you write the policy.

What counts as business travel?  

Travel away from the usual place of work, for a work reason. The rules often depend on where the trip goes. A trip within the same municipality is treated differently from a trip outside it. A trip abroad is treated differently again.

The daily commute is not business travel. Do not reimburse it as if it were.

Can I pay a flat per diem instead of collecting receipts?  

Yes, in many cases. This is often called a trip allowance. It saves admin and gives the employee a clear, predictable amount.

There is a catch. Part of a flat allowance can be tax-free and part can be treated as taxable pay. The split depends on the type of trip and on how you structure the payment. If you treat it wrongly, the employee pays tax they should not pay, or you face a payroll correction later.

The cleaner the structure, the fewer problems. Decide in advance which model you use and write it down.

Can I mix the two systems?  

Yes, but be careful. A common approach is to reimburse transport and accommodation against receipts, and pay a flat amount for meals. This works well when the policy is written clearly. It fails when the rules change from trip to trip.

Do not pay a flat allowance and also reimburse the same cost. That is a double payment and it creates a payroll issue.

What paperwork do I need?  

For documented reimbursements, keep the invoices and receipts. Italian invoices and fiscal receipts have their own format. A card slip alone is often not enough.

For flat allowances, keep a record of the trip: the dates, the destination and the business reason. This is the proof that the allowance relates to real travel.

Ask the employee to submit an expense report in a fixed format and by a fixed deadline. Late claims are a common source of disputes.

How are reimbursements shown on the payslip?  

Amounts that are properly documented and fall under the tax-free rules appear separately from salary. Amounts that go beyond those rules are added to taxable pay. The payroll provider handles this. Your job is to give clean data on time.

What about the employee’s own car?  

Some employees use a private vehicle for work trips. You can reimburse the use of the car, but the method must follow the rules for mileage reimbursement. Fuel receipts alone do not always cover it. Agree the method before the first trip.

What about travel abroad?  

Trips outside Italy often use a different allowance logic. Local costs differ by country, and the payroll treatment changes too. Set a rule for each destination type and check it with your payroll provider.

If an employee works abroad for long periods, other questions arise, such as social security and tax residence. Do not treat a long assignment like a short business trip.

Does a travel policy help?  

Yes. A written policy answers most questions before they start. It should say:

• which costs you cover
• whether you pay receipts, flat allowances, or both
• how the employee submits claims
• who approves them
• how fast you pay

Share it at hiring. Italian employees expect clear terms in writing, and a clear policy reduces disputes.

Common mistakes  

• Paying flat amounts with no written rule behind them.
• Ignoring the collective agreement that applies to the role.
• Reimbursing without proper receipts.
• Paying the same cost twice.
• Treating all trips the same, whether local, national or abroad.
• Sending expense data to payroll late.

How an Employer of Record helps  

If you hire through an Employer of Record (EOR), the EOR is the legal employer in Italy. It runs payroll and applies the right treatment to each payment. You set the travel rules for the business. The EOR checks that they fit the contract and the applicable agreement, then processes the claims correctly.

This removes a lot of guesswork. You keep control of the budget and the approvals. The EOR handles the Italian side.

Find the country site for your market or request a quote to see how we can support your Italian hires.