SAP's FI travel management for business trips in Denmark: Reimbursement rates, deductions and tax implications
The FI Travel Management component in SAP has all the necessary legal and business requirements for Denmark. It includes specific customization, settlement rules, and standard reports for Denmark. This is important because Denmark has unique laws that need to be taken into account when using SAP Travel Expenses. In short, the special features of Danish law are incorporated into SAP Travel Expenses.
Business travel reimbursement in Denmark: Hourly rates and legal requirements in SAP
When employees travel for business in Denmark, they are reimbursed for meals and other expenses based on the number of hours they spend in a particular location. This reimbursement is rounded up to the nearest hour. The rates for reimbursement vary depending on the location and are legally determined. These rates are tax-free for the employee and can be deducted from taxes for the company. These reimbursement rates have already been incorporated into the standard SAP system.
Actual expense reimbursement for business travel: Tax-free compensation in SAP
If employees want to settle their business trip expenses based on the actual amount spent, they can do so by providing receipts for all expenses, including meals. In this case, the company can provide a tax-free travel compensation, which is a percentage of the per diem rates for that country. The standard SAP system has a specific trip schema called "Receipt Settlement with Business Trip with Receipts" for this reimbursement method. The per diem rates, which are technically paid, can be used to reduce the employee's taxable income or paid to the employee tax-free.
In the "Assign Wage Types to Expense Types for Per Diem Rates" customization activity, there is a field called "3rd Wage Type" for the expense type "VERP" (meals per diems). This field controls whether the travel compensation will be reimbursed tax-free (MJ23 in standard customization) or used to decrease the employee's taxable income (MJ24 in standard customization).
Tax implications for business trips of different durations in SAP
In some cases, there are no rigid reimbursement rates for meals and other expenses. This is the case when the business trip lasts less than 24 hours, exceeds 3 months in the case of domestic travel or 6 months in the case of foreign travel.
The standard SAP system has customized two trip types, "Trip < 24 Hours" and "Expatriate," to handle these situations. The corresponding reimbursement rates for these trip types have also been customized in the system. If an employee is on a trip for more than 3 months, they can create a stopover with the "Expatriate" trip type for the remaining duration of the trip. Understanding meal deductions for employees on business trip
When an employee is on a business trip and their accommodation includes a meal or they are invited to a meal by someone else, they need to deduct the cost of that meal from their full reimbursement rate for that location. This information can be found in the Travel Expenses IMG under the Define Deductions section (view V_T706A).
According to Danish law, there are specific deductions for each meal: 15% for breakfast and 30% for both lunch and dinner. The reimbursement rate that the deduction applies to depends on the location of the meal, which can be determined by the time of the meal. If the user doesn't enter a time, the system will propose default times, but these can be customized if necessary.
To determine the exact location for the reimbursement deduction, the system will check the times of the meals that caused the deductions against the stopovers of the trip.
The default times for the deductions are:
- 03:00 for breakfast deduction
- 12:00 for lunch deduction
- 18:00 for dinner deduction
If you need more information on this topic, check the Travel Expenses IMG under the Check Travel Expenses Constants section (view V_T706_CONST).
Car mileage reimbursement rates in Denmark: standard vs. approved rates
The usual rate for getting paid back for the distance you drive in your car is 1.44 Danish krone per kilometer, both for traveling inside Denmark and to other countries, and this has been the same since 1999. However, if you work for a Danish company, they might agree to give you a higher rate of 2.56 Danish krone per kilometer for up to 12,000 kilometers, and after that, the rate goes back to the normal 1.44 Danish krone per kilometer.