Per diem rates in Italy: a brief guide

Understanding the per diem rates Italy offers can help you manage travel expenses effectively. However, you probably have questions about how and when they can be applied, how they affect employees’ personal income tax, and how deductibles work.

Whether your employees are headed to Albania, the USA, Norway, or Canada for their next business trip, we’re here to break down Italy’s per diem guidelines step-by-step.

What are per diem rates for business travel?

Per diem rates for business travel are fixed allowances given to employees to cover accommodation, meals, and other incidental expenses. This system helps streamline expense management by eliminating the need for individual receipts and reducing paperwork.

Usually, government agencies set these rates, considering local accommodation costs and the cost of living. Rates can vary based on the destination and sometimes the company's location, including major cities and business hubs. For example, Australia’s per diem rates vary significantly depending on whether employees are travelling to Ireland, Japan, or the United Kingdom.

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Are per diem rates mandatory?

No, employers aren’t required to follow per diem rate guidelines. Companies can decide whether to use per diem rates, have employees submit expense reports, or create their own budgets for specific expenses.

For example, a company might use per diem rates for meals and incidental costs but apply its own corporate travel policy rules for accommodation and flight expenses.

What are the most important things to know about per diem rates in Italy?

The rules regarding business travel and per diem rates in Italy are set out in Article 51, Paragraph 5 of the country’s Consolidated Income Tax Act. Let’s take a closer look at the per diem Italy guidelines. Firstly, here are a few important factors to be aware of regarding the per diem guidelines in Italy:

Employers can either pay a per diem to the employee using a flat rate or mixed method (metodo forfettario or metodo misto) or reimburse the employee’s actual expenses (metodo analitico).

Reimbursements for expenses are treated differently depending on whether they occur within or outside municipal limits. Within municipal limits, reimbursements generally count as taxable income, except for transportation costs that can be supported with documentation. Outside municipal limits, most reimbursements are tax-exempt.

If you receive allowances for travel or work outside your local area, only the amount that exceeds €46.48 per day (or €77.46 for international travel) is considered taxable income.

What expenses are covered by per diem rates in Italy?

In Italy, per diem rates can be used to cover:

Meals

Lodging expenses in hotels

Mileage rates

Public transportation

What expenses are not covered by per diem rates in Italy?

Per diem rates in Italy do not cover other types of transportation such as flights or rental cars.

Ready to get your business travel expenses in order? Explore our useful guide to setting up a business travel budget.

How are per diem rates in Italy calculated for domestic and international trips?

Italian per diem rates for domestic and international trips are very simple to follow. They are as follows:

Domestic trips (Euros)

International trips (Euros)

€46.48 per day (e.g. travel from Bologna to Milan)

€77.46 per day (e.g. travel from Turin to South Africa)

If employers provide expense reimbursements alongside these allowances, the new tax-free limits are €30.89 per day for trips within Italy and €51.64 for international trips abroad. These expense reimbursements are fully exempt from taxation.

For employees who are required to perform work activities in ever-changing locations, such as airline pilots, allowances are taxed at 50%.

Unlike many other countries, there are no variations in per diem rates for different travel destinations. Whether employees are travelling to Croatia, Luxembourg, Macedonia, or Poland, the per diem rates remain the same.

How do deductions for travel allowances work in Italy?

How travel allowances and reimbursements are taxed for the employer and their deductibility depends on whether the travel is within or outside the municipality of residence.

For travel within the municipality: Reimbursements are deductible from business income up to 75% of the amount.

For travel outside the municipality: Reimbursements for food and accommodation are deductible up to €180.76 per day in Italy (e.g. Genoa, Catania, Palermo, etc) and €258.23 per day abroad (e.g. Latvia, Lithuania, Moldova, etc).

For employers using the flat rate method (metodo forfettario), reimbursements are fully deductible regardless of the amount. With the mixed system (metodo misto), there are limits on the deductible amounts for expenses.

How are per diem mileage allowances calculated in Italy?

Mileage allowances in Italy are amounts that employees can claim to cover the cost of fuel, insurance, road tax, and the wear and tear of their private car while travelling for business.

In Italy, there is no flat-rate system for reimbursements. Instead, the allowance depends on:

Municipality: Reimbursements for business trips within the office's municipality count as taxable income for the employee. If the trip is outside the office’s municipality, the reimbursement is tax-free up to a certain limit.

Make of car: This includes the engine category, manufacturer, type of fuel, and engine capacity.

The full list of mileage rates for 2024 is published by the Gazzetta Ufficiale.

For a more in-depth guide on mileage and car reimbursements in Italy, check out our guide: Travelling allowance and car reimbursements in Italy: the lowdown.

Do per diem rates vary from city to city and country to country?

Per diem rates vary in all countries. The guidelines in Spain are different from those in Ukraine, Bulgaria, and Estonia. However, all countries tend to provide guidelines on the same types of expenses.

In Italy, whether you’re travelling to Turkey or Bosnia Herzegovina, Italy’s international per diem is set at €77.46 per day, with an extra €51.64 per day for expenses.

Major Italian cities, such as Naples, Rome, Florence, Milan, and Venice are known to be popular destinations for business travel. However, according to The Consolidated Income Tax Act, the per diem rate remains the same, regardless of the city. This is also true for less popular business destinations such as Catania, Tuscany, and Livorno.

These rates are designed to cover typical expenses like meals and lodging, ensuring consistency in reimbursement processes.

Improve expense management with a better understanding of per diem rates in Italy

Unlike countries with complex per diem rates (Germany, the Netherlands, France and Australia to name a few!) Italy's guidelines are relatively easy to understand. Regardless, companies should familiarise themselves with the official per diem rates Italy provides to ensure they maintain compliant and accurate expense reporting processes.

Per diem rates in Italy: a brief guide (2024)

What are per diem rates for business travel?

Are per diem rates mandatory?

What are the most important things to know about per diem rates in Italy?

What expenses are covered by per diem rates in Italy?

What expenses are not covered by per diem rates in Italy?

How are per diem rates in Italy calculated for domestic and international trips?

How do deductions for travel allowances work in Italy?

How are per diem mileage allowances calculated in Italy?

Do per diem rates vary from city to city and country to country?

Improve expense management with a better understanding of per diem rates in Italy

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