Guide to international per diem rates for corporate travel

Using per diem can simplify your travel expense management process. Still, it requires careful planning to comply with regulatory requirements and avoid tax issues—especially if you have employees traveling internationally.

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This article explains how international per diem rates are determined, per diem tax considerations, tips for planning ahead, and how modern travel expense management software helps simplify your per diem program.

What is per diem?

In business travel, per diem refers to a daily allowance to cover lodging, meals, and incidental expenses. The term comes from the Latin phrase for “by the day” or  “for each day.” Similarly, workers hired on an as-needed (day-to-day) basis are classified as per diem workers.

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International per diem rules are similar to the guidelines for domestic travel. As such, per diem overseas only covers your daily lodging rate, meals, and incidental expenses like dry cleaning or gratuities for hotel staff. It doesn’t cover airfare, car rentals, or other travel expenses.

How are international per diem rates established?

The US Department of State Office of Allowances provides foreign per diem rates by location. The rates are revised monthly, and the rate for a particular location may vary based on the time of year. In general, as tourism and business travel increase, global per diem rates also increase.

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In contrast, domestic per diem rates for the continental United States (CONUS) are managed by the General Services Administration (GSA) and are updated annually.

International per diem example

Assume you’re sending a salesperson from New York to Paris. Here are the current per diem rates as of December 2024:

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• Lodging rate: $476
• Meals and incidental expenses (M&IE) rate: $161
• Total per diem: $637

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The Office of Allowances provides a more detailed breakdown of what makes up the $161 M&IE rate in a publication called Appendix B, Chapter 301:

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• Breakfast: $24
• Lunch: $40
• Dinner: $65
• Incidental expenses: $32

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Your business can spend up to the daily per diem dollar amount and comply with IRS regulations for foreign per diem payments—but only if you use per diem allowances for the intended expenses. You can only use per diem allowances to cover lodging and M&IE.

How per diem benefits employers and staff

Managing international travel expenses is more challenging than domestic travel for two key reasons:

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1. Different currencies: International travelers need to be aware of currency exchange rates. Consider our example with the salesperson traveling to Paris: The Office of Allowances provides the per diem rate in dollars, but the salesperson will be transacting in Euros.
2. Recordkeeping: Longer flights, time zone changes, and, often, language barriers make organizing travel expense receipts difficult. The salesperson in our example would benefit from an automated system to record travel expense information during the trip.

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Using per diem simplifies the international travel expense reporting process. To illustrate, assume a manager travels for five days to meet with customers. Each day, the manager has costs for lodging, meals, and incidental expenses.

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Without per diem, the manager would need to submit individual receipts for each expense and include each cost on an expense report. If the manager travels to multiple cities (or multiple countries) during the trip, paper receipts can easily get lost.

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With per diem, the manager has a daily dollar amount for each category, and no receipts are required. Expense reports are easier to complete, and the manager can make expense decisions based on their available per diem.

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Managing international per diem payments

Here are some other considerations for managing international per diem payments:

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• Per diem advance vs. reimbursement: Some businesses pay employees a per diem allowance before business travel, while others have employees pay out of pocket for per diem expenses and reimburse them after travel. However, paying for expenses and waiting for reimbursement may frustrate your staff.
• Fixed-rate vs. actual expenses method: Your business can pay a fixed-rate per diem allowance in advance based on the number of travel days and the daily rates. If you have employees pay out of pocket for expenses and reimburse the costs they incurred, your business uses the actual expenses method.
• Documentation: Only use per diem for business-related expenses, and require your staff to complete expense reports documenting the time, place, and business purpose for each expense

Are international per diem payments taxable?

The IRS determines whether per diem for foreign travel is taxable, and the same rules apply to both domestic and international per diem. Aim to ensure per diem payments are used for legitimate business expenses and that the amounts don’t exceed the current per diem rates.

When is international per diem not taxable?

Businesses that limit per diem to proper expense categories and require expense reports avoid taxation issues. It’s also essential to comply with the Office of Allowances recommended per diem rates and assign them correctly.

When is international per diem taxable?

These situations would generate taxable income for the employee who receives per diem:

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• Payments in excess of the Office of Allowances rates; the amount paid over the recommended rate would be considered taxable income
• No legitimate business purpose for the expense
• Incomplete expense reports or reports filed past the IRS deadline
• The employee does not return unused per diem dollars to the employer; any unused per diem the employee doesn’t return would be considered taxable income

How to plan ahead for international per diem 

Employees need clear instructions on how to use per diem before international travel, and long hours in transit and time zone differences make communication difficult during an overseas trip. Use these strategies to plan ahead:

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• Document your per diem policy and clearly communicate it to employees. In addition, your staff must be able to access the policy while traveling.
• Plan for business travel using the most up-to-date international per diem rates
• Automate expense reporting and approvals to save time and increase productivity

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International travel can be exhausting for employees. Planning ahead can help make the whole process easier.

Simplify corporate travel with Ramp

International travel management is hard enough without having to worry about exchange rates and lost receipts. One of the best ways to reduce your travel planning workload is by using expense management software that lets you book travel and manage T&E expenses in one place.

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Ramp Travel is specifically designed to save you time and money:

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• Upload your corporate travel policies directly into to Ramp to detect and block out-of-policy spend before trips even start
• Low rates, rewards, and an intuitive booking experience with flights and hotels listed in one interface thanks to our partnership with Priceline
• Integrations with apps like Uber, Lyft, Gmail, and Outlook automatically generate and categorize travel expense receipts
• Automatically pulls in the latest per diem rates for your business travel destinations, helping you manage expenses quickly

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Try Ramp for yourself and see why customers save an average of 5% a year across all spending.