Setting up Per diem for international travel

General Discussions
1

We wish to revisit our per diem (daily allowance) for international travel. Could you please let me know how it is done in your organizations?
We typically book the hotels for the stay, reimburse transportation, telephone and other incidentals. We pay a fixed amount as allowance for food and tips.
How much should be the food allowance per day for US, Europe, Japan, UK?

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Hi @Bindu11 ,

Revisiting per diem policies for international travel is a common practice to ensure they align with current costs and employee needs while staying competitive and compliant with company policies. Here’s a structured way to determine the per diem allowance for food and tips:

1. Key Considerations for Setting Per Diem Rates

  • Research Cost of Living: Food costs vary significantly by region. Use tools like:
    • U.S. General Services Administration (GSA): Provides per diem rates for U.S. cities.
    • OECD or World Bank Data: Offers international cost-of-living indices.
    • Expat Websites: Platforms like Numbeo or Expatistan offer localized cost data.
  • Benchmarking with Industry Standards: Check peer companies or industry norms for per diem policies.
  • Travel Class and Role: Adjust allowances based on employee roles (e.g., senior executives may have higher allowances).
  • Frequency of Reassessment: Review annually or biannually to adjust for inflation or changing conditions.

2. Suggested Per Diem Rates for Food and Tips

Here’s a general guideline based on average meal costs in major regions:

Region Daily Food Allowance (USD) Notes
United States $60–$100 Higher rates for cities like New York, San Francisco, or Washington, D.C.
Europe $70–$120 Varies widely (e.g., higher in Switzerland, lower in Eastern Europe).
United Kingdom $70–$110 London typically requires higher allowances.
Japan $80–$130 Costs are higher in cities like Tokyo; includes service charges.

3. Components to Consider in the Allowance

  • Meals: Covers breakfast, lunch, and dinner. Include separate rates for expensive cities if necessary.
  • Tips: Include tipping norms (e.g., higher in the U.S. but less common in Japan).
  • Currency Fluctuations: Adjust periodically to account for exchange rate changes.

4. How Companies Typically Implement Per Diem Policies

  1. Pre-Defined Allowance by Country/City:
  • Use a single rate for the country or define separate rates for major cities (e.g., New York vs. Dallas).
  1. Itemized Reimbursement:
  • Employees provide receipts, but this can be time-consuming for both employees and the finance team.
  1. Blended Approach:
  • Fixed per diem for food and tips, with separate reimbursements for transport and other incidentals.

5. Tools for Benchmarking

6. Example Per Diem Calculation

For a 7-day trip to London:

  • Food and Tips: $100/day x 7 = $700
  • Transportation: Reimbursed separately.
  • Incidentals: Allow for ~$10/day (or as per policy).

I hope this answers your query.

Priya

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@spriya
Thank you for the detailed answer. This is very helpful.

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