Business travel per diem: how to set the amounts

A travel per diem is a fixed amount the company pays employees to cover day-to-day expenses away from their home city, mainly meals and, in some policies, local transport and small costs. Instead of checking every restaurant receipt, the company sets how much it pays per day of travel and the traveler manages that amount.

The model is simple, but it only works when the amounts make sense for the destination and the type of trip. Per diems that are too low lead to complaints and exception requests; too high, and they become an uncontrolled cost. At ArrowTur, which has been handling corporate travel since 1989, we see that the policies that work have clear criteria and are reviewed regularly. Here is how to build the table.

What the per diem covers and what it does not

The first step is to write into the travel policy what the per diem includes. Without that definition, each traveler reads it differently and the expense report turns into a negotiation. A common format is:

Included in the per diem: breakfast (when it is not part of the hotel rate), lunch, dinner, snacks and tips.
May be included, depending on the policy: local transport, laundry on long trips and small personal expenses.
Outside the per diem: flights, hotels, car rentals and business expenses such as meals with clients, which follow their own approval and reimbursement rules.

It is also worth defining what happens with meals already paid for by the company, such as lunch served at an event or breakfast included at the hotel. Many policies deduct part of the per diem in those cases.

Criteria for setting the amounts

By destination

The cost of a meal varies widely between state capitals, smaller inland cities and international destinations. A table with two or three bands is usually enough for domestic trips, for example: capitals and major business hubs, other cities, and higher-cost regions. For international travel, the usual approach is amounts in foreign currency per country or region.

By job level or type of trip

Some companies set different per diems by seniority; others prefer a single amount for everyone and handle exceptions case by case. There may also be a difference between short and long trips, when the traveler spends weeks in the same place and has access to cheaper options such as serviced apartments with a kitchen.

By time of day

Trips that start in the afternoon or end in the morning do not require a full per diem. A simple rule is to pay fractions of the per diem according to the meals covered: for example, half a per diem when the employee leaves after lunch or returns before dinner.

How to arrive at the numbers

Instead of setting amounts blindly, use data the company already has:

pull the actual meal spending on recent trips, by destination, from the expense reports;
compare it with meal prices at restaurants near the hotels and offices your team usually uses;
consider working hours at the destination, because people with meetings until late eat near the hotel, not downtown;
test the table for a few months and track exception requests, which show where the amount fell short.

Review the amounts at least once a year, or sooner if food prices rise sharply or the company starts traveling to new destinations.

Per diem, reimbursement or card: how to combine them

The per diem does not have to replace every other model. It is common to combine a fixed per diem for meals with reimbursement or a corporate card for local transport and business expenses. What matters is that each expense has a single path, so the same cost is never paid twice.

The main advantage of a per diem is fewer receipts to check. The downside is that the company loses detail on how much was spent on each meal. For many companies, the time saved is worth it.

Labor and accounting considerations in Brazil

Under Brazil’s labor code, the CLT (Consolidação das Leis do Trabalho), travel per diems, even when paid regularly, are not part of the employee’s pay and are not subject to labor and social security charges, according to article 457, paragraph 2 of the CLT, as amended by Law 13,467/2017. This applies to amounts actually intended for travel expenses; payments called per diems without a matching trip may be challenged.

That is why you should keep a record of each trip (destination, dates and purpose) linked to the per diem payment and check with the company’s accountants on tax treatment and the documents to keep. Companies based in other countries should follow their own local rules.

Business travel per diems and ArrowTur

At ArrowTur, we help companies build their travel policy, including what goes into the per diem and what stays with the agency. We book flights, hotels and car rentals within the policy and bill them centrally, with reports by traveler, destination and cost center. These reports show where and for how many days your team travels, which gives you a basis for setting per diem bands by destination. We also suggest hotels with breakfast included, which makes per diem calculations simpler.

Our team is available Monday to Friday, 7 a.m. to 7 p.m. (Brasília time), with emergency support outside those hours. Learn more about our corporate travel management and talk to our sales team by phone at +55 11 5189-4120, on WhatsApp or through our Contact Us page.

Frequently asked questions

Do employees who receive a per diem need to submit receipts?

It depends on the company’s policy. A per diem usually removes the need for meal receipts, but the company should record the trip and check with its accountants which documents to keep.

Should the per diem be the same for every destination?

That is not ideal. A table with a few bands, separating capitals, other cities and international destinations, usually reflects real costs better.

Is a travel per diem part of salary in Brazil?

Under article 457, paragraph 2 of the CLT, travel per diems are not part of pay and are not subject to payroll charges, as long as they match real trips. Confirm the details with your accountants.