Travel Allowances: Which Countries Require Them?

Travel insurance is a requirement for entry into certain countries. This is often the case for countries in the Schengen zone, which generally do not grant travel visas without proof of specific travel insurance. Some countries, such as Cuba, require travel insurance due to diplomatic relations. In the wake of the COVID-19 pandemic, many countries now require travel insurance that covers COVID-19-related treatment. This is the case for Ukraine, Turkey, and Seychelles, among others.

Travel insurance requirements for entry

The Schengen Area

The Schengen Area comprises 26 European countries, including heavy hitters like Austria, Belgium, France, Germany, Italy, and Spain. All Schengen visa applicants must obtain comprehensive travel insurance to ensure financial protection against unexpected medical expenses, such as emergency medical treatment or repatriation costs. The insurance must meet specific requirements, including coverage of at least €30,000 in medical costs, validity in all Schengen Area member states, and coverage for the entire duration of the stay.

Antarctica

Due to the unique nature of travel to Antarctica, travel insurance is considered a necessity. The required medical coverage varies based on the traveler's itinerary and tour operator. However, comprehensive plans that include trip cancellation, trip interruption, and medical evacuation are recommended.

Cuba

The relationship between the United States and Cuba has been strained historically. As a result, when both countries agreed to allow limited travel, the Cuban government stipulated that travel insurance, including medical coverage, would be required for US travelers.

Ecuador

While travel insurance is not required to enter Ecuador, it is mandated for visitors to the Galapagos Islands.

Iran

Travel insurance is mandatory for visitors to Iran who wish to obtain a travel visa.

Jordan

All international visitors to Jordan must have travel medical insurance.

Laos

Laos now requires visitors to have travel medical insurance that includes coverage for a minimum of $50,000.

Nepal

The government of Nepal has made travel medical insurance mandatory for all visitors, with some exceptions.

Qatar

All international travelers to Qatar are required to have travel insurance.

Russia

To obtain a visa to enter Russia, travelers may be asked to provide proof of "medical insurance valid in the country to be visited and fully covering the period of the first trip."

Rwanda

Rwandan law requires all visitors to the country to possess health insurance. Those who arrive without it may be required to purchase a plan upon entry.

Seychelles

All international travelers to Seychelles must have full medical coverage, including COVID-19 coverage, for the duration of their stay.

Turkey

All visitors to Turkey must purchase medical travel insurance before entering the country. The only requirement is that the insurance must cover the entire trip.

Ukraine

Travelers to Ukraine must have medical insurance that covers all COVID-19-related treatment. The policy must be issued by insurance companies registered in Ukraine or foreign companies with a representative office in the country.

In addition to the above, some countries may require travel insurance due to the COVID-19 pandemic. It is always best to check the latest government advice for your intended destination.

Tax-free allowances

In the context of international travel, the European Union (EU) has established Community tax-exemption arrangements for the non-commercial importation of goods by travellers within the EU and between Member States and third countries. These exemptions apply to goods in travellers' personal luggage, provided they meet specific conditions and are not for commercial purposes. The total value of exempt goods per person is generally EUR 175 for travellers from third countries and EUR 600 for travel between Member States, with reduced amounts for travellers under 15.

Additionally, specific import limits for tax exemptions are set for certain goods, such as tobacco products, alcoholic beverages, perfume, coffee, and tea. These limits vary depending on the type of travel (between third countries and the EU or between Member States). Exemptions for tobacco and alcohol are not granted to travellers under 17, and exemptions for coffee are not granted to travellers under 15.

It is important to note that personal allowances also apply when bringing goods into the UK for personal use, regardless of where they were purchased. However, commercial goods must be declared, and there are no personal allowances for goods brought in for business or sales purposes.

In Australia, if an individual receives a travel allowance from their employer, they must include it as income in their tax return. They can then claim a deduction for the amount spent on deductible travel allowance expenses, such as accommodation, meals, and incidentals. Detailed records of travel expenses must be kept unless the deduction is within the specified reasonable amounts.

Reimbursements for employees

When employees are required to travel for work, it is the employer's responsibility to compensate them for any expenses incurred. This typically includes the cost of transportation, meals, accommodation, and other incidental expenses. There are several ways employers can go about this:

• The business provides the employee with company property such as a company car, fuel card, or vouchers to cover travel expenses.
• The business books and pays for transport, accommodation, and meals in advance.
• The employee pays for expenses themselves and is then reimbursed by the business.
• The employee is provided with a travel allowance or lump-sum payment to cover anticipated costs.

It is important to note that the laws and regulations regarding travel allowances vary from country to country. For example, in the United States, most companies have an "accountable plan" for employee travel expenses, which follows guidance from the Internal Revenue Services (IRS) and allows employees to obtain reimbursement without including these payments in their annual income tax return. In the UK, there is no legal requirement for businesses to pay for their employees' travel costs, but it is generally in the company's best interest to offer reasonable travel expenses as tax-deductible expenses.

When providing reimbursements for employees, it is essential to have clear and detailed policies in place. These policies should outline what expenses are covered, any maximum amounts that can be claimed, and the process for submitting and approving expense reports. Additionally, employees should be advised to keep and submit receipts for all expenses incurred.

• Transportation expenses: including airfares, taxi or local transportation costs, car rentals, motorway tolls, parking fees, and standard mileage rates for personal vehicles.
• Meal allowance: usually covering breakfast and dinner during overnight travel.
• Accommodation: reimbursement for hotel rooms or other equivalent establishments.
• Incidental expenses: such as tips, gratuities, telephone, internet usage, and parking fees.
• Entertainment expenses: for business meals or drinks with clients.
• Travel insurance: policies purchased specifically for the business trip.
• Medical considerations: including vaccinations for international travel.
• Laundry services: reimbursement for dry cleaning or laundry services when employees are away from their usual location for extended periods.

Travel allowance rates

Country-Specific Rates:

Some countries have specific requirements and rates for travel allowances:

• Schengen Countries: These include 29 European countries such as Austria, Germany, France, Italy, and more. They require proof of specific insurance benefits, including $50,000 of Medical Emergency/Hospitalization Coverage, $300,000 of Medical Evacuation and Repatriation Coverage, and a $0 deductible.
• Cuba: Requires US travelers to have travel insurance with medical coverage due to the diplomatic relationship between the US and Cuba.
• Antarctica: While not a country, travel to Antarctica is considered a unique case where travel insurance is necessary to protect travelers' significant investments in their trips.
• Ecuador: While not required for the mainland, travel insurance is mandated to visit the Galapagos.
• Egypt: Not mandatory for all visitors, but the Egyptian government advises checking with consulates for the latest updates, as some travelers may be required to have travel insurance.
• Chile: Travelers are not required to show proof of travel insurance, but they must fill out a "Traveler's Affidance" within 48 hours before departure.

Company-Specific Rates:

Companies typically have their own policies and rates for travel allowances:

• Flat Travel Allowance: This is a set amount of money provided to employees for travel costs, regardless of the location or duration of the trip. This is common for short trips or employees who travel infrequently.
• Daily Allowance: Also known as a per diem, this is a set amount provided daily to cover expenses like meals, transportation, and lodging. The amount varies based on the location and duration of the trip.
• Reimbursed Expenses: Some companies reimburse employees for their travel expenses after they submit receipts. This can include airfare, hotel accommodations, meals, and other incidentals.

Australia-Specific Rates:

As an example, here are the travel allowance rates for employees in Australia as of July 1, 2024:

• Capital City Zones (excluding Canberra): These rates vary depending on the season, with high and low seasons defined for each city.
• Canberra: TA rates are set in line with the Remuneration Tribunal (Members of Parliament) Determination 2024 - Travelling Allowance.
• Other Locations: Charters Towers (QLD), Port Macquarie (NSW), and Thursday Island (QLD) are listed as specific locations with their own TA rates.

European Union Tax Exemptions:

The European Union has established tax-exemption arrangements for the non-commercial importation of goods by travelers within the Community and between Member States and third countries. These exemptions apply to goods in travelers' personal luggage, with specific value limits per person.

Company-provided travel resources

When employees are travelling for work, it is the company's responsibility to compensate them for their travel expenses. This can be done in several ways, and the method should be communicated to employees before their trip.

Company-provided resources

One option is for the company to provide employees with the resources they need to cover travel costs. This could include a company credit card, vouchers, or a fuel card. If a company vehicle is provided, the company should also clarify whether it can be used for personal reasons or only for business purposes.

Pre-paid expenses

Alternatively, the company can book and pay for transport, accommodation, and meals in advance. This ensures that the employee does not have to pay out of pocket and streamlines the process by eliminating the need for reimbursement.

Travel allowance

Another option is to provide employees with a travel allowance or lump sum to cover anticipated travel costs. This gives employees more flexibility in how they manage their expenses, but it requires them to keep track of their spending and submit receipts for reimbursement if necessary.

Reimbursement

In some cases, employees may be required to pay for travel expenses upfront and then be reimbursed by the company at a later date. This method can be more complicated and may cause financial strain for employees, so clear guidelines and policies are essential. Employees should be advised to keep all receipts and submit them to the company before reimbursement.

Per diem allowance

A per diem allowance is a set amount of money provided to employees to cover daily expenses while travelling for business. This is usually based on the location and duration of the trip and is intended to cover living costs. Per diem allowances can be provided in addition to other travel compensation, such as lodging or airfare reimbursement.

Flat travel allowance

A flat travel allowance is a set amount of money provided to employees for travel costs, typically used for short trips or infrequent travellers. The employee is responsible for managing the funds and ensuring they are used for their intended purpose.

International travel

When employees are travelling internationally, they may be eligible for tax exemptions on goods brought into the country for personal use. For example, when entering Germany from a non-EU country or certain territories, travellers can bring in goods that do not exceed certain quantity and value limits tax-free. These limits vary depending on the type of goods and the traveller's age. Similar exemptions may apply in other countries, so it is important to research the specific regulations for each destination.

Frequently asked questions