Travel rules in connection with a posting or permanent place of employment abroad

What is an official journey or a permanent place of employment abroad?

First it is necessary to decide whether the arrangement is a posting or a permanent place of employment abroad.

The department/office assesses and decides together with Corporate HR whether an employee should be posted, i.e. have a temporary place of employment for a longer period of time, or have another permanent place of employment.

A posting assumes:

• that the journey is a necessary part of the work, and
• that it has been approved by the department/office as an official journey.

A posting is an official journey of longer duration. A posting may be when an employee stays at the same place for at least 28 days, and when the employee stays overnight at the place where he or she is working. In connection with a posting, the employee will therefore have a temporary place of employment for longer than 28 days.

A permanent place of employment abroad may for example be when an employee is already working abroad at the time of employment and will continue to work abroad during the period of the employment, or when the stay abroad is of such a permanent nature that it can be regarded as a permanent place of employment. It is necessary to make an assessment in each and every case, and Corporate HR is able to assist the department/office in this respect.

The assessment includes the following aspects when deciding whether the arrangement is a posting or a permanent place of employment abroad:

• duration of stay
• all relevant economic factors, including in particular the relative cost of the posting compared with the cost of a permanent place of employment abroad
• other relevant aspects which make it more appropriate for DTU to post the employee abroad rather than having a permanent place of employment abroad.

To assess whether a posting or a permanent place of employment abroad is most financially expedient for the department/office, it is necessary to compare the total remuneration costs associated with a posting under e.g. the Agreement on Official Travel (Tjenesterejseaftalen) and the total costs associated with a (new) permanent place of employment abroad.

This applies only in the case of actual postings. If the employee is working for longer periods of time from the same place of employment abroad, it is necessary to access whether the position corresponds to a permanent place of employment abroad.

In addition, it must be decided whether the employee is covered by Danish collective agreements during his or her stay abroad. In the case of a posting, the Danish collective agreements often apply during the stay abroad, but this is not always the case with a permanent place of employment abroad. If the employee will not be covered by Danish collective agreements, including, e.g., the collective agreement for academic staff in the state (akademikeroverenskomsten) and the Agreement on Official Travel (Tjenesterejseaftalen), the terms and the extent to which DTU bears any expenses associated with the stay are agreed individually.

Several official journeys or one continuous posting or permanent place of employment

A stay abroad can consist of several official journeys, a posting or a permanent place of employment abroad. The department/office decides whether the stay abroad is to be organized as several official journeys or as a single continous posting.

The financial aspects as well as which option is the most suitable are decisive for the solution chosen. As part of the financial assessment, a possible rate reduction under the Agreement on Official Travel (Tjenesterejseaftalen) is an important factor, as the hotel allowance and the undocumented night allowance are reduced from the twenty-ninth day.

Expenses covered in accordance with the Agreement on Official Travel (Tjenesterejseaftalen) etc., in connection with a posting

In connection with a posting, DTU may cover the employee’s expenses according to the Agreement on Official Travel (Tjenesterejseaftalen). In connection with budgeting and prior to the posting, it is agreed which expenses DTU covers in relation to a particular posting. It is therefore important to involve the Office for Budget and Accounting (AØR) before reaching a final agreement.

The purpose of the Agreement on Official Travel (Tjenesterejseaftalen) is to cover the additional expenses associated with official trips. Additional expenses are defined as the extra costs which employees incur when making official journeys. It is only these expenses which may be covered. Below is an overview of the most important expenses which can be covered in connection with a posting.

Expenses which can be covered according to the Agreement on Official Travel (Tjenesterejseaftalen)

Expenses for meals etc. are covered either in the form time-subsistence percentage allowance or through the reimbursement of reasonable additional expenses for meals etc. against documentation (see Employee Administrative Guidelines (PAV) section 21.4.2.3. Agreeing on a fixed amount will usually be financially advantageous for the department/office. It is therefore recommended that a fixed amount is agreed.

The agreement may apply for the entire or part of the posting. For example, it may be appropriate to agree a fixed amount from the time when the time subsistence percentage  allowances become tax liable, see PAV section 21.1.5.

There is no percentage allowance during a posting, even though additional expenses for meals etc. will be reimbursed against documentation.

Accommodation expenses will be covered either through the reimbursement of documented expenses incurred within the maximum amount per night (hotel allowance) or as undocumented night allowance. The hotel allowance and the undocumented night allowance are reduced by 25% from the twenty-ninth day.

For scientific staff, the department/office may, following a specific assessment, cover reasonable and documented travel and removal expenses etc. for the employee in question and, to a limited extent, for any accompanying family members. It is not possible to cover similar expenses for technical and administrative staff.

Taxation

Many of the amounts which may be paid out during a posting are either non-taxable or treated according to special rules. It is therefore important to check the tax rules. You can read more about taxation here.

Time-subsistence percentage allowance which are paid during a posting for up to 12 months are normally not taxable. On the other hand, time-subsistence percentage allowances which are paid during a posting lasting more than 12 months are always tax liable.

The reimbursement of documented additional expenses is normally liable to tax, even if the posting lasts more than 12 months. The value of any free accommodation is, as a general rule, regarded as a taxable employee benefit in the same manner as salary.

PhD students

PhD students are not covered by the Agreement on Official Travel (Tjenesterejseaftalen). In some cases costs may be covered, although it may never exceed the amounts stated in the current rules for travel expenses and time-subsistence percentage allowances. The maximum amounts stated in the Agreement on Official Travel regarding travel expenses and time-subsistence percentage allowances apply.

Children’s schooling

In connection with a posting, it is not possible to have the costs of children’s schooling covered.

Other expenses

It is not normally possible to have other expenses covered. In particular, compensation is not paid for a spouse’s loss of income, air tickets for visiting children, air tickets in connection with holidays in Denmark, hardship or maintaining two homes.

Expenses covered in connection with a permanent place of employment abroad

In connection with a permanent place of employment abroad, the employee will normally sign an individual contract of employment. The salary will be fixed according to the nature and demands of the position. You can read more about salary levels here.

The salary level must be approved by the Danish Agency for the Modernisation Ministry of Finance if the total salary level excluding both the employee’s and the employer’s pension contributions exceeds DKK 518,000 in basic salary (level 31 March 2012).

The Agreement on Official Travel (Tjenesterejseaftalen) does not apply in the case of a permanent place of employment abroad. Therefore, a budget and a specific agreement on which expenses DTU may cover has to be concluded in advance.

Planning

Legal and financial issues in connection with a posting/permanent place of employment abroad are often complex and require a knowledge of Danish legislation, collective agreements and legislation etc. in the country to which employees are being posted or in which they have a permanent place of employment.

It is recommended that the planning of a posting/permanent place of employment abroad starts no less than six months prior to departure, as a number of issues, as mentioned above, must be clarified. Corporate HR as well as the Office for Budget and Accounting (AØR) will assist the department/office in this respect.

Read more about official travel in Guidelines on official travel at DTU.