How are expenses for a business trip of an employee abroad accounted for?

Accounting for the costs of an employee's business trip abroad for employers registered in Bulgaria is an important and common issue for companies that operate at the international level. Proper accounting of these expenses not only ensures the accuracy of financial statements, but also helps to comply with legal requirements and optimize company resources. Postings abroad related to international projects, meetings or trainings entail expenses that include daily money, transportation, accommodation and others. The question is how to properly document and account for these costs.

The key points in accounting for a business trip abroad include filling out accurate documents such as advance report for a business tripand the right accounting of daily money for a business trip. These processes are often challenging, especially when accounting for costs in different currencies and with changes in legislation for 2024, such as amount of business trips abroadand daily money for a business trip. Companies must comply with regulatory requirements, including Annex No. 2 of the Ordinance on Official Missions and Specializations Abroad.

Risks of incorrect posting include errors in tax returns, delays in reporting and penalties by the tax authorities. For example, not giving the right A1 form, where necessary, can lead to violations in the social security of employees. On the other hand, opportunities include effective cost management and optimization of tax benefits.

Important practical questions that arise are how to properly fill the posting template, how to calculate the cost and what documents to submit for certificate A1. It is also important to observe the period for accounting of the service advance, as well as to correctly prepare all accounting documents, including report on a business trip abroad letterheadand related documents.

The topic is essential for all companies that send employees abroad, because the correct accounting of expenses for business trips can prevent mistakes and financial losses. In the next part of the topic, we will consider in detail how the necessary documents are prepared and submitted, as well as what are the specific requirements for 2024 regarding payment of business trips abroadand Requirements for the issuance of the A1 certificate.

What are the requirements for posting employees within Bulgaria and abroad?

The posting of employees in Bulgaria and abroad is regulated by various legal acts, such as Ordinance on business trips in the countryand The Ordinance on Business Missions and Specializations Abroad. A posting is the sending of an employee to perform official duties outside his main place of work for a certain period. This is an important process because it affects both the remuneration of the employee and the obligations of the employer, especially in the accounting of expenses for travel, subsistence and accommodation money.

For business trips within Bulgaria, according Art. 2, para. 1 of the Ordinance on business trips to the country, a business trip includes not only the time for completing the task, but also travel days, as well as weekends and holidays. The order for a business trip must include details such as the place of the business trip, the task to be performed, as well as the right to travel, subsistence and accommodation money according to art. 9, para. 1. It is important to note that Art. 11provides for the payment of travel money both for going and for returning from the place of business trip.

Regarding postings abroad, according to Art. 2, para. 1 of the Ordinance on Official Missions and Specializations Abroad, this is the sending of a person abroad to perform specific official work. The order for a business trip must contain detailed information on travel, subsistence and accommodation money, as well as other expenses such as visa and passport fees, if applicable, according to art. 5, para. 2of the same ordinance. Daily money for business trips abroad covers expenses such as food and transportation in the city where the employee is posted, as provided for in Art. 18, para. 1.

On business trips abroad, the employer must comply with a number of other requirements, such as providing medical insurance for the time of the business trip, according to Art. 28, para. 1. It is also important to comply with the rules of cost accounting, which includes the submission of documents on the incurred costs of transportation and accommodation, these expenses must be in accordance with the sizes approved by the employer.

If the posting requires social security in another country, it is necessary to issue a Form A1to confirm that the employee is insured in Bulgaria while working abroad. This certificate is issued in accordance with Article 12 (2) of Regulation (EC) 883/2004and proves that the employee remains subject to Bulgarian social security legislation, even when working in another EU Member State.

Accountability on business trips is a key aspect for both domestic and foreign business trips. The employee is obliged to submit a report on the funds spent within 10 days after returning from a business trip, as regulated in Art. 38 of the Ordinance on Official Missions and Specializations Abroadand art. 39, para. 1.

How are posting expenses accounted for?

Expenses for a business trip of an employee are accounted for according to clearly defined rules, it is important to comply with the provisions on travel, daily and accommodation money, as well as the rules for accounting for expenses. The posting is carried out on the basis of a previously issued written order, which must contain details such as the place, purpose and duration of the posting, as well as the amount of the posting money. According to the Ordinance on business trips in the country and abroad, the order can be drawn up as an electronic document that meets the requirements of Regulation (EU) 910/2014.

The posted employee is entitled to travel money to and from the place of business trip. Depending on the means of transport chosen by the employer, transport costs must be covered. According to Art. 11 of the Ordinance on business trips in the country, travel money is paid for public transport, such as buses and trains, and in the case of a business trip with a personal motor vehicle, the fuel consumption is paid according to the norms specified by the vehicle manufacturer. In addition, when posting for a longer period (more than a month), the employee has the right to return to his place of residence once a month, travel expenses for this transport are also covered.

The daily allowance covers the cost of food and small expenses of postings and is calculated on the basis of the number of days of the mission. They are paid in an amount approved by the employer, but not less than the legally established minimum values. According to Art. 19, para. 1 of the Ordinance on business trips in the country, the amount of daily money for a business trip in Bulgaria is fixed at BGN 40 for each day. For business trips abroad, the daily allowance varies depending on the country, and the amounts are set out in Appendix No. 2 to the Ordinance on Business Missions and Specializations Abroad.

When the business trip includes overnight stays, the employee is entitled to accommodation money, which covers the cost of accommodation. They are paid on the basis of the expenses actually incurred, certified by an official document (invoice), in accordance with Art. 26 of the Ordinance. If the seconded person has to spend the night in a neighbouring city due to lack of accommodation in the city of the posting, he shall be reimbursed the costs of additional transport, provided that he presents the relevant documentation.

Upon completion of the posting, the employee must submit an advance report describing all expenses incurred. The deadline for accounting of expenses is 10 days after the return, providing all necessary documents — cash receipts, invoices for accommodation and transport costs, in accordance with Article 39, paragraph 1 of the Ordinance. In the case of a business trip abroad, this report should also include additional expenses such as visa and passport fees, if applicable, and other specific documents.

What documents are needed for posting expenses in relation to a posted employee of a Bulgarian company?

Accounting for posting expenses for a posted employee of a Bulgarian company requires a set of documents that certify the correct execution of expenses and compliance with legal regulations. These documents provide transparency and legal protection for both the employer and the employee, while allowing for the correct accounting of expenses. Here are the main documents that are needed to account for posting expenses:

1. Order for a business trip— This is the main document certifying the posting. The order must be issued before the start of the posting and include the following mandatory elements:
   • The name of the posted employee.
   • The place of the business trip.
   • The duration of the posting (date of departure and date of return).
   • The purpose of the business trip.
   • The amount of living, accommodation and travel expenses that will be paid to the employee.
2. Tickets and invoices for transport— The employee must present tickets for public transport (train, bus, plane) or fuel invoices if a personal vehicle is used. These documents certify the actual transportation costs incurred and are necessary for reimbursement.
3. Invoices for accommodation— If the business trip requires overnight stays, the employee must provide an invoice for the hotel or other type of accommodation. These invoices are necessary for the refund of the accommodation money and must include all mandatory requisites — name of the employee, dates of accommodation and the amount paid.
4. Invoices for other expenses— These can be invoices for food, taxis, public transport or other expenses related to the business trip, which must be approved in advance by the employer. These expenses must be accounted for according to the established rules of the company.
5. Advance report— An employee who received an advance before the posting must submit an advance report after the end of the posting. This report includes all expenses incurred during the business trip, accompanied by the necessary documents (tickets, invoices and receipts). If the costs exceed the advance granted, the employee has the right to demand an additional refund of the amounts, and if they are below the advance amount - he must reimburse the difference.
6. Business trip report (posting report)— Upon completion of the posting, the employee must draw up a report that includes a description of the tasks performed and the expenses incurred during the posting. This document is submitted to the employer and serves as the final approval of expenses.
7. Form A1(if posted to an EU country) — When the employee is posted to a European Union country, it is necessary to issue a certificate A1, which confirms that he remains insured in Bulgaria during his stay abroad. This certificate is important to prove the correct social security of the employee and avoid double insurance.
8. Cash receipts and other receipts— All expenses not covered by invoices but related to the posting must be supported by receipts or other valid receipts. This includes smaller expenses such as food, public transport or taxi.
9. Documents for visa and passport fees(if applicable) — For business trips to countries where the issuance of visas or other documents is required, the employee must present expenditure documents that prove the relevant payments have been made.

Each company may have specific internal reporting requirements, but these basic documents are mandatory under the legal framework for the correct accounting of posting expenses.

What is the advance report for business trips in the country and abroad?

The advance report on business trips is a document that serves to record the funds previously provided to the employee to cover expenses related to a business trip in the country or abroad. The main purpose of the advance report is to show how these funds were spent and to find out whether the employee spent exactly the advance money received or there is a difference that needs to be recovered.

The advance report shall include:

1. Received funds— The statement must indicate all amounts granted in advance to cover the costs incurred during the posting. This includes daily money, accommodation money, travel expenses and other anticipated expenses that the employee will have during the business trip.
2. Details of expenses incurred— The employee must provide detailed information on all expenses incurred during the posting. This includes transportation, accommodation, food and other eligible expenses. Each expense must be supported by valid documents, such as invoices, receipts or other receipts.
3. Attached documents— All documents related to expenses must be attached to the advance statement. These are basically invoices for accommodation, transport tickets, receipts for food, taxis or other expenses. It is important that these documents are issued in the name of the company or posted employee and meet legal reporting requirements.
4. Review of costs versus advance— At the end of the posting, the employee is obliged to provide a complete picture of the funds spent compared to those received in advance. If the expenses incurred exceed the money provided, the employer should reimburse the employee the difference. However, if less funds were spent than the advance provided, the employee must return the unspent amount to the company.
5. Deadline for submission of the advance report— After the completion of the posting, the employee is obliged to submit the advance report within a specified period. According to The Ordinance on Postings, this period is usually up to 10 days after the end of the posting. This requirement aims at the timely accounting of costs and the avoidance of irregularities in the financial statements.
6. Approval from the employer— After submitting the advance report, it must be approved by the employer or the responsible person in the company, who monitors the correct expenditure of funds. Only after such approval can the employee receive additional funds or return the unspent amounts.

Is there a certain amount of secondment for drivers and other employees in transport companies in Europe?

Yes, there are certain rules for the size of business trips for drivers and other employees in transport companiessom opererer i Europa. These rules shall be applied on the basis of provisions in the relevant national and European legislation. Drivers in international transport companies often work in specific conditions associated with long periods of travel and stay in different countries. Therefore, the amount of secondment, including daily and lodging money, is usually regulated both by Bulgarian legislation and by the European Union directives for posted workers in the transport sector.

According to Bulgarian legislation and in particular the Ordinance on Posting Abroad, there are minimum amounts of daily and accommodation money that employers must provide to their employees. Each state has different rates for living and accommodation expenses, which apply to business trips of drivers and other employees. In addition, the Posting of Workers Directive within the EU (Directive 96/71/EC and subsequent amendments) obliges transport companies to provide posted drivers and other employees in the sector with working conditions corresponding to the standards of the country where they work temporarily.

This means that in addition to the basic costs of travel, food and accommodation, employers are obliged to provide payment of daily money that covers the needs of drivers during their stay in different European countries. In some cases, specific minimum wage agreements have to be applied in the countries where they operate, which can lead to variations in posting money. All these requirements aim to protect the rights of employees and ensure fair working conditions within the transport sector in Europe.

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