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05October2018

Travel Allowance - Daily Indemnity

Daily Indemnity

The terms Travel Allowance and Daily Indemnity are usually mixed in our legislation. There are significant differences between them, besides, it is known that the social security premiums are deducted from the travel allowance whereas the daily indemnities are not questioned in social security premiums. Please see below the related articles of Mr.Resul Kurt and  Mr.Mehmet Maç.


As it can be referred from being involved in the 24th article about the indiscriminatenesses of the social security commission, mainly the daily indemnities are not an allowance for the employees but an expense for business. However, on the condition that the indemnities are paid as a lump sum under the name of daily indemnity rather than promoted real travel expenses and that they are economized by the employee, they can be considered as benefit and allowance. The amounts that exceed the legal limits are subject to the taxed wage payment.

According to the provision of the 24/2nd article of the social security institution, in the private sector, there is no such application that the travel expenses are paid km-based as a lump sum as well as in the institutions that are subject to daily indemnity law. It can only be possible for the employees who travel by their own car to pay as return for their real travel expenses on km basis. Therefore, there are not any benefits that can be considered as saving or payment in regard to the travel expenses, yet, the employee must be paid the actual travel expenses without considering any conditions and limits.

The situation is different for food and accommodation allowance. On the condition that actual expense principal is accepted for these items, even when any benefit or allowance is out of question, by paying the employee the daily indemnity of food and accommodation for both domestic and foreign travels, the amount that the employee economized during his/her travel is considered as benefit which is exempted from deductions.

As it is known, the indemnity which is not subject to the withholding tax limited to the daily indemnity of the public servant of the highest level is paid to the employee in the private sector. Consequently, the daily indemnities over the level will be considered as a net payment subject to tax and will be subjected to the withholding tax stoppage over the gross amount.

All the indemnity payments in the stamp tax application are involved in the stamp tax stoppage base ( the position of IV / 1 – i  of the table numbered 1 which is added to the stamp tax law ). Although the provision prescribes that the daily indemnities are involved in the stamp tax scope, we assume that this is not correct and the stamp tax liability on the payments should be completely abrogated.

The indemnities are excluded from the social security premium calculation according to the 77th item of the law numbered 506, and no limit is prescribed. Therefore, whereas all the payments under the name of daily indemnity are subject to stamp tax, and the exceeding amount is subject to the withholding tax stoppage as a net payment, these payments are not subject to the social security premiums regardless with a limit.

Category Turkish Commercial Code

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