Daily allowances and business trips from 1 October 2026: what is changing?
Updated: 2026-09-30
From 1 October 2026, the rules on daily allowances and business trips change. There are new conditions for reducing daily allowances, and employees must be informed about reduced allowances. No daily allowance is paid for one-day business trips within Lithuania, and only 20% of the daily allowance rate is paid for a first or last day of a trip that lasts less than 4 hours. What do these changes mean for employers and employees?
WHAT IS A DAILY ALLOWANCE?
A daily allowance (per diem) is an amount paid to an employee to cover the additional everyday expenses incurred during a business trip.
The amount of the daily allowance depends on:
- the country or city of the business trip;
- the duration of the business trip;
- the actual start and end time of the business trip;
- whether the company reduces daily allowances.
1. WHEN CAN DAILY ALLOWANCES BE REDUCED?
From 1 October 2026, whether daily allowances can be reduced depends on the basis on which the company sets reduced allowances.
If the company has a collective agreement:
- reduced daily allowances can be set in the collective agreement;
- they cannot be lower than 50% of the maximum daily allowance rate set by the Government;
- this rule applies regardless of the duration of the business trip.
Example:
If the maximum daily allowance rate is €70:
- 100% = €70;
- 50% = €35.
If there is no collective agreement:
Reduced daily allowances can be set in the company's local regulation / internal administrative act. However:
- the business trip must last at least 7 calendar days;
- the daily allowance cannot be lower than 65% of the maximum rate set by the Government.
Example:
If the maximum rate is €70 and the business trip lasts at least 7 calendar days:
- €70 × 65% = €45.50.
If the company has no collective agreement and the business trip lasts less than 7 days, the daily allowance cannot be reduced. In that case, the full daily allowance rate must be paid.
Example:
An employee is sent on a 5-day business trip, and the company has no collective agreement. Even though the company's internal documents set a 65% rate, it cannot be applied to this trip.
2. INFORMING EMPLOYEES ABOUT REDUCED DAILY ALLOWANCES
If reduced daily allowances apply to an employee, the employee must be informed in writing of the specific amount before the business trip starts.
The amount set applies until the end of that business trip. This means the employer cannot change it on its own decision during the trip.
3. ONE-DAY BUSINESS TRIPS IN LITHUANIA
From 1 October 2026, no daily allowance is paid for a one-day business trip within Lithuania.
Example:
An employee is sent from Vilnius to Kaunas and returns on the same day. This is a one-day business trip in Lithuania, so no daily allowance is paid.
* This change applies only to one-day business trips within Lithuania. A daily allowance must still be paid for a one-day business trip abroad.
4. CALCULATING THE DAILY ALLOWANCE FOR THE FIRST AND LAST DAY OF A BUSINESS TRIP
From 1 October 2026, if the first and/or last day of a business trip lasts less than 4 hours, only 20% of the set daily allowance is paid for that day. This rule applies to business trips both in Lithuania and abroad.
Business trip time also includes travel time:
- to the workplace specified by the employer;
- back from it.
The actual time of the business trip counts toward the 4-hour threshold:
- 3 h 59 min → 20%;
- 4 h 00 min → full daily allowance rate.
Example. Business trip in Lithuania: 5 October 13:30 → 6 October 17:00
- 5 October: 3 h 30 min of business trip time;
- 6 October: full day.
Since the business trip lasts more than one day, a daily allowance is paid in Lithuania. For the first day, which is shorter than 4 hours, the 20% rate applies. If the set daily allowance is €28:
- Day 1: €28 × 20% = €5.60;
- Day 2: €28.
Total daily allowance: €5.60 + €28 = €33.60
QUICK REFERENCE
| Situation | Daily allowance from 1 October 2026 |
|---|---|
| One-day business trip in Lithuania | Not paid |
| One-day business trip abroad | At the set rate |
| First day of the trip < 4 h | 20% of the set rate |
| Last day of the trip < 4 h | 20% of the set rate |
| Collective agreement in place | Can be reduced to no less than 50% of the maximum rate |
| No collective agreement, trip ≥ 7 days | Can be reduced to no less than 65% of the maximum rate |
| No collective agreement, trip < 7 days | Cannot be reduced |
OTHER BUSINESS TRIP CHANGES
The provision on paying daily allowances and other business trip expenses has been expanded: reimbursable business trip expenses now include electricity costs as well as fuel.
- Fuel or electricity costs can be reimbursed for the kilometres driven during a business trip;
- reimbursement is based on the fuel or electricity consumption rate (per 100 km) that the organisation sets for the specific vehicle, supported by the manufacturer's technical data;
- this applies when the trip uses a car owned by the organisation, leased, borrowed under a loan-for-use agreement, or owned by the employee;
- it applies to business trips both in Lithuania and abroad.
WHAT SHOULD COMPANIES PREPARE BY 1 OCTOBER 2026?
- Review the company's business trip policy;
- update internal documents if needed;
- set up a procedure for informing employees about reduced daily allowances;
- stop paying daily allowances for one-day business trips within Lithuania;
- make sure actual departure and return times are recorded;
- inform employees about the new rules;
- update the business trip accounting process.