What Are International Per Diem Rates? And How Should You Manage Them?

Business travel expenses change based on where you’re going in the world. This presents a challenge for companies that do business globally. How do you determine a per diem rate for travel when expenses vary each time you visit a new destination? This article explains what international per diem rates are and how to manage them.

Some key takeaways:

• International per diem rates are daily allowances to cover lodging, meals, and incidental expenses for business travelers.
• Federal international per diem rates are more complex than domestic per diem because they must account for fluctuations in currency exchange rates.
• Businesses with locations in more than one country may use different per diem rates based on where the business traveler is based.

Your business is not the only one struggling with this. The Global Business Travel Association estimates that international travel expenses exceeded $1.43 trillion in 2024. Much of that is attributed to the per diem rates international travelers are allotted. Higher transportation and food prices limit how far that can go. We’ll discuss that in more detail below.

What are International Per Diem Rates?

International per diem rates are daily allowances to cover lodging, meals, and incidental expenses for business travelers. The US government has federal international per diem rates used for travel by government employees. IRS per diem rates are used by most private companies to ensure employees are not burdened with additional tax liabilities.

The primary purpose of international business travel per diem rates is to simplify expense reporting while ensuring travelers receive adequate funding for their daily needs abroad. Domestic per diem rates are set by city, whereas international per diems are typically determined based on the country being visited.

Federal international per diem rates are more complex than domestic per diems because they must account for fluctuations in currency exchange rates. If the value of another country's fiat currency increases, and the value of the US dollar stays the same, the cost of living in your destination country is more expensive. That needs to be accounted for.

Several other factors also influence per diem rates 2025 international calculations, including local accommodation costs, restaurant prices, transportation expenses, and economic stability. Government agencies also consider seasonal variations, with rates often adjusted for peak tourist seasons or major international events that might affect local pricing.

What is Included in Per Diem Rates?

Everyone needs to eat. Understanding how international meal per diem rates are calculated is critical for expense management because they typically represent a significant portion of the total per diem expenses. Food costs fall in the category of meal and incidental expenses (M&IE), which also includes miscellaneous expenses like tips, laundry, and communications.

Government international per diem rates also include lodging allowances like the cost of hotel accommodations, including taxes and fees. This is often the largest portion of per diems allowed by private companies and government entities. Lodging costs also vary significantly based on the season traveled, economic situation, and currency fluctuations.

Incidental expenses could include gratuities, minor transportation costs, and personal care items. Travelers using USaid international per diem rates and other agency-specific rates could see increases in their allowances for special circumstances, like hardship allowances when traveling to locations with limited accommodations.

Businesses with locations in more than one country may use different per diem rates based on where the business traveler is based. For instance, the per diem government rates international travelers from the United States use are not the same as the international per diem rates Canada uses.3 This should be accounted for in your expense management system.

How are International Per Diem Rates Determined?

US per diem rates for international travel by government employees are set by the United States Department of State.4 These rates are typically adopted by private companies to reimburse employee travel because the State Department conducts annual surveys of accommodation and meal costs in major cities around the world.

The USG per diem rates international travelers use are updated monthly because prices at hotels and restaurants change frequently. The State Department also collaborates with the General Services Administration to set domestic per diem rates and GSA per diem international rates that can be used across different government agencies.

Coordination among government agencies helps prevent discrepancies that could create confusion or unfair advantages for travelers from different departments. Using US per diem rates for international travel in the private sector eliminates the hard work of calculating per diems because the government is already handling that for you.

State Department international per diem rates are considered the gold standard for private industry because they closely monitor currency fluctuations. Rates are updated monthly to ensure travelers are provided the proper amounts of money to cover currency conversions and the cost of living in the nation they’re visiting.

How do I Find Current International Per Diem Rates?

International per diem rates are set by the US State Department and updated monthly on their website. You can see their latest entry at Allowances.State.Gov.

Domestic per diem rates are set by the General Services Administration (GSA). Most companies need a combination of both for salespeople or executives traveling to foreign destinations. Here’s an example:

A business traveler from Boise, Idaho, needs to travel to India to sell industrial food preparation equipment. Unfortunately, no direct flights are going from Boise to Indira Gandhi International Airport (DEL), Delhi. The best way to go is to fly through San Francisco, necessitating a domestic per diem for that leg, then an international per diem for the flight to Delhi.

Domestic per diems can be found at GSA.gov. State department international per diem rates are published in a searchable database that allows you to filter by country, city, and effective date. This system ensures travelers and finance departments can access the most accurate information for trip planning and expense approval.

Tax liability is a potential issue here also. Many organizations subscribe to commercial services that aggregate IRS per diem rates 2025 international data, providing additional context and comparison tools for expense management. Companies with expectations of sending representatives overseas should consider this carefully.

Challenges and Considerations

The most difficult challenge to overcome with US per diem rates for international travel is price fluctuations. Domestic business owners understand inflation and stock market volatility, but it’s hard to grasp what’s happening in other countries without having a physical presence there. For instance, extreme weather conditions could disrupt supply chains, raising local food prices.

Currency fluctuations are even more unpredictable than weather patterns. The exchange rates in the United States are set based on what the local currency is worth compared to the US dollar. Both values are variable, meaning they’re subject to change at any time. The ideal state you’re looking for is a strong dollar and a weak local currency.

Ironically, that weak local currency that gives travelers more spending bandwidth with their per diem could also make a sales trip more difficult from a results perspective. When the dollar is weak, prices go up here at home. Imagine that scenario in reverse when you travel to sell high-end goods and services. The business math doesn’t work well.

The opposite scenario is a weak dollar and strong local currency. The per diem remains the same, but the traveler won’t be able to afford the amenities they’d be able to enjoy if the situation were reversed. In these cases, many companies choose to subsidize employees with additional funds to cover the difference. Others simply limit international travel to that country.

Are Per Diem Rates Taxable?

This is a twofold question. The company providing the international per diem to employees should be able to deduct it as a business expense, provided they can produce receipts that are in deductible categories, like business meals, transportation, and accommodations. It’s important to have employees collect these while traveling.

The best way to ensure deductibility is to furnish the traveler with a corporate charge card or credit card to use for expenses. This ensures that all spending is done by the company, not the individual, and all transactions are recorded. Many expense management systems offer preloaded card services that are ideal for this type of arrangement.

Per diems are taxable if they’re provided as part of a compensation package. This is when the company pays the employee a per diem as part of their salary, leaving the responsibility for deducting expenses in their hands. This is rarely done with employees, but it’s common with independent contractors receiving a 1099 at the end of the year.

If the company’s per diem exceeds the IRS per diem allowed by the current tax code, the difference is taxable. For example, the maximum international per diem rate if you are traveling to Belfast, United Kingdom, is $318 ($110 M&IE).5 If the company offers a per diem of $400, the difference of $82 is considered taxable income. Speak with your accountant about that.

The Easy Way to Manage International Business Payments

Managing international per diem payments doesn't have to be complicated or expensive.

Wise Business offers several key features that make international per diem management more efficient:

• No monthly fees: Keep more of your budget for actual business expenses rather than account maintenance
• International payments at the mid-market rate: Save money on every transaction with no hidden fees
• Connect to accounting software: Streamline expense tracking and financial reporting
• Designed to manage multiple currencies all in one place: Perfect for organizations with global operations
• Receive payments like a local with major currency account details: Simplify international transactions
• Hold over 40 currencies: Maintain balances in destination currencies to avoid repeated conversion fees

When your employees also have Wise accounts, international per diem transfers become even more cost-effective, with free transfers between Wise accounts in the same currency. This can result in substantial savings for organizations with frequent international travelers.

Open a Wise Business account online

	Editor & Business Expert:
	Panna is an expert in US business finance, covering topics from invoicing to international expansion. She creates guides and reviews to help businesses save time and make informed decisions. You can read more useful business articles on her author profile.

	Author:
	Kevin D. Flynn is a retired financial professional, business coach, and financial writer. He lives in Leominster, Massachusetts with his wife Evelyn, two cats, and ten wonderful grandchildren. When he’s not working, you’ll find him at the golf course or on his back porch reading classic sci-fi novels.

Sources:

1. Global Business Travel Industry Spending Expected to Hit Record $1.48 Trillion in 2024
2. 2025 IRS Per Diem Rates: What Changed + Implementation Guide | Engine
3. Foreign Per Diem Rates In US Dollars
4. Foreign Per Diem Rates
   All Sources checked October 2025.