Back in 2021, there was a small revolution in the form of the cash meal allowance, which I told you about.
A more dramatic change is planned for next year. Until now, we have been used to different rules for meal vouchers and cash meal allowances. Meal vouchers followed their own system: regardless of the voucher’s value, the employer could deduct only 55% (subject to a limit), but the whole voucher was exempt from income tax and insurance contributions for the employee. The explanatory memorandum to the new Act says that so-called „executive“ meal vouchers were overused, with senior employees receiving daily vouchers worth thousands of crowns. Although almost 100% was a non-deductible expense for the employer, it allowed them to give the employee „money“ free of tax and contributions.
This is another reason why a decision was made from above to give us a slap on the wrist: after almost 30 years, meal vouchers are starting to adopt the new system introduced for cash meal allowances.
Meal contribution – from 1 January 2024
From 1 January 2024, the systems for meal vouchers and cash meal allowances will therefore be unified under the new name meal contributions. An important figure for this contribution will be 70% of the upper meal allowance limit for a business trip lasting 5 to 12 hours, which for 2024 is 116,20 CZK. This limit determines the threshold for tax and contributions, as follows:
up to the limit (below CZK 116.20) | above the limit (above CZK 116.20) | tax and contributions on the excess | |||
tax | social insurance | health insurance | |||
employee | exempt from tax and insurance contributions | subject to tax and insurance contributions | 15 % | 7,1 % | 4,5 % |
| employer | tax-deductible expense | tax-deductible expense | – | 24,8 % | 9 % |
Meal vouchers and cash meal allowances will therefore have exactly the same tax treatment, so it now makes no difference whether you hand an employee a voucher or send the money directly to their bank account with their wages. At present, I therefore see no reason to use meal vouchers at all (higher administration costs, processing fees and more time spent distributing them among employees).
Example (2024):
An employer provides an employee with a meal contribution of CZK 200 (whether physical vouchers or a cash meal allowance). There were 20 working days in the month.
up to the limit (below CZK 116.20 * 20 days) | above the limit (above CZK 116.20 * 20 days) | tax and contributions on the excess | |||
tax | social insurance | health insurance | |||
| employee | CZK 2,324 exempt | CZK 1,676 subject to tax and contributions | CZK 251.40 | CZK 119.00 | CZK 75.42 |
| employer | CZK 2,324 tax-deductible expense | CZK 1,676 tax-deductible expense | – | CZK 415.65 | CZK 150.84 |
Example summary:
The employee receives a meal contribution of CZK 3,554.18 [20 * 200 – (251,40 + 119,00 + 75,42)].
This benefit costs the employer CZK 4,566.49 [20 * 200 + (415.65 + 150.84)]. Of this, CZK 2,324 is a non-deductible expense and CZK 2,242.49 is tax-deductible.
In my view, the best approach is to set an amount in your internal policy that falls within the exemption limit for tax and contributions. If you want to give an employee something extra, give them a bonus instead. You will not commit yourself to paying that amount regularly, and the tax treatment will be identical. 🙂
The longstanding final alternative to meal vouchers and cash meal allowances is workplace catering. Given the size of my clients, however, I do not encounter this type of meal provision, which is also why I will not discuss it further.
If you would like advice on setting up benefits correctly for the new year, do not hesitate to get in touch and we can look at it together. 🙂 .