As of today, you can contribute towards employees' meals in only two ways that qualify as tax-deductible expenses: meal vouchers or providing workplace catering.
The new cash meal allowance provides, from 1.1.2021, a third option for giving employees a meal benefit. It also avoids much of the administration and fees associated with vouchers, and you do not need to establish a canteen. 🙂
The procedure:
The employer simply decides how much to contribute towards employees' meals. Ideally, put it in an internal policy: a simple document stating that from a specified date employees receive a specified amount alongside their monthly wages as a cash meal allowance. I have a policy template ready for my clients. 🙂
A smart employer chooses no more than CZK 75 for each day worked (meaning a day when the employee worked at least 3 hours of their scheduled shift). This figure is not plucked from thin air: it is the tax-deductible limit for 2021.
This cash meal-allowance limit is determined, as meal vouchers were previously, by the upper meal-allowance rate for public-sector employees on a business trip lasting 5–12 hours. The employer may then claim a maximum of 70% of this amount.
So, in 2021:
| Upper meal-allowance rate for a business trip | CZK 108 |
| 70 % | CZK 75.60 |
| Exempt from income tax and contributions up to | CZK 75 |
Taking January 2021 as an example:
| Number of working days | 20 days |
| Cash meal allowance per day | CZK 75 |
| Paid to the employee alongside wages | CZK 1,500 |
| Contributions and income tax on the cash meal allowance | CZK 0 |
In effect, you give the employee an extra CZK 1,500 “net”. The Ministry of Finance expects many employers who previously avoided meal vouchers because of administration and fees to introduce this benefit. So there is no need to hesitate about using it straight away. No proof will be required that employees actually spent the money on food. 🙂
The cash meal allowance follows the same basic rules as meal vouchers: employees can receive it only for days actually worked. Its amount therefore changes monthly according to working days, holidays and sick days.
Employees under ordinary employment contracts, as well as agreements to perform work (DPP), agreements to carry out work (DPČ), and company executives may receive the cash meal allowance. For these other categories outside ordinary employment there should already be a working-time schedule in the contract. For everyone, however, there is an obligation to keep attendance records for their employees.
Who might not benefit so much:
Some of you may currently give employees meal vouchers worth not CZK 70, but, for example, CZK 120. Employees are used to that value and are not particularly interested in how you handle it internally. They need not contribute anything themselves towards the vouchers. You then claim as an expense no more than 70% of the business-trip allowance mentioned above, capped at 55% of the voucher's value. The remaining 45% is a non-deductible expense for you. The advantage for employees is that they need not pay contributions or tax on the extra amount they receive.
However, if you want to preserve the value of meal vouchers for employees so they do not feel their benefits have actually been reduced, the cash allowance presents a problem. Anything above CZK 75 per day worked is subject to contributions and tax. If you want to keep the existing “contribution” at, say, CZK 120, the difference between CZK 75 and CZK 120 — CZK 45 — is effectively a wage increase for the employee, subject to all normal contributions and taxes.
I have also encountered employees affected by obstacles to work — the employer does not have enough work for them because of the current situation. In that case, employees do not qualify for the cash meal allowance. If the employer nevertheless insists on paying it, the entire allowance is subject to tax and contributions, just as if their wages had increased by that amount.
If you are interested in the cash meal allowance and want to apply it in January payroll, let me know no later than when you hand over the January payroll documents. Also create a simple spreadsheet in the payroll folder to record employees, months, days worked and cash meal allowances paid. That will keep everything clear and provide documentation for any inspections. 🙂 More information is in the current article on the Financial Administration website.
If you are unsure, do not hesitate to get in touch and we will look at it together. 🙂