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Czech Republic: VAT treatment of employer-provided meal vouchers

Czech Republic: Employer-provided meal vouchers

The value added tax (VAT) treatment of employer-provided meal vouchers has been clarified in reports jointly issued by the Czech tax administration and a chamber of tax advisors.

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The position of the tax administration in the reports is that meal vouchers are vouchers in the meaning of the VAT law. The VAT treatment of meal vouchers will depend on whether they are single-purpose or multi-purpose vouchers. In most cases, they will be multi-purpose vouchers (i.e., vouchers for which the tax rate or the place of supply is not known at the time of their issue). Yet, it is also possible that the contractual conditions of some meal vouchers will make them single-purpose vouchers. The assumption is that meal vouchers are transferred from their issuers to employers, and subsequently to employees, for consideration.

  • For VAT purposes, the transfer of a single-purpose voucher is to be treated as a supply of goods or services covered by the voucher. The company issuing the single-purpose meal vouchers will pay VAT on the amount of the voucher, including any commission charged to the customer (usually an employer), immediately at the point of their transfer to the employer. For catering services, the meal voucher including the commission paid by the employer will be subject to the 15% rate of VAT. The employers receiving and subsequently distributing the meal vouchers to employees for consideration will pay the output VAT and will have full entitlement to VAT deduction on the supply received (the amount of the meal vouchers and the commission). The intermediary’s commission charged by the issuer of the meal vouchers to their partners with whom the meal vouchers are used will be subject to a standard 21% rate of VAT.
  • For multi-purpose vouchers, VAT will only be paid at the time when the meal voucher is used by the employee. The tax base will be the nominal amount provided on the meal voucher, regardless of the amount of payment received from the employee. The commission charged to the employer and to the business partners will be subject to a standard 21% rate of VAT.

Because the issuance and redemption of multi-purpose meal vouchers is outside the scope of VAT, there is a question whether the meal vouchers’ issuer will have the full entitlement to a VAT deduction on these supplies. The position of the tax administration is that the issuer is entitled to a VAT deduction in the full amount, on all direct and indirect costs connected with the voucher, as well as the distribution or redemption of multi-purpose meal vouchers.

Employers that provide meal vouchers to their employees need to consider their VAT treatment.


Read a June 2019 report prepared by the KPMG member firm in the Czech Republic

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