Czech Republic: Tax treatment of new meal allowance rules explained

A new form of meal contribution under an amendment to the income tax law

A new form of meal contribution under an amendment to the income tax law

The tax administration issued guidance in an effort to answer certain questions regarding the tax deductibility of the new meal allowance.

Beginning January 2021, employers may use a new form of meal contribution under an amendment to the income tax law with tax deductibility of the new meal allowance on the employer’s part and its tax exemption on the employee’s part.

The tax administration’s guidance explains and clarifies:

  • The meal allowance is not exempt from income tax on the employee’s part without limit, but is only exempt from tax up to 70% of the maximum subsistence expenses available to certain employees for business travel.
  • Employers may pay the meal allowance to executives or members of governing bodies and to employees working under agreements to perform work or complete a job (rather than employment contracts), as long as their working hours are scheduled in shifts.
  • The income tax law does not in any way limit the place of performance (such as, working from home) for the employee's activities.
  • There is a possibility of combining various types of meal allowances. While one employee can only draw one type of allowance at a time, there is nothing preventing employers from providing different types of allowances to different employees.

Read a June 2021 report prepared by the KPMG member firm in the Czech Republic

 

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