Lump-sum meal allowance in light of new information from the GFD

Lump-sum meal allowance in light of new information from the GFD

From 2021, employers can use the cash allowance for meals (the so-called lump-sum meal allowance) as one of the alternatives to the tax-advantaged meal voucher benefit. The General Financial Directorate (GFD) has now issued a memorandum explaining some of the provisions of the new legislation which, in our experience, have caused uncertainty in practice and complicated the introduction of the meal allowance by employers.

According to the Labour Code, employers are obliged to provide their employees with meals. In addition to its legal obligations, an employer may decide to provide a benefit to its employees in the form of a certain meal allowance. As with other types of benefits, employers try to use tax-advantaged forms of contributions as much as possible. In addition to the previously tax-advantaged options of a non-monetary contribution (typically meal vouchers) or subsidised meals as part of company meals, a cash contribution will also be added from 2021.

The following table compares the conditions of the tax-favoured meal voucher and meal allowance schemes.


Meal vouchers

Meal allowance

Exemption of income for an employee

No limit on the value of the meal voucher.

Up to CZK 75.60 (2021) per shift according to the Labour Code; if the conditions are not met or exceed CZK 75.60, the non-exempt contribution is taxable and subject to compulsory contributions.

Tax deductibility of expenses by the employer

Max. 55% of the value of the meal voucher or CZK 75.60 (2021), presence at work during the shift according to the Labour Code for at least 3 hours.

No limit on the amount if the presence at work during the shift according to the Labour Code lasts at least 3 hours.


The text of the law regulating the tax benefits of the lump-sum meal allowance is unclear in many points, and therefore the GFD has issued a memorandum in which it explains the meaning and purpose of some of the controversial provisions. I summarise these below and include our recommendations, if any, to the points.

  • For shifts longer than 11 hours, the cash allowance, unlike the meal voucher, can only be provided exempt once, up to CZK 75.60 per shift;
    Therefore, if a shift lasts, for example, 12 hours and the employer used to provide two tax-free meal vouchers to the employee concerned, the cash allowance will now be exempt only up to CZK 75.60. The remainder of the allowance will be subject to income tax and mandatory deductions. However, unlike the meal voucher, the full amount of the cash allowance will be tax deductible.
  • Even if the employee is present at work for only part of the shift, the allowance will be exempt.
    For example, if an employee has an eight-hour shift, but only works five hours of that shift because of a doctor's appointment, the cash allowance is exempt under the same conditions as if the employee had worked the entire scheduled shift.
  • Exemption of the cash allowance for employees working under agreements (agreement to complete a job and agreement to perform work) is possible if a shift is specified beyond the mandatory provisions, ideally directly in the agreements. Subsequently, the relevant time within the shift must also be worked and recorded in the attendance register. This is also important to prove the condition of being present for three hours within the shift for the tax deductibility of the cost on the employer's side.
    In our view, in the case of agreements, it is necessary to consider whether it is more important for employers and employees to have flexibility in that shifts do not have to be scheduled by law, or whether they prefer to adjust their shifts to obtain a tax-advantaged regime.
  • Executive directors of limited liability companies are considered employees for income tax purposes. For this reason, the tax-advantaged employee benefits regime may also apply to executives.
    If the intention is to apply the meal allowance exemption on the executive's side and the related tax expense on the company's side, in addition to the entitlement to the meal allowance itself, a certain part of the working time must also be regulated as a shift in the executive service agreement. At the same time, records must be kept showing that the executive has worked the relevant part of the shift. The wording in the contract should then be chosen appropriately also from a corporate law perspective.
  • When working from home, a tax-advantaged meal allowance can be provided, provided that the place of residence is contracted as a workplace and adequate records of the hours worked during the shift are kept.
    We also recommend that it is agreed in the related employment documentation that the employer determines the shift schedule even when working from home.
  • According to the GFD, a combination of several meal schemes provided by one employer is generally possible. However, each employee can only use one of these at a time under the tax-advantaged scheme.
    If an employer wishes to offer different meal schemes to its employees, it is recommended that it leaves the choice to each employee to avoid any complaints of unequal treatment.

In our opinion, the use of the lump-sum meal allowance may be a welcome change for some employers and the clarification of its tax conditions by the GFD will certainly help. Employers will have the opportunity to enjoy for more substantial administrative savings, particularly where they will provide a contribution up to the exempt limit. In any case, we recommend that the possible transition to a cash allowance be properly treated legally and tax-wise, as the potential additional assessments from an incorrectly set meal voucher package are considerably higher than in the case of the provision of meal vouchers.