Meals on business trips

Over the past year, the General Tax Directorate has confirmed an interpretation that has a favourable tax impact in the area of meals on business trips. This is a step in the right direction for employers.

Meals on business trips are typically handled in the Czech Republic through travel allowances. This includes meal allowances, to which employees are entitled if the duration of the business trip exceeds a certain number of hours. The amount of the meal allowance is based on the Labour Code and implementing regulations, and the amounts change annually. The cost of providing meals is tax deductible, and the employee's meal allowance is not subject to tax, but only up to the legal limits. Above these limits, it is taxable income from employment.

In practice, however, we also encounter cases where meals are paid for directly by the employer. Either the meals are part of the accommodation service (e.g. half board in a hotel), educational events (refreshments at a training seminar) or the employees pay for the meals themselves and these expenses (restaurant bills) are subsequently reimbursed by the employer. The employer may also order catering as part of the organisation of internal or customer events.

Refreshments for training are regulated as a tax expense by GFD Instruction D-59. Accommodation with breakfast was also charged as a standard tax expense, although there was no explicit regulation. In contrast, the reimbursement of "receipts" from restaurants was very controversial. Some of the clients claimed these expenses for tax purposes up to the amount of the meal allowance under the Labour Code and excluded the amount over and above that as a representation expense. The complexity of this practice was multiplied when on some days the travel reimbursement limit was not exceeded and on others it was. A further complication arose when only one of the employees paid for the "expenses" for the whole team. For corporate events, catering usually ended up as a non-tax expense.

In view of the unclear legal regulation, the above-mentioned topic was the subject of Coordination Committee No. 593/18.05.22. The GFD accepted the interpretation that all costs of providing meals (i.e. all food and all drinks) to employees on a business trip are tax deductible, provided that the meals are breakfast, lunch or dinner, regardless of the form of the meals (menu, buffet, etc.). It is therefore not necessary to address the question of how much the meals cost and what form they took. What matters is that the employee is participating in a business trip and the expenses incurred are fully tax deductible.

Exceptions are made in extreme situations where it is clear that catering has been arranged predominantly to reward the employee and is inappropriate in view of the circumstances of the business trip.

Finally, we would like to add that employees' meals on business trips are not taxable.