As already mentioned in one of our contributions, since 2021 an employer may provide a meal allowance as an alternative to meal vouchers.
In today's article, we will focus on comparing these two employee benefits.
Meal allowance
This is an employer's contribution to the employees' meals paid together with salary in cash. The company thus need not purchase meal vouchers and is also saved a certain amount of administrative effort. On the employer’s side, this is a financial contribution that is always tax-deductible in full. For the employee, this contribution is considered to be exempt up to 70% of the upper limit of the meal allowance that can be provided to salaried employees for a business trip lasting 5 to 12 hours (for 2021, this upper limit is CZK 108, so the tax-optimal meal allowance contribution is CZK 75.60 per day). If the contribution exceeds CZK 75.60, the benefit above the limit is taxed as income from dependent activity (the employee pays 15% for tax and 11% for health and social insurance, the employer 33.8% for employee health and social insurance).
Accounting entities shall account for this financial contribution in the employee's salary as 527-Statutory social costs/331-Employees.
Meal vouchers
This is a contribution to employee meals in the form of vouchers. The company records meal vouchers under account 213-Vouchers. On the employer side this is a tax expense up to 55% of the nominal value of the meal voucher, but up to a maximum of 70% of the upper limit of the meal allowance (for 2021 this is again CZK 75.60 CZK per day). For the employee, this contribution is always fully exempt from income tax from dependent activity. The provision of meal vouchers is usually associated with a deduction from the employee's salary of 45% (if part of this 45% was borne by the employer, then it would be a non-tax expense for the latter).
Accounting entities shall account for the purchase of meal vouchers as 213-Vouchers/321-Liabilities. The subsequent issue of meal vouchers is then posted to the accounts 527-Statutory social costs/213-Vouchers (tax-deductible expense - 55%) and 335-Employee receivables/213-Vouchers (deduction from employee's salary – 45%) and the deduction from the employee's salary as 331-Employees/335-Employee receivables.
Summary
If an employer decides to provide a meal allowance up to the limit of CZK 75.60, then in the case of a meal voucher lump sum and a meal voucher, this will be a tax-deductible expense and this benefit will not be subject to income tax from dependent activity. Both variants will thus be equally advantageous; in the case of a meal allowance, the employer is also spared a certain administrative burden.
If an employer decides to provide a meal allowance in excess of CZK 75.60, then it is more advantageous to use classic meal vouchers. Although the employer will not be able to obtain an exemption on that part of the meal voucher over CZK 75.60, the non-monetary benefit will be exempt from the employee's tax on dependent activity and the employer will not pay over-threshold amounts for social and health insurance premiums (33.8%).
It should be emphasized that the advantage of a meal allowance or meal vouchers should be assessed for each accounting entity separately, taking into account the overall employment policy and the company's operations, and a possible first step for the employer towards a meal allowance would be to amend the internal regulations relating to meal allowances. As with meal vouchers, working for at least 3 hours per shift is a condition for the tax deductibility of any meal allowance provided.
