With the arrival of the tax package for the year 2021, which is part of tax no. 609/2020 Coll., a piece of legislation was also adopted, which enables employers from 1 January 2021 to provide a monetary so-called flat-rate contribution to meals to employees as another form of contribution to meals, under advantaged tax conditions. This is an alternative to the luncheon vouchers (non-monetary contribution), a widely used benefit for employees.

Food for employees is governed by article 236 of act no. 262/2006 Coll., the Labour Code. The employer is obliged to enable access to catering to employees on all shifts, while he does not have this obligation to employees sent on a business trip. The Income Tax Act regulates only the tax regime for a potential contribution for meals provided to employees. The issue of a monetary contribution to meals, which is viewed as income from employment, exempted from tax, is treated in article 6 paragraph 9 letter b) of the Income Tax Act as of 1 January 2021. According to the above-mentioned stipulation, it is an income exempted from tax on the side of the employee up to the limit of 70% of the upper limit of subsistence expenses that can be provided to employees remunerated with a salary during a business trip lasting 5 to 12 hours per one shift according to the Labour Code, which, for the year 2021, represents the sum of CZK 75.60.

The conditions for assessing the contribution to meals (monetary or non-monetary) as tax-eligible expense (cost) on the part of the employer in further context is defined in article 24 paragraph 2 letter j) point 4 of the Income Tax Act. The contribution to meals can be used as expense (cost), if the presence of the employee at work lasts for a minimum of 3 hours during the given shift.

The conditions for provision of monetary contribution to meals to employees working in the home office regime

The income tax legislation does not specify an obligatory place of performing work for the employee for eligibility of costs related to the provision of a contribution to meals. Such regulation is not pertinent in this case, because it is a theme of the labour-relation, which is governed by the Labour Code. Employees, who work in an agreed place other than the workplace at the employer, in this case working from home, are obliged to work on shifts. For this reason, too, it is possible to also to provide a monetary contribution to meals to the employee as an income exempt from tax under article 6 paragraph 9 letter b) of the Income Tax Act and at the same time it is possible to use the monetary contribution to meals as tax-eligible income for the employer under article 24 paragraph 2 letter j) point 4 of the Income Tax Act.

For using the contribution, the following needs to be fulfilled:

The employee must have his domicile negotiated as the place for performing his activity in his contract and he must work a minimum of 3 hours per one shift. It is also necessary for the given time condition to be confirmed by recording the time worked during one shift.

The conditions for providing monetary contribution for contracts for work or for services performed outside employment

In the case of contracts for work or for services performed outside employment, the problem is that according to article 74 paragraph 2 of the Labour Code, there is no obligation of the employer to divide the performed work for the employee into specific shift. For assessing the monetary contribution to meals as an income exempt from tax, same as for other employees, it is necessary even in this case to meet the requirement for the existence of a shift according to the Labour Code. According to the stipulation of article 78 paragraph 1 letter c) of the Labour Code, a shift is understood to mean a part of the weekly working hours without overtime work, for which the employee is obliged to work based on a shift schedule set in advance. If a specific part of the working hours (shift) is thus defined, preferably explicitly in the respective contract, and then recorded in the time and attendance records, the contribution to meals for taxpayers performing work based on contracts for work or for services performed outside employment can be assessed under similar conditions as in the case of other employees.

Monetary contribution exempt from tax in case of a shift longer than 11 hours

If an employee works for more than 11 hours during one shift and the employer grants him double monetary contribution, i.e. for the year 2021 the sum of CZK 151.20, for the employee it will be income exempt from tax only in the amount of CZK 75.60 and the remaining part will be taxable income from employment under article 6 paragraph 1 letter d) of the Income Tax Act. From the perspective of the employer, it will be tax eligible cost in the full amount.

In case of a shorter shift, or in case of presence during one shift only for its unspecified part, the monetary contribution to meals is also exempt. It is not possible to exclude a situation, when an employee has a work shift set at 8 hours and will spend for example 6 hours at the doctor. If a monetary contribution to meals is granted to him, it will be tax-ineligible cost for the employer, but for the employee it will be income exempt from tax at the same time.

The conditions for providing the contribution to executives of limited liability companies

According to article 6 paragraph 1 letter c) of the Income Tax Act, the income for performing the function of an executive of a limited liability company is considered income from employment and from the perspective of article 6 paragraph 2 of the Income Tax Act, the executive is considered an employee. Therefore, the executive of a company is entitled to be provided a monetary contribution to meals, if specific working hours are negotiated in the contract on performing his function (a minimum of 3 hours of work per one shift) and are then recorded for example in the time and attendance records.