How to Travel Allowances in the Czech and Slovak republic

Due to the cultural similarity and no language barrier, many foreign investors decide to be present in the Czech and Slovak markets from one branch. It often happens that the Czech company is present on the Slovak market and employs Slovak citizens, and is thus obliged to provide travel allowances, ie expenses for accommodation, meals, fares, etc. according to Slovak law. As the entity is thus obliged to comply with Czech and Slovak law and related regulations, this may cause certain complications in the company's accounting. You will find out the main differences between Czech and Slovak travel allowances in the following text.

What is the legislation?

In the Czech Republic, travel allowances are regulated by the Labor Code (Act No. 262/2006 Coll.) and Decrees of the Ministry of Labor and Social Affairs (No. 589/2020 Coll.) and the Ministry of Finance (No. 510/2020 Coll.). In Slovakia, it is governed by Act No. 283/2002 Coll., On Travel Compensation, as well as Decrees of the Ministry of Labor and Social Affairs (No. 143/2019 Coll.) and the Ministry of Finance (No. 401/2012 Coll.). Amendments to decrees always enter into force on January 1 of the given year in the Czech Republic and most often as of June 1 in Slovakia.

What about diet?

The amount of the meal allowance depends on the duration of the business trip in one day. The rates are regulated annually by a decree of the Ministry of Labor and Social Affairs of the Czech Republic and the Ministry of Labor and Social Affairs of the Slovak Republic. However a private company also has the option to determining the amount of the meal allowance by an internal guideline (directive, regulation). If they do not stipulate this, the meal allowance is paid in the minimum amount specified in the legal regulation. In order to be entitled to a meal allowance at all, a Czech and Slovak employee must spend at least 5 hours on a business trip. In both countries, the employer has the option to provide employees with additional so-called pocket money, but its amount is limited to a maximum of 40 % of the right to meal allowance.

The table below relates to domestic business trips, there is the biggest difference in the amount of the meal allowance, while in the Czech Republic the amount of the meal allowance is determined as a percentage of the basic rate, in Slovakia it is determined by the absolute rate in EUR for each band of business travel. However, at different times each year, the basic rates are announced by the Ministry of Labor and Social Affairs in Czech and Slovakia.

In the case of sending an employee on a business trip abroad, the amount of the meal allowance is determined differently in Slovakia, see table below, both the travel duration bands and the percentage of the basic rate are different. In the Czech Republic, except for the minimum duration of a business trip, it is same as for a domestic business trip.

The basic rate is determined separately for each country (e.g. if a Slovak employee travels to Austria, the daily rate is 45 euros, if to Poland, the daily rate is 37 euros).

When is the obligation to reduce meals?

The reduction of the meal allowance depends on two factors: the duration of the business trip and the food provided. If the employee was provided with food (breakfast, lunch or dinner) free of charge during the business trip, the employee is entitled to reduce the meal allowance. In both countries, a different reduction mechanism is used and the resulting effect is significantly different.

If a Czech employee was provided with a free meal during a business trip (i.e. a meal to which the employee did not contribute financially), the employee is obliged to rudece the meal allowance for each free meal by the value of

• 70 % of the meal allowance if the business trip lasts 5 to 12 hours,
• 35 % of the meal allowance if the business trip lasts longer than 12 hours, but no longer than 18 hours
• 25 % of the meal allowance if the business trip lasts longer than 18 hours.

A Czech employee is not entitled to a meal allowance if during a business trip that lasts

• 12 hours or less, 2 free meals were provided,
• longer than 12 hours, but no longer than 18 hours, 3 free meals were provided.

In Slovakia, a free lunch is reduced by 40 % from the basic rate of 11,60 EUR, with a free dinner by 35 % from the basic rate and in the case of breakfast by 25 % from the basic rate.

Even during business trips abroad, the Slovak employee's meal allowance is reduced with free meals provided. It is not reduced from the basic rate of 11,60 EUR both for a domestic business trip, but it is reduced from the basic meal rate set for a specific country.

Meal vouchers vs meal allowance

For Czech employees, meal vouchers provided by the employer are only an optional benefit, unlike in Slovakia, where they are required by law. A Czech company employing Slovak workers must think about this obligation. However, in both countries, you are not entitled to a meal voucher if the employee was on a business trip on the same day and was entitled to a meal allowance.

If you are interested in this topics, sign up for the webinar called Doing business in "Czechoslovakia" - issues of VAT, permanent establishments and travel allowances which will take place online on 17.6.2021 at 10:00.