Tax News and News in Tax-Related Areas
Increased reimbursements of travel expenses
Effective 20 August 2022, Decree No. 237/2022 Sb. of the Ministry of Labour and Social Affairs increases meal allowances which employees have a right to obtain during business trips. Normally, meal allowances are adjusted effective 1 January every year. However, if the Czech Statistical Office notices an increase (or decrease) in prices of 20% or more in the course of the year, then the rates of meal allowances are adjusted accordingly.
The following table shows the amounts of minimum rates of meal allowances in the business sector:
The amounts of meal allowances in the public sector are as follows:
In addition, the average price of one litre of 98 octane petrol has increased from CZK 40.50 to CZK 51.40. The average price is used in calculations of reimbursements of travel expenses of employees who used their own vehicles during business trips, and failed to document the actual price of fuel by means of a purchase document. Please note that in the course of 2022 the official average prices of other types of fuels have already been increased. The following table provides an overview of official fuel prices:
The amount of the basic reimbursement per 1 km travelled by an employee’s private car remains unchanged, as well as the amounts of meal allowances abroad.
Change in the maximum amount of the so-called ‘meal voucher flat-rate’ and increased optimal value of a meal voucher
The maximum amount of employers’ monetary contributions to employees’ meals has increased (the so-called meal voucher flat-rate) in connection with the increased reimbursement of travel expenses. Meal voucher flat-rates not exceeding 70% of the upper limit of meal allowances on 5 – 12 hour business trips (the amounts valid in the public sector apply) are exempted from personal income tax, and thus are not object of social security and health insurance payments. In 2022, the original amount was CZK 80.60, and since 20 August 2022 the maximum amount of tax-exempted meal vouchers has been CZK 99.40 per shift.
Due to the increased reimbursement of meal allowances, the optimal value of meal vouchers has increased to CZK 180. Employers may provide meal vouchers to their employees as a non-monetary form of providing meals.
Reduced social security payments for employers employing selected employees
Act No. 216/2022 Sb. has been passed amending the Act providing for Social Security Insurance and Contributions to Government Employment Policy (Act No. 589/1992 Sb.). The amendment aims to promote employment of selected employees in the form of employment with reduced working hours (with one exception – see below).
The selected employees are, among others:
- Persons over 55 years old,
- Parents taking care of a child under 10 years of age,
- Job applicants,
- Persons under 21 years old.
If employers employ the selected employees for reduced working hours (8 to 30 hours per week), they will pay insurance payments reduced by 5 %. The social and health insurance payments on behalf of the selected employees will not be 33.8 % of the assessment base, but in fact 28.8 %.
Employers have the right to pay reduced insurance payments if they employ persons under 21 years old, even if their working hours do not comply with the criterion of 8 to 30 hours per week (that is, they may even work full time).
To claim the reduction, several conditions need to be met: in particular, the assessment base (gross wage) of an employee must not exceed 1.5 times the average wage.
Only one employer of the selected employee will be allowed to pay the reduced insurance payments. Employers will notify the Czech Social Security Administration of their intentions to pay the reduced insurance payments. If there are several employers of one employee, the first employer to submit the notification will have the right to pay the reduced insurance payments.
The act comes into effect on 1 February 2023, and in February 2023 employers may start paying reduced insurance payments.
New road tax legislation
As we have informed you in previous VGD newsletters, in 2022 a significant amendment of road tax legislation has been passed (Act No. 16/1993 Sb.). As a result, effective 2022 road tax on passenger cars, buses and freight vehicles under 12 tonnes is abolished. Please find below a brief summary of the new legislation.
The so-called “taxable vehicles” are object of road tax. The taxable vehicles are category N2 and N3 vehicles (i.e. freight vehicles over 3.5 tonnes) and their category O3 and O4 trailers, provided that they are registered in the register of road vehicles in the Czech Republic. Certain vehicles are excluded from the object of road tax, for example, O vehicles of DA category (that is, semi-trailers). Trailers (with a draw-bar) are object of tax, but not semi-trailers. However, trailers are exempted from road tax, if a taxpayer pays road tax on a road tractor (that is, a BD category freight vehicle).
A road taxpayer is usually the person registered as the operator of the vehicle in the vehicle registration book. Under the new rules, employers are not road taxpayers in regard of cars used by employees during business trips.
The new legislation specifies the amount of road tax (previously called a tax rate) in the annex to the Road Tax Act. Yearly road tax amounts payable for each taxable vehicle have decreased, if compared to the previous road tax legislation (the road tax amounts are on the scale from zero to CZK 24 200). There is zero road tax on freight vehicles under 12 tonnes. In fact, only freight vehicles over 12 tonnes are object of road tax. The new road tax legislation continues to offer a tax reduction of the so-called “combined transport” (that is, transport of goods in a transport unit – for example, a large container – where also rail or inland waterway service is used).
Road tax procedural rules have also been simplified significantly. Under the new rules, road taxpayers are not going to pay road tax advances during the year, their total road tax amounts are due upon submitting road tax returns (by 31 January of the following year). The new legislation also introduces a simplification: taxpayers do not need to disclose all of their vehicles in their road tax returns, but they will only show their taxable vehicles with non-zero road tax amounts. The new legislation abolishes road tax registration duty: the road tax registration of all taxpayers has been abolished automatically (and taxpayers need to take no further steps).
Taxpayers who have paid road tax advances on vehicles which are no longer object of road tax may apply for returns of their road tax overpayments, or they may apply for transfers of their overpaid road tax amounts to cover possible underpayments of other taxes.