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Business travel legislation in the Czech Republic: Overview of responsibilities | Infographic

February 17, 2023

Are you sending your employee on a business travel from the Czech Republic? If so, there are some crucial aspects you should pay attention to in order to stay compliant. In this infographic we outline a basic overview of definitions, requirements and details to help you better understand the scope of work around traveling for business.

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DEFINITION OF BUSINESS TRAVEL
Czech labour contracts define the employee’s place of work. If the employee performs the agreed work in a different location based on the employer’s order, it is considered as business travel.
WORK PERFORMANCE AGREEMENT VS BUSINESS TRAVEL
In case of employment based on work performance agreement, the place of regular work should be stated in the agreement in order to be entitled to business travel allowances. However, it is possible to agree on compensation as part of the work activity even if the place of regular work is not specified.
PRIVATE VEHICLE FOR BUSINESS TRAVEL
Based on the Czech legislation, the employee can use their own motor vehicle during the business travel. In such case, the employee is entitled to a compensation for every 1km and for the fuel, either based on the purchase price or the flat rate set by the decree.
MEAL ALLOWANCE FOR DOMESTIC BUSINESS TRAVEL IN THE CZECH REPUBLIC
For employees in the non-commercial sector, the Czech legislation sets an upper and lower limit on the amount of meal allowance, based on the travel duration within one day. In the commercial sector, the minimum value of meal allowance depends on the travel duration and the upper limit is not specified. However, as a tax-deductible expense, the reimbursed amount cannot exceed the upper limit of the meal allowance in the non-commercial sector.
MEAL ALLOWANCE FOR BUSINESS TRAVEL ABROAD
When traveling abroad (i.e., to a destination outside of the Czech Republic), the right to compensation in a foreign currency arises when the employee crosses the border, their ship departs or arrives to the port or when their plane departs or lands. Meal allowance is provided: 

1. Even if the business travel lasts less than 1 hour 

2. If the employee spends more than 5 hours abroad and they are entitled to a domestic meal allowance too. 

In case the employee visits 2 or more countries within one calendar day, the meal allowance is compensated for the location where they have spent the longest time. If the employee spent the same amount of time in each country, they are entitled to the highest meal allowance.

REDUCTION OF A MEAL ALLOWANCE
Based on the Czech legislation, the employee is not entitled to a meal allowance if the employer provides free meals. If the employee is provided with breakfast, lunch or dinner, the meal allowance is proportionally reduced for each free meal. If the meal allowance is not reduced by the free meals, even though provided, the amount exceeding the allowance limit counts as a taxable income. However, in the commercial sector employers can provide their employees with meal allowances reduced up to 75% without stating a reason.
ADVANCES FOR MEAL ALLOWANCE
For a business travel abroad, employer in the Czech Republic can provide the employee with financial means in advance in foreign currency. The amount can be up to 40% of the meal allowance and it is subject to taxation when exceeded. However, the Czech law does not oblige the employer to provide pocket money.
ADVANCES FOR BUSINESS TRAVEL COMPENSATION
The Czech legislations specifies 2 options for providing advances: 

1. the employee is provided with an advance up to the expected amount of travel allowances, or 

2. the employee receives a traveler’s check or borrows a company card.

DECLARATION OF EXPENSES AND REFUND OF PAYMENTS
Within 10 working days of returning to the Czech Republic, the employee must submit a written document to the employer for the calculation of compensation and return the unspent advances. The reimbursements must be paid within 10 working days after the date of submission of written document but can be prolonger in exceptional situations.
TRAVEL REIMBURSEMENTS
The employer must reimburse the following items: 

1. Meal allowance (subject to specific conditions)

2. Travel expenses

3. Accommodation expenses

4. Secondary expenses

5. Travel expenses for trips to visit family (if the business travel lasts more than 7 consecutive calendar days, every week of the month, but maximum one month)

These compensations are not subject to self-employment tax.

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