Travel allowances

What it means

Travel allowances are what an employer must reimburse an employee on a business trip under Act 283/2002 Coll.: transport, accommodation, meal allowance, necessary incidental costs and, when a private car is used, mileage plus fuel.

Within the statutory limits they are neither wages nor taxable income for the employee and carry no social contributions. That is their main advantage over raising pay by the same amount.

Travel allowances cover business trips, not the journey to work. A business trip is time when the employee carries out tasks away from the regular workplace agreed in the employment contract. The place of work written into the contract therefore shapes the entitlement directly: too broad a definition narrows it, too narrow a one turns every visit to a client into a business trip.

How it works in practice

The entitlement is evidenced by a travel order: purpose, destination, start and end, means of transport, approval. Accommodation and transport receipts go with it, and for a private car the registration document and proof of fuel price. The settlement itself is an internal document.

The same rules cover a managing director and a member working for the company. Meal and mileage rates are set by ministerial decree, so we check them whenever they change.

The travel allowance act does not apply directly to a self-employed person, who is nobody’s employee. On their own business trips, though, they may claim meal allowance as a tax-deductible expense up to the amount the law grants employees. We therefore recommend keeping the same trip record as for an employee, so the expense can be evidenced in an inspection.

What to watch out for

An allowance paid above the statutory cap or without a travel order is a non-deductible expense and taxable income with contributions for the employee. Commuting to a fixed place of work creates no entitlement at all.

A common slip is not reducing the meal allowance when the employee was given free meals, such as breakfast included in the hotel or lunch at a conference. An allowance paid in full is then partly an overpayment, and that part is taxable. On foreign trips add the currency conversion and the FX difference when the advance is settled.