Foreign per diem

What it means

Foreign meal allowance is the reimbursement of food costs an employee is entitled to on a business trip abroad. It forms part of travel expenses under the Slovak Travel Expenses Act, and the rate for each country is set by a Ministry of Finance decree, in euros or a foreign currency.

The amount depends on the time spent abroad during a calendar day. A shorter stay earns only part of the base rate, a longer one the full rate. If the employee receives free meals during the trip, such as breakfast at the hotel, the allowance is reduced by a statutory percentage for each meal provided.

Besides the meal allowance, the employer may also pay pocket money up to a statutory percentage of the allowance. Pocket money is voluntary and can be set in an internal policy. For time spent in Slovakia, the domestic meal allowance applies.

How it works in practice

When settling a trip abroad, we work from the travel order and the exact times of crossing the border or departure and arrival. On that basis we split the trip into domestic and foreign parts and calculate the allowance for each day and country.

If the employer pays the allowance in a foreign currency or converts it to euros, the statutory rate is used, usually the ECB rate on the day the advance is paid. Exchange differences are not settled to the employee’s detriment unless the law provides otherwise.

Foreign meal allowance at the statutory rate is not taxable income for the employee and is a tax-deductible expense for the employer. If the employer pays more than the law provides, the excess is taxed as salary and deductible only as part of payroll costs.

What to watch out for

The most common mistake is forgetting to reduce the allowance for meals provided. If breakfast is included in the hotel price or lunch at a conference, the allowance must be cut. In an audit, the tax authority treats the unreduced amount as taxable employee income and assesses the difference.

For business trips by sole traders and directors without an employment contract, special rules govern deducting meal allowances. Not everyone who travels for work is entitled to the allowance in the same way as an employee, so the legal basis for the trip must be checked.