When providing services outside the company's premises, it is often necessary to provide meals for employees. If the employer pays a per diem allowance for business travel in the amount specified in Regulation 1 , this does not constitute employee income. However, when the employer pays for the meals, the situation is less clear-cut.
A construction company also considered this. It provides services nationwide. Due to its contracts, it is obligated to complete its work within a strictly defined deadline. Therefore, it is often forced to provide its employees with accommodation and meals. Currently, it is working at a considerable distance from its headquarters, and to ensure timely contract completion and ensure its employees receive their mandatory daily rest, it provides accommodation and meals through catering. Meals are delivered to the construction site in a so-called hot pot format. Employees do not have assigned portions; they serve their own food and are not held accountable for their meals.
The company believed that the costs of employee meals and accommodations were incurred in its best interest and therefore would not constitute employee income. It requested confirmation of its position from the Director of the National Tax Information Office, who, in an interpretation dated January 24, 2024, No. 0115-KDIT2.4011.564.2023.1.RS, deemed them incorrect. The office indicated that conducting construction work off-site does not constitute a business trip for employees. Therefore, the employer is not obligated to compensate for expenses related to performing work away from home. Therefore, the employer's provision of accommodation and accommodations in such a situation is in the employees' best interest, and to the extent the cost can be attributed to a specific employee, it constitutes their income. However, since in the case of hot pot catering, income cannot be attributed to a specific employee in a specific amount, its cost will not constitute employee income.
Disagreeing with the issued interpretation, the company appealed it to the Provincial Administrative Court. However, in its judgment of June 13, 2024, file reference I SA/Rz 186/24, the court agreed with the authority's interpretation of the regulations. Despite this, the company achieved a Pyrrhic victory, as the court partially overturned the issued interpretation. It found that since the Director of the National Tax Information Office agreed with the company regarding the lack of income for employees from providing them with a hot pot meal, he should have issued an interpretation declaring its position incorrect in part, rather than, as was the case, in its entirety.
In justifying its ruling, the court stated that if a meal is provided at a hotel as a comprehensive service, it is irrelevant whether the employee uses it or not. In such a case, the cost of such a meal can be attributed to the individual employee. This is not possible if the meal is not portioned.
This ruling therefore implies that sharing a meal among employees not only promotes integration but also does not constitute taxable income for them. This means they will not pay tax on it, and the employer will have less paperwork to do.
Healthy eating in particular brings tax benefits, as we have already written about in the series Tax this and that: Healthy eating reduces taxes .
This article is for informational purposes only and does not constitute legal advice.
Legal status as of August 12, 2024
- Regulation of the Minister of Labour and Social Policy of 29 January 2013 on the entitlements due to an employee employed in a state or local government budgetary unit for business trips. ↩︎
