Business trip legislation in Europe | Series – Part 2: The Czech Republic

Business trip:

Business trip is defined as time spent from the start of the trip to the place of work different than regular workplace, including working on that other place and moving back from the trip. Regular workplace is defined by agreement with employee or by employment contract.

Agreements on work outside Employment:

In order for employees working on the basis of some of the non-employment agreements to be entitled to travel allowances connected with a business trip, it is necessary to directly agree on this entitlement in the agreement. It is necessary to indicate the place of performance of the work, or regular workplace, from which the specific entitlement to travel allowances is subsequently derived.

As part of the work activity agreement, it is possible to agree that the employer will also provide compensation for the journey from the employee’s place of residence to the place of work and back as for a business trip, even when the place of the regular workplace is not specified.

Private car:

With the consent of the employer, the employee can use his/her own motor vehicle on the business trip. In that case, the employee is entitled to a basic compensation for every 1 km (the compensation is to compensate for the wear and tear of the car and its service) and compensation for the fuel consumed, either according to the price actually paid or according to the flat rate set by the decree. The price of fuel is multiplied by the consumption of the car according to the technical license and the number of kilometres travelled.

Meals by a domestic business trip:

For an employee in the non-business sphere, the law determines the upper and lower limits of the amount of the meal allowance, depending on the duration of the business trip within one day. In the case of the business sector, the law determines only the minimum value of the meal allowance depending on the duration of the business trip, the upper limit is not determined. It should be noted here that as a tax-deductible expense, the employer in the business sphere can only use the amount reimbursed in an amount that does not exceed the upper limit of the amount of the meal allowance in the non-business sphere.

Meals by a foreign business trip:  

In the case of a foreign business trip, the right to compensation in foreign currency begins with the crossing of the border, the departure or arrival of the plane, the departure or arrival of the ship from/to the port. Individual rates are determined by the Ministry of Finance, where the employee is entitled to the amount of the rate based on the duration of the trip abroad. If the business trip outside the Czech Republic lasts less than 1 hour, the foreign meal allowance is not provided. If the employee is also entitled to a domestic meal allowance, he/she will be entitled to a foreign meal allowance if he/she is outside the Czech Republic for more than 5 hours. If an employee visits 2 or more countries within one calendar day, he/she is entitled to a meal allowance for the country in which he/she spent the longest time, taking into account the time zone of the sum of the duration of the business trip for the given calendar day abroad. If the employee spent the same number of hours in each country, he/she claims the highest meal allowance.

Reduction of a meal allowance:

If the employer provides free meals to the employee, the meal allowance is not provided. If the employer provides free meals as breakfast, lunch or dinner, the meal allowance is proportionally reduced, for each free meal according to the amount of the meal allowance. If the employer did not reduce the meal allowance in this way, it would be an over-limit meal allowance, and thus the employee’s taxable income. However, employers in the business sector can provide their employees with foreign meal allowances reduced to 75% without giving a reason.

Advances:

The advances are determined by a specified percentage, up to a maximum of 40% (in the case of the state and contribution sphere. Entrepreneurs are not restricted, but if it were a higher percentage, they would have to be taxed; 40% is therefore generally recommended in their case as well) from foreign meal allowance reduced according to the duration of the foreign business trip even before it is reduced for free meals. However, the employer is not obliged to pay pocket money by law. The claim should be based on a collective agreement, an internal regulation, or by agreement with the employee, while it is necessary to ensure equal treatment.

Advances for compensations:

The law determines 2 options for providing advances. The first option is that the employee will always be provided with an advance up to the expected amount of travel allowances. The second possibility is that the employer and the employee agree that the deposit will not be provided. The employer can provide a foreign currency advance in the form of a traveller’s check or by borrowing the employer’s payment card.

Expenses declaration and refund payments:

The employee is obliged to submit to the employer the written documents necessary for accounting for the business trip and to return the unbilled deposit no later than 10 working days after the end of the business trip. Reimbursements are payable within 10 working days from the date of submission of written documents. For both maturities, it is possible to agree on a different date in exceptional situations.

Travel reimbursements:

An employer who sends an employee on a business trip determines the starting point, performance of work, duration, mode of transportation and termination of the business trip, and may also determine other conditions of the business trip.

Those are the reimbursements which employer is obliged to provide:

• reimbursement of proven travel expenses,
• reimbursement of proven accommodation expenses,
• meal allowance under specified conditions,
• secondary expenses,
• reimbursement of proven travel expenses for trips to visit his/her family (if the business trip lasts more than 7 consecutive calendar days, every week, but no longer than one month).

These compensations are not subject to self-employment tax.

Business trip management in TULIP is separated to 2 parts:

• business trip request (plan)
• settlement

Business trip planning

Before going on a business trip, the employee should initiate and complete a business trip form in TULIP. A business trip request can also be created by a direct supervisor on behalf of his subordinates or a person responsible for entering plans and settlements for the entire company. The business trip can be sent for approval to the responsible manager or other approvers in accordance with the company’s internal rules.

The business trip planning requests to fill in details about destination, planned costs, advance payment and more details related to the business trip plan.

After submitting the request of business trip by employee, the manager is informed by a notification and can approve, reject or delete the request.

Before going on the business trip, employee can request an advance payment.

Business trip settlement

The settlement can only be created after the business trip plan has been approved. After filling in any other required information for the employee, such as the exact timing of the trip, meals or additional costs, the result of the settlement will be displayed directly in the form. The XLS document is generated by the system automatically. The employee is responsible for uploading all receipts, invoices and other accounting documents.

The responsible manager or approver is notified and asked to check the correctness and approve (or reject) the business trip. After the approval, the files are ready for the accounting team to process and pay the result of the settlement.

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