Fiscal Authorities Help Themselves for Breakfast Twice
Economic Growth Acceleration Act has an unpleasant surprise in store for employers in 2010: A lot of extra work!Munich, 21 December 2009 – Those who travel a lot on business will soon lose their appetite in January. As World Tax Service WTS announces in its tax news, the fiscal authorities will help themselves for breakfast twice, now that the Economic Growth Acceleration Act has been passed by the Upper House as well.
This is against the background of a VAT reduction in the accommodation and hospitality industry to 7 per cent. this reduction, however, only applies to overnight accommodation and not to breakfast. Here the tax charge will remain unchanged at 19 per cent.
In the travel expenses claim the cost for breakfast could so far only be refunded by the employer tax-free when it was included in the room rate and not shown separately in the hotel bill. Business travellers presenting a separate invoice had to tax the refund like a salary payment, though.
Whenever the costs for overnight accommodation and breakfast were summarized in one amount, the fiscal authorities permitted to reduce the invoice amount by a standard rate for breakfast - last 4.80 euros for domestic overnight stays. The employee received the balance tax-free.
Since from 2010 on the cost for breakfast will always have to be shown separately in the hotel bill due to the different VAT rates, this standard reduction of the hotel bill will no longer be relevant from a tax point of view.
World Tax Service WTS does have a piece of advice for employers though: If the employer has arranged for breakfast for the employee before the business trip, breakfast can be valued at the “official rate for benefits in kind”. In such a case the entire hotel bill (including the separately shown breakfast) can be refunded tax-free, the breakfast is subject to payroll tax to the amount of the official rate for benefits in kind. As of January breakfast will be valued at the official rate for benefits in kind of 1.57 euros. One more hint: For the fiscal authorities a typical meal should not exceed a value of 40 euros.
WTS payroll tax expert Susanne Weber assumes that “in many cases hotel breakfast is already being arranged for by the employer today. Most employers, however, have probably not documented this arrangement properly so that it would most probably not bear a close review by the fiscal authorities. In future such documentation might prove useful.”