Meal Voucher Reform: In Force Imminently

The revamp of meal vouchers in Luxembourg will have major repercussions for businesses. The aim is to modernise the meal voucher scheme and make it more effective for both employees and employers.

The main purpose of meal vouchers is to enable employees to eat during their lunch break. To take advantage of the tax exemption, two conditions in particular must be satisfied:

• the business does not have a staff canteen; and
  
• (ii) the employee does not receive a flat-rate reimbursement of work expenses in the form of a daily allowance.

Meal vouchers are a widespread and popular benefit, as they are exempt from tax under certain conditions. However, with inflation, the digitalisation of society and changing market practice, it became clear that the meal voucher scheme was no longer meeting its objectives and the time had come to modernise its use and make it more efficient.

Hence, in accordance with the previous government's coalition agreement, the tax regime for meal vouchers was radically overhauled in September 2023 by two Grand Ducal regulations dated 25 September 2023 ¹.

The changes come into force on 1 January 2024.

1. Key aspects of the reform

The highlights are as follows:

	Increase in face value: the maximum face value of meal vouchers increases from EUR 10.80 to EUR 15, offering employees an additional financial benefit. However, employers are under no obligation to increase this nominal value or indeed to provide meal vouchers at all to their employees.
	Increase in tax-exempt amount: the maximum tax-exempt value of meal vouchers increases from EUR 8 to EUR 12.20, while the employee contribution remains fixed at EUR 2.80 to maximise the impact.
	Digitisation of meal vouchers: meal vouchers will now have to be issued and used in digital form to simplify administrative procedures for businesses and employees. However, they continue to be valid for 12 months.

	Use of meal vouchers:
		Concept of "meal": in response to changing eating habits, the definition of "meal" has been extended to include food purchases from restaurants or retailers affiliated to one of the companies issuing the meal vouchers.
		Concept of "working day": it is now legally possible to use meal vouchers at the end of the day, at weekends or during holidays, unlike before when, strictly, they could only be used during the lunch break.
	Limit on number of meal vouchers that can be used per day: the limit on the number of meal vouchers that can be used per day has been increased to five (i.e. EUR 75 per day if the employee receives meal vouchers worth EUR 15 each).

2. Impact on businesses

For businesses, this reform represents a step forward, offering simplified administrative procedures due to the digitisation of meal vouchers and greater attractiveness thanks to the increase in the tax-exempt amount. However, employers are under no obligation to provide their employees with meal vouchers or to increase their face value following the entry into force of the new provisions. 

Digitisation will be gradual and the transition will be complete by 31 December 2024 at the latest. Note that the limit on the number of meal vouchers that can be used per day will apply to all meal vouchers, whether in paper or digital format.

3. Recommended actions:

• Communicate with employees: inform your employees of the changes so as to ensure a smooth transition and answer any questions they may have.
  
• Update internal policies: if necessary, update your internal benefits policies to reflect the reforms.
  
• Verify employee tax treatment: check that your business has adopted a compliant tax treatment of this benefit for your employees.
  

Footnote

1. Grand Ducal regulation of 25 September 2023 amending the amended Grand Ducal regulation of 28 December 1990 implementing Article 104, paragraph 3 of the law of 4 December 1967 on income tax (determination of the average value of remuneration in kind with regard to tax on salaries) (Mémorial A No. 622 of 27 September 2023) and Grand Ducal regulation of 25 September 2023 amending the amended Grand Ducal regulation of 29 December 1986 implementing Article 115, number 21 of the law on income tax (Mémorial A No. 621 of 27 September 2023).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.