Paper or electronic meal voucher? Instructions for use

Meal vouchers are by far the most widespread corporate welfare tool in Italy today.

A multitude of companies take advantage of the economic benefits that meal vouchers offer (fully tax-deductible costs, reduced VAT (4%) that is also fully deductible, no social security contributions up to the legal thresholds—which will be discussed shortly—and their motivational impact on employees.

Every day, millions of recipients use meal vouchers to pay for lunch break meals or ready-to-eat food.

Tens of thousands of restaurants and food retailers view meal vouchers as a key driver for increasing their business revenue.

For some time now, however, alongside the traditional paper “booklet” (widely known and accepted practically everywhere), electronic meal voucher smart cards have also seen growing success, especially the so-called rechargeable ones.

While the Traditional Paper Meal Voucher (BPCT), given its widespread use and recognition, requires little explanation, it is worth saying a few words about the Electronic Meal Voucher, specifically its rechargeable version (BPER).

This service is provided via an electronic card that is reloaded monthly with the number of vouchers determined by the company on a case-by-case basis. The process is simple: the client sends the monthly order to the issuing company; the company uploads the data to the system and makes it available to the network of point-of-sale (POS) terminals; the beneficiary acquires the reload on the card through the same POS network used to record purchases.

The BPER offers the beneficiary the same usability features and the same “benefit” content as the traditional paper voucher (although, as we will see, spending limits are not yet comparable): in practice, it functions as an “updated” version of the BPCT, and everything feasible for the paper voucher is also feasible for its electronic variant.

The only real substantial difference between the BPER and the paper voucher concerns the traceability of the electronic transaction, with the resulting implications for the merchant’s conduct.

Given this context, for the employer—who must choose between the different service options, traditional or electronic—there are two parameters that must be taken into consideration:

• tax and social security treatment – The lifecycle of the rechargeable electronic “product” is still in its early stages of development: although it has been on the market for some time, the BPER has seen significant growth thanks to the 2015 Stability Law (Law 190/2014), through which the legislature sought to reward the traceability features inherent in the electronic instrument by raising the tax and social security exemption threshold for employers and employees to €7.00, while leaving the threshold for the BPCT unchanged at €5.29. Raising the limit to €7.00 makes the BPER an extremely attractive corporate welfare tool for businesses, all the more so as the face value of the voucher approaches the €7.00 threshold.

• The disparity in tax treatment between the two solutions has fueled the expectations of issuing companies and supported the necessary hardware investments aimed at creating extensive redemption networks through the installation of dedicated POS terminals at participating merchants.
• Redemption – The situation regarding the main qualitative aspect of the meal voucher service—namely, its redemption and acceptance (compared to the BPCT) within the network of participating merchants—is undergoing significant evolution, even though there remains a wide gap to bridge compared to the BPCT: in fact, it is reasonable to assume that, currently, the spendability of the BPER is approximately 50% of that of the paper meal voucher. In any case, these are significant numbers (tens of thousands of participating merchants) and they are constantly growing. How important is the “spendability” of the meal voucher? Obviously, there is no single answer, but based on my experience, ERA customers largely consider “spendability” to be at least as important as the discount. In some cases, even more important. However, assessments regarding “spendability” cannot be limited to a simple tally of the public establishments and retailers that accept the meal voucher. To make a rational decision, it is in fact essential to conduct an in-depth analysis of your employees’ “spendability needs,” because, as always, a quality that is not optimized is synonymous with inefficiency and additional costs.

Without analyzing “spendability needs,” it may prove impossible to seize significant savings opportunities.

Therefore, when choosing between paper meal vouchers (the most widespread and accepted) and electronic meal vouchers (the most economical), evaluating the trade-off between “quality” and “cost-effectiveness” is at the heart of the decision-making process.

A very simple rule can steer the choice in the right direction. Here it is: if the face value of the meal voucher is less than (or equal to) €5.29 and it is believed that this limit will not be exceeded in the immediate future, then the choice must fall on the Traditional Paper Meal Voucher. With this type of service, in fact, nothing is sacrificed in economic terms (no differential tax or social security benefits, for either the company or the employees, can be obtained compared to the BPER), and the qualitative advantages are optimized (a wider network of acceptance).

Conversely, if the value of the meal voucher exceeds the €5.29 threshold, the electronic meal voucher becomes the more cost-effective option, and this advantage grows more significant as the unit value of the meal voucher approaches (or reaches) €7.00. In this case, the utmost attention must be paid to a thorough analysis of the acceptance network.

The differential economic advantage applies only within the range between €5.29 and €7.00. These are the two thresholds beyond which, depending on the type of service chosen, the company incurs the social security contributions applicable to regular wages, and employees face the tax burden corresponding to their income level.

For the sake of completeness, it should finally be noted that, if the need to provide employees with a catering service comparable to a company cafeteria takes precedence over the “benefit” features of the two types of meal vouchers described above, issuing companies offer the option of activating a so-called “distributed cafeteria” service (BPEMD), which is also managed via electronic cards and terminals.

Unlike the BPER, the BPEMD does not require monthly reloading, as meal vouchers or monetary values are not loaded onto the card, but rather the “right” to enjoy a meal for each day worked.

Just like the cafeteria service, the BPEMD is fully tax-deductible for the employer and has no tax or social security implications for the company or the employee, even though, normally, it can only be used for one meal per day within a “closed” network—that is, a restricted and predefined one.

There is no doubt that the electronic meal voucher represents the future of meal voucher services. But perhaps the future has not yet arrived.

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