MANDAT news. Fresh tax, legal and economic information JANUARY 2014

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1 Fresh tax, legal and economic information MANDAT news The January issue includes: Act on Income Tax Income tax advance payments Not to be missed MANDAT CONSULTING, k.s., Nám. SNP 15, Bratislava,

2 In the January issue of the MANDAT správy newsletter, we would like to inform you about the most important changes to the Act on Income Tax. The amendment to the Act on Income Tax was approved by the National Council of the Slovak Republic in December 2013, signed by the President of SR on 17 December 2013 and it is effective from 1 January Legislative changes in the area of international taxation resulting from this amendment were dealt in detail in the October issue of the newsletter. In this issue, we therefore focus on other important changes and new aspects introduced by this amendment. Overview of important changes: Use of a company car for private purposes From 1 January 2014, the wear and tear of a motor vehicle is taken into account when calculating the taxable income of an employee who uses a company motor vehicle for private purposes. The income of the employee will include: Robert Jex robert.jex@mandat.sk Tel.: during the first calendar year after putting the vehicle into service, the amount equal to 1 % of the acquisition price of the vehicle for each, even a partial calendar month; during the second to eighth calendar year after putting the vehicle into service, the amount equal to 1 % of the acquisition price of the vehicle, reduced annually by 12.5 % on the first day of the calendar year, for each, even a partial calendar month of the period, during which the vehicle is used for business and private purposes. For the purposes of calculating this non-cash income, the acquisition price of the motor vehicle of the employer will also be increased by the amount of any technical evaluation of the motor vehicle carried out in the respective years. Revenue from capital Any interests, winnings or other revenue derived not only from deposit books but also from deposit accounts, building-saving accounts or current accounts with the exception of the interest income related to resources on the current account used in connection with business activities, will be considered as revenue from capital, which, if it results from sources in the territory of the Slovak Republic, will be taxed using a withholding tax by the taxpayer. Changes in the identification of the tax base Taxpayer will no longer be obliged to notify the tax authorities of initiation or termination of the procedure of non-inclusion of currency exchange differences arising in the accounting due to unrealized collection of receivables or unpaid obligations in the tax base by a separate notification. MANDAT CONSULTING, k.s., Nám. SNP 15, Bratislava, 1

3 This fact shall be included in the filed tax return for the relevant taxation period (for this purpose, a change will be made in the tax return form) The set of expenditures included in the tax base only after the payment will now include the lump sum compensation of costs associated with collecting a receivable. The lump sum compensation will be determined by regulation of the Government of the Slovak Republic in the amount of EUR 40, regardless of the amount of the claim and the length of the delay. In the case of an early termination of a lease contract due to the insolvency of the lessee (return of the leased property to the leasing company) and in the case of depreciation of a total loss of the leased property due to an accident or theft, the loss resulting from withdrawing the leased property from use cannot be included in the tax base. A taxpayer will be required to increase the tax base in relation to the period (number of days) elapsed from the due date of the outstanding liability by 20 % to 100 % of the nominal value of the liability or its unpaid part earlier than three years after the due date. Jana Princová jana.princova@mandat.sk Tel.: In the case of working time accounts and a smaller work volume for equal pay, accrued payroll costs, including insurance premiums to be paid for the employee by the employer, shall be included in the tax base. When the working hours are worked out in subsequent tax periods, prepaid expenses posted in the appropriate expense account will not be included in the tax base. Tax expenses From January 2014, tax expenses of an employer will include expenses for transportation of employees if employees cannot use public transportation to go the place of their work and back. If any subsidy, aid or allowance were granted for this purpose, the tax expense will be calculated as the difference by which the costs exceed the subsidy received. Tax licenses Tax license is the minimum corporate income tax that must be paid by legal entities for the first time in filing tax returns for the tax period beginning on or after 1 January This minimum tax will be paid by a taxpayer if, after deducting rebates and after crediting any tax paid abroad, the tax liability is less than the relevant tax license, or if the taxpayer realizes a tax loss. Tax license shall be reduced by one half if the taxpayer employs at least 20 % of natural persons with disabilities. Tax license is due and payable upon the deadline for filing the tax return. MANDAT CONSULTING, k.s., Nám. SNP 15, Bratislava, 2

4 Tax license can be credited against any tax liability before applying advance payments, up to the maximum period of three consecutive periods. Minimum tax will not be paid by a taxpayer who is obliged to file a tax return for the first time, by taxpayers whose income is not based on business activities, sheltered workshops or workplaces and under certain conditions by companies in liquidation and bankruptcy. Tax license to be paid by taxpayers: EUR 480 for taxpayers who are not VAT payers as at the last day of the taxation period and whose annual turnover amounts up to EUR 500 thousand; EUR 960 for taxpayers who are VAT payers as at the last day of the taxation period and whose annual turnover amounts up to EUR 500 thousand; EUR 2,880 for taxpayers whose annual turnover exceeded in the taxation period the amount of EUR 500 thousand. Tax loss amortization Tax loss realized after 1 January 2014 will be amortized evenly by no more than 4 years (previously it was possible to deduct the tax loss over seven consecutive tax periods). Roman Ferjanc roman.ferjanc@mandat.sk Tel.: Under the transitional provisions of the amended Act, however, this restriction also applies to unused tax losses for tax periods ending between 2010 and INCOME TAX ADVANCE PAYMENTS Based on the amendment to the Act on Income Tax, the rate of the corporate income tax is reduced from 23 % to 22 % from 1 January We would like to remind you that the new rate of 22 % shall be used for the calculation of advance payments of corporate income tax for January 2014 and the following months. Marian Vojtek marian.vojtek@mandat.sk Tel.: MANDAT CONSULTING, k.s., Nám. SNP 15, Bratislava, 3

5 NOT TO BE MISSED Financial Bulletin No. 12/2013 published the Measure of the Ministry of Finance of the Slovak Republic of 20 November 2013 No. MF/17920/ amending and supplementing the Measure of the Ministry of Finance of the Slovak Republic of 31 March 2003 no. 4455/ laying down the details of the structure, description and content of items of individual financial statements and of the scope of data from individual financial statements to be published by entrepreneurs using double entry bookkeeping, as amended. This measure is in force from 1 January 2014 and will be first used in preparing separate financial statements as at 31 December 2013, which are to be drawn up after 1 January Important deadlines Overview of important dates in the period from January 2014 to March 2014 can be found on our website: Martin Šiagi martin.siagi@mandat.sk Tel.: ABOUT US The companies MANDAT CONSULTING, k.s. and MANDAT AUDIT, s.r.o. were founded in 2004 as tax advisory and auditing companies. Since their establishment, they have been providing small, medium-sized and companies active in Slovakia with services in the field of tax consultancy, audit and accounting. Long-lasting cooperation with foreign advisory companies hand in hand with the competence of Slovakian tax advisors and auditors enables us rendering our service to the clients originated from abroad. In present time, 41 well trained members of our staff are at the disposal to our clients. Information provided in this material are only of a cursory nature. MANDAT CONSULTING, k.s. assumes no liability for any decision taken on the basis of this issue. Should you wish to add other person to be receiving MANDAT news, please contact: news@mandat.sk Please contact us, should you require additional information. MANDAT CONSULTING, k.s., Nám. SNP 15, Bratislava, 4