Tax and legal news 05/2015

Transcription

1 Tax and legal news 05/2015

2 Contents EY Croatia expands the scope of advisory services 3 Amendments to the VAT Bylaw 3 Application of tax relief for reinvested profit in Potential amendments to the Corporate Income Tax Bylaw 4 Change of Croatian National Bank ( CNB ) discount rate 4 Amendments to the Personal Income Tax Act 5 Potential amendments to the Personal Income Tax Bylaw 5 Filing of the Annual Tax Return for Amendments to the Accounting Act 6 Notice on application of new Double Tax Treaties as of 1 January Clarification of the Customs Authorities in relation to the provisions of the special tax on motor vehicles 7 Act on Amendments of the Companies Act 7 Latest developments on BEPS ( Base Erosion and Profit Shifting ) 8 2 EY Tax and legal news - Croatia 05/2015

3 EY Croatia expands the scope of advisory services We are delighted to inform all of our clients that we have expanded our services on domestic market as of October The novelty with this respect is our Department for Legal Advisory. Hence in the future, EY clients will be provided with a wide spectrum of expert legal services, especially in the area of labor law, trade law, business law including legal services connected with business transactions such as mergers and acquisitions or business restructuring. Our Legal department is led by Joško Perica, experienced attorney-at-law, with graduate degree from the Oxford University. Amendments to the VAT Bylaw The amendments to the VAT Bylaw were published in the Official Gazette, No. 130/15 and entered into force on 8 December VAT treatment of food donation In line with amendments to the VAT Bylaw, donation of food made to non-profit organizations performing humanitarian work in line with special regulation and registered as mediators in the food donation chain will not be considered taxable. The mediators will be obliged to issue a statement to the donator stating they will donate the food to the end consumers in line with special regulation. Donation of food will be considered tax deductible shortage of food up to 2% of revenue of the previous year. However, in case of natural disasters, even supplies towards end users will be considered tax deductible shortage if in line with special regulations regarding food donations. Taxpayers donating food will be obliged to report such supplies until the 20th day in the month following the respective taxation period through the new form DONH. Exceptionally, for 2015, the form should be submitted by 20 June VAT treatment of foreign exchange differences arising in finance lease arrangements The amendments to the Bylaw confirm that foreign exchange differences arising in finance lease due to a foreign currency clause shall be exempt from VAT on the ground that they are linked to financing services. Exclusion of the special tax on motor vehicles from the VAT base The amendments to the Bylaw confirm that the special tax on motor vehicles should not be included in the VAT base upon supplies by car dealers and leasing companies in case the special tax on motor vehicles is transferred to the acquirer of the vehicle / lessee. Goods in transit and export supplies documenting VAT exemption According to the changes to the Bylaw, documents prescribed for the customs transit procedure should be used to prove VAT exemption for goods in transit. In case the goods are transported by rail, copy of the consignment note CIM certified by the competent customs office should be obtained. Furthermore, with regards to export supplies, in case paper declarations are used, original documents certified by the competent outbound customs office is considered as evidence for VAT exemption. Deduction of input VAT (pro-rata) The Bylaw introduces amendments regarding the percentage of input VAT (pro-rata) in a way that taxpayers using pro-rata input VAT deduction will in first accounting period (month/quarter) of the current year have to apply the deduction percentage calculated on the basis of last year s supplies, instead of the percentage which was temporarily applied in the previous year. 3 EY Tax and legal news - Croatia 05/2015

4 Application of tax relief for reinvested profit in 2015 According to the Act on Amendments to the Corporate Income Tax Act (Official Gazette, No. 143/14), entered into force during 2014, amendments to conditions and way of usage of a tax relief for reinvested profit have been prescribed. These amendments should apply in process of preparation of corporate income tax return for However in addition to these, two additional conditions are prescribed as follows: obligation to invest into fixed assets, which, investment, must meet prescribed conditions and obligation to keep existing number of employees in a period of at least two years in which tax relief has been used. Potential amendments to the Corporate Income Tax Bylaw As of 7 December 2015, proposal of the amendments to the Corporate Income Tax Bylaw has been published on the official website of the Tax Authorities. Based on the proposed amendments, the Bylaw should be adjusted with the new Investment Promotion Act. Accordingly, amendments to the corporate income tax return for 2015 were proposed. Additionally, new form - Report on business events with related parties (PD-IPO form) and its detailed content were proposed. The deadline for submitting PD-IPO form should be no later than 6 months from the end of the tax period. Also, in relation to the tax relief for reinvested profit, the number of job positions when using the relief has been defined as a number of full-time employees. Change of Croatian National Bank ( CNB ) discount rate As of 31 October 2015, new Resolution on interest rates, discount rate and other CNB charges has entered into force. According to the Resolution, discount rate has been decreased from 7% to 3% annually. The decrease in CNB discount rate effects the tax treatment of loan interest between related parties. 4 EY Tax and legal news - Croatia 05/2015

5 Amendments to the Personal Income Tax Act Potential amendments to the Personal Income Tax Bylaw The Croatian Government amended the Personal Income Tax Act related to the taxation of capital gains arising from financial assets. To remind you, the capital gains from financial assets acquired as of 1 January 2016 and disposed of within 3 years, will be taxed at the rate of 12% (plus city tax), with some exceptions. Until now, the Act was prescribing that individuals earning capital gains need to report and pay tax within 8 days of incurring capital gain, whereby the potential capital losses would be used only at year end through a special report (and potentially through submission of the Annual Tax Return, which could result in the effective tax rate on net gains of 40%, plus city tax). Amendments to the Personal Income Tax Act, state that net gains (capital gains reduced by capital losses) will be taxed only at year end, i.e. until 31 January of the following year, which will significantly reduce the administration burden for taxable persons. However, it remains unclear whether the taxable persons who wish to use their capital losses will still need to submit the Annual Tax Return (which could increase the effective tax rate to 40%, plus city tax). The Ministry of Finance prepared many amendments to the Personal Income Tax Bylaw that are expected to be published soon in the Official Gazette. Many of these refer to the capital gains/losses of financial assets which are no longer applicable, taking into consideration the above mentioned amendments to the Personal Income Tax Act. Therefore, we expect additional adjustments from Ministry of Finance on amendments of the Personal Income Tax Bylaw. With respect to other announced amendments to the Personal Income Tax Bylaws, we would like to highlight the following: Definition of business trip for tax purposes is now harmonized with regulations on mandatory social security contributions, which is considered to be a trip of maximum of 30 days, continuously. If the food (lunch and/or dinner) is provided during the business trip in Croatia, the non-taxable amount of daily allowance is decreased by 60%. If the food (lunch and/or dinner) is provided for the field worker, in Croatia or abroad, the non-taxable amount of field allowance is decreased by 50%. Certain clarifications on conditions for increasing personal allowance based on dependent family members. Changes in JOPPD codes, clarification of certain submission deadlines, annual tax reconciliation. Clarifications on the special procedure for the annual tax return which becomes applicable as of 2016 for the annual tax return for The new ZPP DOH form is introduced, through which the taxable persons to whom the special procedure for the annual tax return is applied can exercise their right on certain allowances about which the Tax Authorities had no information (like increased personal allowance for dependent family members that were not listed on the Tax Card PK). 5 EY Tax and legal news - Croatia 05/2015

6 Filing of the Annual Tax Return for 2015 The special procedure will be applied to the most of taxable persons, who are no longer obliged to submit the annual tax return since the Tax Authorities will take over that responsibility. Under the new procedure, the Tax Authorities will issue preliminary tax assessment for 2015 based on information available in their IT system, no later than by the end of June The taxable persons will have the right to appeal on preliminary tax assessment until July In addition, by the end of February 2016, the taxable persons will have right to submit the request (through the new ZPP -DOH form) for the recognition of certain rights about which the Tax Authorities had no information, such as increased allowance for dependent family members who were not listed on the Tax card - PK. The obligation of filing the annual tax return (by end of February) still remains for the following taxable persons: who earn income from self-employment, Croatian tax residents who are members of the crew of a ship on international sailing, cases where the Tax Authorities do not hold any information on earned income. Read this QR code to access our current and past Tax newsletters: Amendments to the Accounting Act Amendments to the Accounting Act (Official Gazette, No. 78/15) were enacted on 10 December 2015 and will enter into force on 1 January The most significant amendments are as follows: Statutory deadline determined by the old Accounting Act will still apply to financial statements and statistical reports for all periods that started before 1 January 2016, while new deadlines will apply for reporting periods starting after 1 January Application of mandatory chart of accounts has been postponed until 1 January Draft proposal of mandatory chart of accounts was released on 13 October 2015, and the final mandatory chart of accounts should be issued by 30 June EY Tax and legal news - Croatia 05/2015

7 Notice on application of new Double Tax Treaties as of 1 January 2016 As of 1 January 2016 Double Tax Treaties with following countries shall become applicable: United Kingdom of Great Britain and Northern Ireland India Portugal Turkmenistan Clarification of the Customs Authorities in relation to the provisions of the special tax on motor vehicles The current Bylaw on special tax on motor vehicles defines that the Croatian Customs Authorities can define the price of the vehicle by estimation in cases where the recommended retail price of the motor vehicle is shown in an amount lower than what can reasonably be achieved on the Croatian market. The Customs Authorities announced additional explanations of the provisions of the respective Bylaw on 16 October 2015 explaining how to determine the tax base for the purpose of this Bylaw. Also, it is explained that the recommended selling price is not the same as the retail price of the vehicle proving that the Customs Authorities cannot determine the retail price of the vehicle, but is only interested in the recommended selling price, in order for all taxpayers to be in the same position in relation to payment of taxes. Act on Amendments of the Companies Act The amendments to the Companies Act (Official Gazette, No. 110/15) entered into force on 1 November Conditions for a decrease of liquidation costs for limited liability companies were introduced with this respect. Also, liquidation procedure for all types of companies has been simplified as well. Companies assets can be distributed to the shareholders after period of one year from the day of the first announcement to the creditors to report their receivables. Prior deadline was after third announcement to the creditors. The amendments are also applicable to the liquidation of simple limited liability companies as well. The only differences in relation to the above stated relate to announcement for creditor being period of two months from the day of the first announcement and companies asset can be distributed to the shareholders after period of six months from the first announcement to the creditors to report their receivables. Furthermore, obligation of publication in the Official Gazette has been replaced with publication on the Court Register web page. 7 EY Tax and legal news - Croatia 05/2015

8 Latest developments on BEPS ( Base Erosion and Profit Shifting ) Following the series of webcasts where EY provided a review of the final BEPS reports and the outlook for country action, EY is preparing a new series of webcasts titled BEPS is broader than tax, focused on key business functions in a program of seven Thought Center Webcasts, as follows: Mergers and acquisitions Impact on the operating model and the deployment of intangible property Considerations and challenges for the treasury team Implications for financial accounting and tax compliance Key issues for the General Counsel s office Changes affecting human resources Overall review of key focus areas and country developments The first webcast will be held on 7 January 2016 at 4pm CET. To access the webcast please register using the following site: webcast_ _beps-is-broader-than-taxmergers-and-acquisitions-1 8 EY Tax and legal news - Croatia 05/2015

9 Contacts EY Assurance Tax Transactions Advisory Dénes Szabó Partner Tax Services Tel: +385 (1) Maša Šarić Executive Director Business Tax Advisory Tel: +385 (1) Joško Perica Senior Manager Law Tel: +385 (1) Katarina Dijan Executive Director People Advisory Services Tel: +385 (1) Vladimir Nol Senior Manager People Advisory Services Tel: +385 (1) Marko Starčević Senior Manager Business Tax Advisory Tel: +385 (1) About EY EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities. EY refers to the global organization and may refer to one or more of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit ey.com. Sanja Stojić Senior Manager Global Compliance and Reporting Tel: +385 (1) sanja.stojic@hr.ey.com Petra Megla Manager People Advisory Services Tel: +385 (1) petra.megla@hr.ey.com Tamara Korkutović Manager Business Tax Advisory Tel: +385 (1) tamara.korkutovic@hr.ey.com Sanja Stambolija Andrić Manager Business Tax Advisory Tel: +385 (1) sanja.stambolija-andric@hr.ey.com Ernst & Young Advisory LLC Radnička cesta 50, Zagreb, Croatia Tel: Fax: Ernst & Young Advisory LLC All Rights Reserved. This material has been prepared for general informational purposes only and is not intended to be relied upon as accounting, tax, or other professional advice. Please refer to your advisors for specific advice. ey.com/hr 9 EY Tax and legal news - Croatia 05/2015