This Legal Update provides information on some important legislative changes which have been passed in October, November and December 2010.

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1 1 January 2011 LEGAL UPDATE 4/2010 This Legal Update provides information on some important legislative changes which have been passed in October, November and December Change in names of ministries On 1 November 2010 an act 1 came into force which, among other things, will change the names of some ministries. According to the amended act, the affected ministries will have the following names: - Ministry of the Economy of the Slovak Republic, - Ministry of Transport, Construction and Regional Development of the Slovak Republic, - Cultural Ministry of the Slovak Republic. First aid course and first aid instructor course On 15 October 2010, a decree 2 came into force on the minimum requirements of first aid courses and first aid instructors courses. The decree describes first aid courses, staff requirements in the course, instructors courses and the staff requirements in said courses. Attached to this decree is the scope of theory curriculum and practical skills for course participants. 1 Act 403/2010 Coll, which amends and supplements Act 571/2001 Coll on organization of the activities of the government and central public administration, as amended 2 Decree 398/2010 Coll. of the Health Ministry of the Slovak Republic on the minimum requirements for first aid courses and first aid instructors courses

2 Announcement of the Ministry of Foreign Affairs 3 The Ministry of Foreign Affairs of the Slovak Republic has announced that based on communications on 23 and 24 September 2010, an Agreement was concluded between the Ministry of Foreign Affairs of the Slovak Republic and the Ministry of Foreign Affairs of Hungary with respect to representation in the issuance of visas. This agreement came into force on 1 November Pensions increase On 1 January 2011, a measure of the Slovak Ministry of Labor, Social Affairs and Family 4 will come into force, laying down an increase in pensions of 1.8%. Statistical classification of occupations A decree of the Bureau of Statistics 5 came into force on 15 November 2010, with the attached Statistical Classification of Occupations. The Statistical Classification of Occupations is a system of code designations and names for occupations which are carried out by one person by type of job duties. This decree also repeals the measure of the Bureau of Statistics which declares Classification of Occupations. Minimum wage A decree of the Government of the Slovak Republic 6 came into force on 1 January 2011, laying down the minimum wage of EUR per month for employees paid on a monthly basis and EUR for each hour worked by the employee. Christmas contribution in 2010 A decree of the Government of the Slovak Republic 7 came into force on 31 October 2010, laying down the percentage of the average monthly wage in the Slovak economy used for determining pension benefits in order to calculate the Christmas contribution for 2010, which amounts of anywhere between 25% and 60%. It further lays down pension benefits determined as a percentage of the average monthly wage in the Slovak economy in 2009, which is between EUR and EUR Pursuant to this decree, the Christmas contribution for 2010 will be from EUR to EUR Announcement 400/2010 Coll. of the Ministry of Foreign Affairs of the Slovak Republic on an agreement concluded between the Ministry of Foreign Affairs of the Slovak Republic and the Ministry of Foreign Affairs of Hungary with respect to representation in the issuance of visas. 4 Measure 404/2010 Coll. of the Ministry of Labor, Social Affairs and Family of the Slovak Republic laying down the percentage of increase in pension benefits in Decree 407/2010 Coll. of the Bureau of Statistics of the Slovak Republic, which issues the Statistical Classification of Occupations 6 Decree 408/2010 Coll. of the Government of the Slovak Republic, laying down the minimum wage 7 Decree 409/2010 Coll. of the Government of the Slovak Republic on the Christmas contribution for 2010

3 Days of remembrance On 1 April 2011, a new act 8 will come into force designating new days of remembrance - 1 May, Day of Slovak Accession to the European Union, and 10 August Day of Victims of Mining Accidents. Days of remembrance are not official holidays and therefore from a labour perspective they are business days. However in case of May 1, this is also a Labour Day, which is a state holiday in Slovakia, it means that May 1 will keep to be official holiday in Slovakia. Amendment to the Act on Railways On 1 December 2010 a new act 9 came into force defining, among other things, activities which may not be carried out in railway precincts which could endanger the railway or transportation on the railway. The amendment also contains additional provisions which amend the provisions of act on railways. Subsidies in the competence of the Defense Ministry An act 10 came into force on 1 January 2011, laying down the purpose, conditions, scope, method and control of providing subsidies in the competence of the Defense Ministry of the Slovak Republic. This act contains another provision which addresses the evaluation of applications. Subsidies in the competence of the Ministry of Culture An act 11 came into force on 1 January 2011, laying down the purpose, conditions, scope, method and control of providing subsidies in the competence of the Culture Ministry of the Slovak Republic. This act also governs evaluation of applications and penalties. Subsidies for housing development and social housing An act 12 came into force on 1 January 2011, which governs the scope, conditions and method of providing money in the form of subsidies for housing development, and also defines social housing. This act further defines basic terms such as apartment block, single-family home, habitable room, apartment fittings, apartment with ordinary standards and non-residential premises. The second section of this act lays down the purpose of subsidies i.e. for which purposes a subsidy can be provided. This act also lays down the amount of subsidy and the general conditions for obtaining a subsidy. 8 Act 424/2010 Coll., which amends and supplements Slovak National Council Act 241/1993 Coll. on public holidays, official holidays and days of remembrance, as amended 9 Act 433/2010 Coll., which amends and supplements Act 513/2009 Coll. on railways and on amending and supplementing certain acts, and which amends and supplements certain acts 10 Act 435/2010 Coll. on provision of subsidies in the competence of Defense Ministry of the Slovak Republic 11 Act 434/2010 Coll. on provision of subsidies in the competence of Culture Ministry of the Slovak Republic 12 Act 443/2010 Coll. on subsidies for housing development and on social housing

4 Toll for use of designated sections of motorways and expressways A Government regulation 13 came into force on 1 January 2011, laying down the tolls for use of designated sections of motorways and expressways marked with traffic signs, and the tolls for use of designated sections of motorways and expressways marked with traffic signs as applicable for truck-trailer units over 3.5 t, comprised of motor vehicles in categories M1, N1, M1G and N1G. Collection, storage and dissemination of information on the environment On 1 December 2010 a decree 14 came into force which lays down the content of the national register of release of pollutants and off-site transfers and a format which allows the ministry to search for data in the national pollutant register through a user database, details on administration of records and storing data, content and specimen structure for reporting and the details on the conditions and methods of reporting, criteria for classification of sources of pollution of the air, water or soil within the national pollutant register, details on transfer of data to the European Pollutant Release and Transfer Register. This decree further lays down the details and content of the national pollutant register, administration of records and storing data, content and specimen structure of reporting and details on the conditions and methods of reporting and transferring data to the European Pollutant Release and Transfer Register. Notice of the Health Ministry of the Slovak Republic 15 The Health Ministry of the Slovak Republic has issued an edict which issues a cost risk index for healthcare in the year The material contains a new cost risk index table for healthcare in the year 2011 for the purposes of distributing premiums, which are determined based on the age and gender of the insured persons and according to whether or not the state pays the premiums on the insured s behalf. The edict came into force on 15 December Decree on implementing provisions of the act on waters A decree 16 came into force on 15 November 2010, laying down the details on ascertaining the presence, monitoring and evaluating the volume, quality and behaviour of surface and ground waters. It also speaks of balancing the volumes of surface and ground waters, administering records on waters and of the manner and scope of reporting data on collection of surface waters, ground waters and other waters. The conclusion involves the provision on release of waste water. 13 Slovak Government Regulation 444/2010 Coll., which lays down the tolls for use of designated sections of motorways and expressways for motor vehicles and articulated vehicles 14 Decree 448/2010 Coll. of the Environmental Ministry of the Slovak Republic, which implements Act 205/2004 Coll. on the collection, storage and dissemination of information about the environment and on amending and supplementing certain acts, as amended 15 Notice 427/2010 Coll. of the Health Ministry of the Slovak Republic on the issue of an edict which issues a cost risk index for healthcare in the year Decree 418/2010 Coll. of the Ministry of Agriculture, Environment and Regional Development of the Slovak Republic, on implementing certain provisions of the act on waters

5 Energy efficiency and energy demand A decree 17 came into force on 1 December 2010 which lays down the energy efficiency of the transmission and distribution of electricity, energy demand of the transportation and distribution of natural gas, transportation of fuels or crude oil, energy efficiency of heat distribution, energy demand of public waterworks and public sewer systems, and the designated organization. Tax return specimens The Finance Ministry of the Slovak Republic has announced 18 a measure which sets out specimens of income tax returns and a measure which sets out a specimen of a value added tax return. These measures came into force on 1 January Change in accounting procedures The Finance Ministry of the Slovak Republic has issued a measure 19 which amends the designated details on accounting procedures and the chart of accounts for businesses that keep books using the double-entry system of accounting. There has also been an amendment to the details on the ordering, labeling and defining of items in individual financial statements and the scope of data determined for disclosure from the individual financial statements for businesses that keep books using the double-entry system of accounting. 20 Base rates of allowances On 1 January 2011 a measure 21 came into force laying down the base rates of allowances (per diem) for 2011, in euros or in foreign currency, for business trips abroad. The Ministry of Labor, Social Affairs and Family of the Slovak Republic also issued measure 533/2010 Coll. on allowance amounts, which changes the allowance for the individual time zones. This measure came into force on 29 December Amendment to the Accounting Act An amendment to the accounting act 22 came into force on 31 December 2010 laying down, for parent accounting entities, an exemption from the duty of preparing consolidated financial statements and a consolidated annual report if preparation of only individual financial 17 Decree 428/2010 Coll. of the Economy Ministry of the Slovak Republic, which lays down the scope of evaluation and method of calculating energy efficiency and energy demand 18 Announcement of the Finance Ministry of the Slovak Republic, nos. 470/2010 Coll. and 471/2010 Coll. 19 Measure no. MF/25822/ , amending and supplementing the Finance Ministry of the Slovak Republic measure no / , which lays down the details on accounting procedures in the chart of accounts for businesses keeping books using the double-entry system of accounting, as amended. 20 Measure no. MF/25947/ , amending and supplementing the Finance Ministry of the Slovak Republic measure no. 4455/ , which lays down the details on the ordering, labeling and defining of items in individual financial statements and the scope of data determined for disclosure from the individual financial statements for businesses keeping books using the double-entry system of accounting, as amended. 21 Measure of the Finance Ministry of the Slovak Republic no. 482/2010 Coll., laying down the base rates of allowances (per diem) for 2011, in euros or in foreign currency, for business trips abroad. 22 Act 486/2010 Coll. amending and supplementing Act 431/2002 Coll., on accounting, as amended.

6 statements for the parent accounting entity does not significantly affect reflection of the financial situation, expenses, earnings and operating results of the consolidated whole. Amendment to the act on value added tax An amendment to the act on value added tax came into force on 1 January The most substantial change is the temporary increase in the base tax rate, from 19% to 20%. This increase will remain in force beginning 1 January 2011 until the last day of the calendar year in which the European Commission releases data indicating that the real Slovak national deficit is below 3%. The Finance Ministry of the Slovak Republic will announce the end of this period with a decree. Additionally, the reduced 6% tax rate on the so-called courtyard sale of groceries has been abolished. The amendment contains other changes and according to the preamble, the intention of the amendment is to transpose into Slovak legislation directives 24 which lay down tax rules regarding the place of supply of cultural, artistic, sporting and similar services, specify the minimum conditions for preventing tax evasion in the importing of goods, and amendments of a technical nature specifying some provisions of the directive on the common system of value added tax with respect to the import and place where VAT is levied on supplies of natural gas, heating or cooling energy including services associated with access to systems and distribution networks, strengthen the rules for tax deductions as regards immovable property. Amendment to the act on parental contribution Amendment to the act on parental contribution 25 removes legal barriers of parents gainful activities performance during period they receive parental contribution, in case they ensure proper and responsible care for the child. The amount of parental contribution is euro. Amendment also involves contribution of childcare, which can be provided up to 230 euros on the basis of documented costs paid by parents. Amendment to the act on local taxes This amendment 26 to the act on local taxes introduces a change in that the annual land tax rate designated in accordance with 8.2 of the act on local taxes may not exceed 5 times the lowest annual land tax rate determined by the tax administrator in a generally binding regulation. According to the heretofore legislation, such rate could not exceed 20 times the (official) rate. This change will be applied for the 2012 tax period. 23 Act 490/2010 Coll. amending and supplementing Act 222/2004 Coll., on value added tax, as amended. 24 Council Directive 2008/8/EC of 12 February 2008, amending Directive 2006/12/EC, Council Directive 2009/69/EC of 25 June 2009, amending Directive 2006/112/EC on the common system of value added tax, Council Directive 2009/162/EU of 22 December 2009, amending Directive 2006/112/EC on the common system of value added tax 25 Act 513/2010 Coll amending and suplementing Act 571/2009 on parental contribution and on amending and supplementing certain acts and on amending and supplementing Act 561/2008 Coll on contribution on childcare and on amending and supplementing certain acts, as amended Act 571/2009 Coll. 26 Act 527/2010 Coll. amending and supplementing Act 582/2004 Coll. on local taxes and local fees for municipal waste and construction debris, as amended.

7 Use of electronic cash registers On 30 December 2010 an act 27 amending and supplementing the act on use of electronic cash registers and the act on administration of taxes and fees came into force. Among other things, the amendment extends the period during which businesses may use electronic cash registers in accordance with the regulation applicable prior to Act 289/2008 Coll. of coming into force, excepting those businesses whose duty to use electronic cash registers arises for the first time after 30 December These businesses will only be able to use electronic cash registers that meet the requirements laid down by Act 289/2008 Coll., as amended. Another change is that foreign businesses have been equalized with domestic businesses in that businesses/entrepreneurs with a permanent address/permanent residence outside Slovakia must now also use electronic cash registers if they sell merchandise or provide services within the Slovak Republic. The amendment further governs the duty of businesses to arrange for mandatory maintenance of their electronic cash registers by a service organization within five years of putting an electronic cash register into operation, and subsequently every five years from the previous maintenance, and the duty to prepare a daily balance, at any time once per day. In the event of any changes in the local jurisdiction of the tax office, the tax code in the electronic cash register will remain unchanged. Further governed is the mandatory information printed on receipts generated by the electronic cash register. The changes in the provisions of the act on administration of taxes and fees are primarily focused on specifying the tax audit which ascertains or verifies tax base or other facts critical for accurate determination of taxes or incurrence of a tax obligation, either at the tax entity or at a place necessitated for the purposes of the audit; where taxes are administered by the tax office or customs office, the tax audit is conducted by an employee of the tax administrator under the authority of the tax administrator with local jurisdiction. Biocidal products Also adopted in December was a directive 28 which amends the schedule of active substances suitable to be contained in biocidal products. This Government directive will come into force on 1 May 2011, with the exception of certain provisions which will come into force on 1 August Slovak radio and television Effective as of 1 January 2011, a new act 29 effected the merger of Slovak radio and Slovak television. This act governs the position, mission, tasks and activity of Slovak radio and television, its bodies and the management and financing of Slovak radio and television. 27 Act 494/2010 Coll., amending and supplementing Act 289/2008 Coll. on use of electronic cash registers and on amending and supplementing Act 511/1992 Coll. on administration of taxes and fees and on changes to the system of territorial financial bodies, as amended 28 Slovak Government Directive 549/2010 Coll., which amends and supplements Slovak Government Directive 329/2007 Coll., which lays down a schedule of active substances suitable to be contained in biocidal products, as amended. 29 Act 532/2010 Coll. on the Slovak radio and television and on amending and supplementing certain acts

8 Act on eco-design On 29 December 2010, the act on eco-design 30 came into force, laying down the requirements on the environmental design and use of products in order that they may be introduced to the market or put into service, with the goal of ensuring the free movement of such products on the internal market of the European Union. The act applies to products which are energyrelated products, including their parts intended for the end-user, intended for the end-user which, once introduced to the market or once put into service will impact energy consumption. Amendment to the act on social security An amendment to the act on social security 31 came into force on 1 January The goal of the measures was to reduce the space for legal reductions in mandatory payments, thereby increasing revenues to the state treasury. The regulation lays down an updated, expanded scope of gainful activities, and amends the terms employee, employer, and self-employed person. Changes also affect provisions regarding the incurrence and expiration of mandatory sickness insurance, mandatory pension insurance, mandatory unemployment insurance, accident insurance, the general conditions for claims for employee sickness benefits, the critical period for ascertaining the daily assessment base, determination of the amount of early old-age pension, assessment base, and others. Amendment to the civil code An amendment to the Civil Code came into force on 1 January The amendment entrenches the duty to disclose (publish) certain contracts and the rule that contracts which are to be disclosed will come into force on the day following such disclosure, or at a later date if the contracting parties have deferred efficacy of the contract by consensus. Said duty applies to the mandatory publication of contracts pursuant to the act on freedom of information 33, i.e. to contracts concluded by public institutions. This amendment should also limit the creation of non-terminable contracts which may be disadvantageous for the reason that they are practically impossible to terminate due to, for instance, unreasonably long notice periods. These provisions concern contracts concluded after 1 January Amendment to the income tax act An amendment to the income tax act came into force on 1 January According to this amendment, among other things the act will govern tax on emission quotas. Additional changes primarily concern income exempt from taxes, the scope of which has been expanded, and in some cases such as income received from fulfillment of maintenance (child support), transfer of member rights and duties in housing co-ops, the income is exempt from taxes only if the total of such income does not exceed 500. The amendment also concerns provisions on 30 Act 529/2010 Coll. on the environmental design and use of products (act on eco-design) 31 Act 543/2010 Coll., which amends and supplements Act 461/2003 Coll. on social security, as amended, and on amending and supplementing certain acts 32 Act 546/2010 Coll. amending and supplementing Act 40/1964 Coll., the Civil Code, as amended, and amending and supplementing certain acts 33 5a of Act 211/2000 Coll. on freedom of information and on amending and supplementing certain acts 34 Act 548/2010 Coll. amending and supplementing Act 595/2003 Coll. on income tax, as amended, and amending and supplementing certain acts

9 the non-taxable tax base (allowance), on ascertaining the tax base, on the merger, consolidation or break-up of business entities or co-ops in real values and original costs, on tax expenditures, tax returns, annual balancing, duties of an employer who is a taxpayer, tax collected by deductions, and others.