The most important legislative changes in Slovakia as of 2018 ebook

Transcription

1 The most important legislative changes in Slovakia as of 2018 ebook

2 INTRODUCTION Are you wondering about the most significant changes in the Slovak legislation with the arrival of 2018? Our experts have prepared a comprehensive ebook about the legislative changes in the field of taxes, payroll and accounting with effect from January 1st, The aim of the current changes is in particular to strengthen measures against tax avoidance and increase tax transparency. The minimum wage increased and this fact positively influenced also wage benefits for weekend and night work. Starting 2018 an amendment to the Commercial Code entered into force and the new GDPR security requirements and obligations will apply. Read our ebook and familiarize with the most important legislative changes that can affect your business in 2018! Your Accace team 2 Overview of the most important legislative changes in Slovakia as of 2018

3 LEGISLATIVE CHANGES IN SLOVAKIA IN 2018: TAX 4 VAT... 4 INCOME TAX... 6 TAX ADMINISTRATION... 9 ACCOUNTING 10 Period of archiving of accounting documents Notification of financial statements approval Stricter penalties for infringement of accounting rules PAYROLL 11 Increase of minimum wage Wage allowance for weekend and night work Tax credit for children in Personal allowance in Social Insurance - contributions Sickness benefit and income compensation for work inability Exemption from pension insurance contributions for working pensioners Health insurance - contributions OTHER CRUCIAL CHANGES 13 EU General Data Protection Regulation (GDPR) Amendment to the Commercial Code Overview of the most important legislative changes in Slovakia as of 2018

4 TAX VAT Guaranteeing the tax As of January 1 st 2018 if a supplier is published on the so-called black list, it is not a qualified reason for the application of the rules according to which the taxpayer that has been supplied goods or services shall be held liable for the tax arising from the previous stage. Domestic reverse charge The threshold of EUR for the application of domestic reverse charge when supplying certain commodities was abolished. Supply of real estate If a supplier decides to tax a property that should be exempt from VAT, the buyer is liable to pay VAT if he/she has the status of a taxpayer. In order to ensure that a taxable person who is an acquirer of the property knows that he/she is obliged to pay the VAT on the basis of the reverse charge 4 Overview of the most important legislative changes in Slovakia as of 2018

5 mechanism, the supplier is obliged to inform the acquirer in written form that he has decided to tax the supply of the property; the obligation should be met within the time limit for issuance of the invoice. Special margin scheme applicable to travel agencies Following the case law of the European Court of Justice, the application of the specific rules was extended also to cases where the recipient of tourism services is an entrepreneur who buys a package of tourism services for the purposes of his business, whether for resale or business trips. The travel agency s own services shall not be included into tax base for the margin calculation, but shall be taxed based on general rules. Tax representative in case of acquisition of goods from other Member State for purpose of its supply to another state Foreign persons are allowed to appoint a tax representative in the case of goods acquisition from other Member State inland for the purpose of its supply to other states. The tax representative can be appointed by those foreign persons, who will conduct trade only by electronic means. Trilateral transactions Terms for trilateral transactions were amended: the first customer cannot be established in the Member State of the second customer. Summary statement and summary invoice Obligations were introduced for taxable persons registered under Section 7 or Section 7a of the VAT Act to file EC Sales Lists also when participating in the trilateral transactions. The possibility of issuance of a summary invoice for the rental and supply of electricity, gas, water and heat for a period of 12 calendar months was introduced also for a foreign taxable person. Adjustment of Deductions in respect of Capital Goods The 20-year period for the adjustment of tax deduction is from now applicable to each type of construction due to the extended definition of "capital goods" for that purpose. Tax liability in the last tax period In the last tax period the taxpayer has to refund the VAT he deducted upon the payment for the goods or service prior to delivery, if at the end of the last tax period, the goods or service were not delivered to the taxpayer. For more information about the changes, click HERE. 5 Overview of the most important legislative changes in Slovakia as of 2018

6 INCOME TAX Extension of a local definition of an individual tax resident In addition to the formal criterion of permanent residence and the place where a person usually resides, the residence will be also explored. If a natural person is provided with permanent accommodation on the territory of the Slovak Republic that does not only serve for occasional accommodation due to short-term visits, he/she will be considered a resident. Tax allowances and credits for individuals In the case of fulfilling certain conditions, a tax credit is available for individuals on paid interests on mortgages in the amount of 50% of paid interests in given tax period, up to EUR 400 per year. A new tax allowance was introduced for individuals for paid services of spa resorts. The deductible item is given in EUR 50 per year of provably paid payments. Tax relief to support innovations A specific tax regime was established for the commercial use of intangible assets; it is the exemption of income (up to 50%) from remittance for granting the right to use or using registered patents, but also computer programs (software), subject to certain conditions. Furthermore, a special tax regime for the commercial use of so-called embedded intangible assets was established, too; it concerns the exempting part of the income (up to 50%) from the sale of products in which the registered patent or the technical design protected by the utility model is used. Special scheme for research and development was amended; the amount of deductible item was increased. Spa support In order to support and renovate the buildings where spa is provided pursuant to special legislation, their tax depreciation period was amended and can be from 20 to 40 years. The technical upgrade is to be depreciated in the second tax depreciation category (6 years). Provision of transport for employees Starting from January 1 st 2018, new rules applies regarding the tax deductibility of expenses for providing transportation for employees to the place of work and back. In addition to this, new specific rules applies regarding taxation, respectively tax exemption of benefits of kind by employees. 6 Overview of the most important legislative changes in Slovakia as of 2018

7 Provable expenses on transport are considered to be tax deductible expenses in the full amount at the employer, if all the following conditions are met simultaneously: Public transport is not carried out at all, or not to the extent that is sufficient to employer s needs, Employer uses motor vehicles listed under the code KP for these purposes (motor vehicles for 10 and more people). The benefit in kind in the form of transport, ensured and paid by the employer, will be exempted from personal income tax at the employee level only if all the following conditions will be met simultaneously: Employer provides the transport in the case the public transport is not carried out at all or only to the extent that is not sufficient to the employer s needs, Employer uses for these purposes motor vehicle listed under the code KP Employees participate on the payment of at least 60% of the amount of provable expenses (30% in the case of manufacturing companies). If the participation is lower than the mentioned rate then the difference between the amount corresponding to 60% and the real amount of participation per employee is the taxable income of the employee. Income of non-profit organizations from advertising Starting from January 1 st, 2018 income from advertising by selected entities established for other than business purposes are subjected to income tax only in the taxable period when the payment is received. At the same time, taxpayers having such expenses can claim them as tax deductible expenses only after their payment. If above mentioned entities use the income from advertising for selected beneficial purposes, the income can be exempted from taxation up to the amount of EUR for one taxable period. Income from the sale of stocks and business shares As of January 1 st 2018 corporate income tax exemption on income from sale of stocks or business shares applies to legal entities (residents or non-residents having a permanent establishment in Slovakia). This does not apply to taxpayers which are engaged in trading with securities pursuant to special legislation. The following conditions for tax exemption must be met simultaneously: Minimum 24 month holding period of at least 10% share on registered capital; Taxpayer is not a letterbox company. In case the taxpayer does not meet the conditions, the interests paid from credits and loans for the acquisition of stocks or business shares will be tax deductible only in the taxable period in which the sale of stocks and business shares occur. 7 Overview of the most important legislative changes in Slovakia as of 2018

8 Business combinations The possibility of performing contributions in kind, mergers, fusions or divisions for tax purposes in historical values is now limited. With some exceptions, these types of business combinations are allowed to be performed only in real values. Income of non-residents from Slovak sources The local definition of a permanent establishment was extended. Carrying on business through a digital platform used to habitually conclude contracts for the provision of services of transportation and accommodation in the territory of the SR leads to creation of a permanent establishment. The definition of the so-called construction (assembling) permanent establishment was amended, too, to avoid the artificial division of the activities of interconnected taxpayers in several shorter activities. Amendments cover also the definition of so-called agent permanent establishment, to avoid the misuse of commissioning structures. As an income of a non-resident from Slovak sources is considered also an income from payments from residents and Slovak permanent establishments of non-residents for commercial, technical or other advisory services, data processing, marketing services and management or mediation services, regardless where the services are provided, as far as expenses on such payments are tax deductible expenses. Such incomes are subjected to withholding tax unless double tax treaty states otherwise. Anti-tax avoidance measures Concept of beneficial owner: A definition of a beneficial owner of an income was introduced. If the payer of income cannot prove that the recipient of the income is the beneficial owner of that income, then when applying the withholding tax or tax guarantee the 35% tax rate shall be applied. Exit Tax for legal persons: A 21% exit tax was introduced in the case of taxpayer s property transfer, taxpayer s leaving or transfer of their business abroad. In the case of taxation, the fiction of a property sale, or sale of the enterprise or its part applies. The aim of taxation is to ensure that in the case of taxpayer s property transfer or changing tax residence abroad, the taxpayer will tax an economic value of all capital gains earned in Slovakia, even though this gain is not realized in the moment of leaving. Hybrid mismatches: In 2018, anti-tax avoidance rules were introduced with the aim to prevent the situation between related parties of multiple tax deduction of expenses or of deduction without inclusion. Controlled foreign company rules (CFC rules): With effect from January 1 st 2019, CFC rules are to be introduced, which are consist of assigning the income of a low-taxed controlled subsidiary company to its parent company. Part of the parent company s tax base will be the income of controlled foreign company to the extent to which the assets and risks are attributable to that income that are connected to main functions of the parent company (to the extent in which no adjustment was made in accordance with the transfer pricing rules). For more information about the changes, click HERE and HERE. 8 Overview of the most important legislative changes in Slovakia as of 2018

9 TAX ADMINISTRATION Extension of obligatory electronic communication Starting from January 1 st 2018 all companies (even if they are not VAT payers) have to deliver their documents to tax administrator only electronically via an established electronic mailbox, through the portal of financial administration. This applies to any submission, including tax returns for income tax for Individuals with income from business and other self-employment (unless they are VAT payers) will be obliged as of July 1 st 2018 to deliver submissions through the electronic mailbox. Index of tax reliability of taxpayers Taxpayer s rating according to fulfilment of their obligation towards financial administrator and enabling of specific tax regime for reliable traders were introduced. Increasing of tax transparency Tax transparency was increased: there are new or more detailed lists about taxpayers published by the Slovak Financial Directorate, especially regarding tax registration, tax liabilities, especially in the field of income tax, VAT, special levy for the financial institutions and special levy for regulated industries. Reform of tax secrecy rules Among others, the reform of rules introduced that information on performing tax inspection or tax execution is not considered to be a tax secrecy. Summary protocol The Slovak Financial Directorate can draw up a summary protocol for the tax administration purpose on interconnected transactions of taxable persons at whom breach or circumvention of tax rules has been detected, especially in cases where the tax subjects are involved in the fraudulent chain. Appeals deadline extension Filing deadlines for appeals were extended from 15 days to 30 days. Reduction of fees for binding rulings Fees for binding rulings were reduced to half, which means from EUR to EUR , depending on the value of the business case. For more information about the changes, click HERE. 9 Overview of the most important legislative changes in Slovakia as of 2018

10 ACCOUNTING Period of archiving of accounting documents The period of archiving of accounting documents was harmonized with the period of archiving of the financial statements, i.e. for 10 years. Notification of financial statements approval The deadline for submitting the notification was prolonged from five to fifteen days. Stricter penalties for infringement of accounting rules A measure was established to initiate the cancellation of a trade license if the entity has not kept accounting books, has not prepared the financial statements, or if the entity carried out accounting records outside accounting books, carried out the accounting record of an accounting event that did not arise, conceal and did not record the fact that is the subject of the accounting. For more information about the changes, click HERE. 10 Overview of the most important legislative changes in Slovakia as of 2018

11 PAYROLL Increase of minimum wage Starting from January 1 st 2018 the monthly minimum wage increased from the actual amount of EUR 435 to EUR 480. The minimum hourly wage increased from current EUR to EUR Minimum wage rates (in EUR) by degree of difficulty: Degree Monthly wage 40 hour/week 38,75 hour/week 37,5 hour/week For more information about the changes, click HERE. 11 Overview of the most important legislative changes in Slovakia as of 2018

12 Wage allowance for weekend and night work The increase of minimum wage also means an increase in the wage allowance for night work, weekend work and inactive standby duty, which are based on the minimum wage. From May 1 st 2018 the employee should be paid a wage allowance of at least 100% of the minimum hourly wage for each hour on Saturdays and Sundays. From May 1 st 2018 the wage benefit for night work should also be increased by 50% of the minimum hourly wage. Tax credit for children in 2018 From January 2018, the amount of tax credit for children is EUR for a child per month, which means EUR for a child per year. Personal allowance in 2018 The (monthly) personal allowance is EUR when calculating the tax advance. Social Insurance - contributions The maximum assessment base for the calculation of the contributions was increased to EUR 6,384 except for accident insurance. Sickness benefit and income compensation for work inability The maximum daily assessment base for the calculation of the sickness benefit is currently EUR , and of income compensation for work inability it is EUR Exemption from pension insurance contributions for working pensioners From July 1 st, 2018 pensioners working on agreement are able to determine the agreement to which they apply the exemption from the payment of pension insurance contributions (old age, permanent disability insurance and payment of the contribution to the reserve solidarity fund). Pension insurance from the agreement is not paid, unless the monthly assessment base exceeds EUR 200. Health insurance - contributions The maximum assessment base is cancelled since The deductible item of payment is max. EUR 380 per month. Over EUR 380 per month it is reduced by double the gap between the income and EUR 380. In case of income from EUR 570 the deductible item is zero. From January 2018, it applies only to employees, in the case of employers it was cancelled. 12 Overview of the most important legislative changes in Slovakia as of 2018

13 OTHER CRUCIAL CHANGES EU General Data Protection Regulation (GDPR) In 2016, the Regulation (EU) 2016/679 of the European Parliament and of the Council was adopted, on the protection of natural persons with regard to the processing of personal data and on the free movement of such data, and repealing Directive 95/46/EC ( GDPR as the abbreviation from General Data Protection Regulation), by which are introduced new safety requirements and obligations with which the companies must comply no later than May 25 th The most important changes established by GDPR apply mainly to: The expanded scope, since GDPR applies to all entrepreneurs established in the EU and companies that handle Personal Data of EU citizens, The consent of a natural person to process Personal Data, The new rights established by this regulation, which has arisen to natural persons the data of which are processed, Appointment of Data Protection Officer, The fines, which can be up to EUR 20,000,000 or to 4% of total annual worldwide turnover should the requirements and obligations are not complied with. To prepare for GDPR, the company will need at the earliest to have a clear understanding of the operations executed by the company as: what Personal Data it processes, where the data across the group are processed, where the data is transferred from and to or how the data is secured. For more information about the changes, click HERE. 13 Overview of the most important legislative changes in Slovakia as of 2018

14 Amendment to the Commercial Code Starting from January 1 st 2018 a new amendment to the Commercial Code entered into force, with the aim to improve the business environment. The key changes are as follows: Stop to straw men The Amendment tries to end the use of so-called straw men (persons who only give their name and identity to assume rights and obligations of the statutory body of the company but they do not have a real interest to execute these rights and obligations). For the appointment of a statutory body or its member it is required to have the consent of that person with notarized signature. New criminal offence: Unlawful liquidation The unlawful liquidation is considered as a criminal offense, with the intention to punish persons involved in actions concerning the transfer of company s ownership to straw men in order to thwart the proper liquidation. The penalty rate can be up to 15 years. Increased responsibility of the statutory bodies The Amendment extended the responsibility of statutory body, members of statutory body and liquidators of companies, mainly in case of violating obligations. Breach of the obligation may mean a disqualification of the statutory body and the disqualified statutory officer will not be able to become a statutory officer in any company for 3 years. Furthermore, the obligation to provide cooperation applies also to persons whose function in the company terminated, for the period in which they acted as a statutory body or a member of the statutory body of the company. Increase of shareholders responsibility The Amendment also introduced the shareholders responsibility, mainly in cases when the company has rendered security in favour of the shareholder or concluded an agreement in his favour and by the implementation of the security or of the agreement deteriorated the enforceability of receivable of the creditor of the company, or the shareholder enforced the decision resulting in deteriorating the enforceability of the company s creditors receivables. Merger and split of the companies The legislation introduced several new obligations and constraints regarding merger and split of companies. These corporate changes are prohibited in case the equity of successor s company is negative or participating companies are in liquidation or in bankruptcy or the court proceeding on dissolution of the companies has been initiated. 14 Overview of the most important legislative changes in Slovakia as of 2018

15 Also, further obligations were introduced, such as obligation to prepare an audit report certifying that the value of the successor s equity will not be negative, obligation of a company to submit a draft of the contract of the merger / project of the split to the tax administrator not later than 60 days before its approval by the company s bodies, and obligation to file a petition for the registration of the merger/split in the Commercial Registry not later than 30 days. Other changes The amendment regulated the capital funds and introduced changes regarding violation of business secrets. For more information about the changes, click HERE. Disclaimer Please note that our publications have been prepared for general guidance on the matter and do not represent a customized professional advice. Furthermore, because the legislation is changing continuously, some of the information may have been modified after the publication has been released. Accace does not take any responsibility and is not liable for any potential risks or damages caused by taking actions based on the information provided herein. 15 Overview of the most important legislative changes in Slovakia as of 2018

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