Withholding tax on cash and in-kind benefits in Slovakia April 2015
Introduction As of 1 January 2015, benefits provided to healthcare providers, their employees or medical staff ( HCP / HCO ) by a pharmaceutical company ( Pharma Co. ) should be subject to withholding tax ( WHT ) Collection of WHT for (i) cash and (ii) in-kind benefits: In the case of cash benefits, Pharma Co. applies WHT, i.e. pays 19% WHT to the tax authority In the case of in-kind benefits, HCOs / HCPs tax themselves by means of so-called self-withholding at 19% Page 2
Income subject to WHT Application of WHT required on any income / benefit provided to HCO / HCP by Pharma Co. with exception of: cash and in-kind benefits provided to HCO / HCP in respect of clinical trials in-kind benefits provided to HCP as part of continuation training, while food, accommodation and transport should be taxable events even if provided as a part of continuation training Application of WHT required even if benefits are provided to HCO / HCP by Pharma Co. indirectly, i.e. through a third party Page 3
Collection and payment of withholding tax Cash benefits HCO / HCP TAX AUTHORITY 81 EUR Cash benefit after taxation 19 EUR Payment of WHT 100 EUR Cash benefit before taxation Reporting obligation on a monthly basis PHARMA CO. Page 4
Collection and payment of withholding tax Cash benefits Provision of cash benefit by Pharma Co. on 14 January Reporting of the amount withheld by Pharma Co. by 15 February 1 Jan 1 Feb 1 Mar 1 Apr 1 May Remittance of WHT by Pharma Co. by 15 February Page 5
Collection and payment of withholding tax In-kind benefits 19 EUR Self-withholding payment of WHT on a quarterly basis TAX AUTHORITY HCO / HCP Reporting obligation on a quarterly basis Reporting obligation on a quarterly basis 100 EUR Value of in-kind benefit PHARMA CO. Reporting obligation on a quarterly basis Page 6
Collection and payment of withholding tax In-kind benefits Provision of in-kind benefit by Pharma Co. on 14 January Confirmation on in-kind benefit to HCP / HCO by Pharma Co. by 15 April Reporting of the amount withheld by HCP / HCO by 30 April 1 Jan 1 Feb 1 Mar 1 Apr 1 May Reporting of in-kind benefit to TA by Pharma Co. by 15 April Remittance of WHT by HCP / HCO by 30 April Page 7
Implications for pharmaceutical companies Major implications for pharmaceutical companies Identification of income subject to WHT Set-up of administrative processes for tax withholding issuance of confirmations reporting to the tax authority Sanction interest at 15% p.a. / penalties up to EUR 3,000 may be imposed if obligations of pharmaceutical companies are not fulfilled Page 8
Information in this presentation is intended to provide only a general outline of the subjects covered. It should neither be regarded as comprehensive nor sufficient for making decisions, nor should it be used in place of professional advice. Ernst & Young, s.r.o. accepts no responsibility for loss arising from any action taken or not taken by anyone using this publication. Page 9
Contact details Richard Panek Executive Director Tel.: +421 2 3333 9109 E-mail: richard.panek@sk.ey.com Tomáš Nagy Manager Tel.: +421 2 3333 9164 E-mail: tomas.nagy@sk.ey.com Peter Feiler Manager Tel.: +421 2 3333 9155 E-mail: peter.feiler@sk.ey.com Page 10
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