16.06.2015
Proposed changes in Slovak tax legislation from 1 January 2016
Please allow us to present you with the proposed changes in the tax legislation from 1 January 2016 in the form of a short newsletter
– Draft amendment to the Income Tax Act – taxation of legal entities,
– Draft amendment to the Income Tax Act – taxation of individuals
– Draft amendment to the VAT Act
– Draft amendment to the Tax Code
Draft Amendment to the Income Tax Act – Legal Entities
An amendment to the Income Tax Act, which includes several proposals regarding the taxation of legal entities, is currently undergoing inter-ministerial review. We have selected the following for you:
– The proposed legislative amendment aims to clarify and expand the definition of “consulting and legal services,” the tax deductibility of which has been contingent upon payment since the beginning of 2015. Under the amended classification codes, accounting services, bookkeeping, auditing services, and tax consulting (code 69.2) should be subject to the payment condition. Within the legal professions, taxpayers should assess consulting, representation in various types of proceedings, as well as notary services (code 69.1) in this manner.
– Tenants of office buildings will no longer be required to reduce the tax residual value of technical improvements they have made in cases where this residual value exceeds the proceeds from the financial settlement with the landlord regarding the technical improvements in question upon termination of the lease. For landlords, the rules for applying depreciation to leased property after the lease ends will be clarified if such property is not re-leased.
– Another proposed change would allow employers to include travel allowances provided in excess of the limits set by the Travel Allowances Act as tax-deductible expenses, provided that such income is considered taxable income for the employee.
Draft Amendment to the Income Tax Act – Individuals
– The amendment to the law proposes establishing a separate tax base for income from capital assets. A tax rate of 19% would apply to this separate tax base, and the proposed amendment does not take into account the taxpayer’s total annual income. The proposed changes aim to make investing in the capital market more attractive.
– The legislature is also considering exempting income received by an individual from the transfer of securities and options, as well as income from derivative transactions, provided that such income is derived from long-term investment savings under a special regulation, including income paid out 15 years after the start of such savings. Under the proposal, this exemption is to apply to income derived from the transfer of securities acquired during the savings period. If a taxpayer violates the conditions of long-term investment savings, such taxpayer will be required to include the aforementioned exempt income in the tax base for the tax period in which the conditions are violated.
– It is also proposed to exempt income from the sale of securities traded on a regulated market if the period between acquisition and sale exceeds one year.
Draft Amendment to the VAT Act
The main proposed changes, which are scheduled to take effect on January 1, 2016, include:
– Tax liability after receiving payment from a customer A taxable person established in Slovakia (excluding VAT groups) whose turnover in the previous calendar year did not reach 75,000 Euros and reasonably expects that it will not reach this turnover in the current calendar year, will be able to apply a special mode – to pay VAT only after receiving payment from the customer. However, such taxable person will then only be able to apply VAT deduction after paying its supplier. The taxable person will be obliged to notify the application of the special mode to the tax administrator and provide information on the application of the mode on its invoices . If the taxable person terminates the application of the special mode or ceases to be subject to VAT, it will be liable to pay all value added tax on all deliveries, which in the period in which it applied this special mode, were not paid. If the VAT payer improperly applies any of the obligatory practices of the tax administrator in respect of the stated mode, the tax administrator shall impose a penalty of up to 10,000 Euros. The list of payers who announced beginning or terminating the application of the special adjustments will be published on the website of the Financial authority.
– Voluntary VAT registration – an interesting proposal for newly established businesses is the forthcoming abolition of the obligation to deposit a tax guarantee for taxable persons who are in the stage of preparatory work for a business and that also apply for VAT registration.
– New provisions in the transfer of the tax obligation to the recipient – Within the meaning of the legislative proposal, the subject of self-assessment for customers established in the Slovak Republic should also be the delivery of goods in the Slovak Republic except for the delivery of goods by mail order, performed by a foreign entity.
Draft Amendment to the Tax Code
Proposed amendments to the Tax Code:
– Submissions whose form is prescribed by law and which a person subject to the electronic communication requirement delivers by means other than electronic means shall be deemed undelivered.
– In the case of submissions whose format is not directly specified by law and which a person required to communicate electronically submits by means other than through the electronic filing system, the tax administrator will request that the submission be corrected.
– The amendment also provides for the possibility of filing an amended tax return within 15 days even after a tax audit has begun. The aim of this provision is to encourage taxpayers to continue having the option to adjust the amount of their tax liability even after a tax audit has begun, as such a filing will result in a lower penalty than if the tax were assessed based on the results of the tax audit.
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