Slovak tax news 2/2015

Slovak tax news 2/2015

6 min.

1. Amendment to the Income Tax Act

On 29 May 2015, draft of the law amending and supplementing the Act no. 595/2003 on income tax as amended was delivered to the Slovak parliament (hereinafter the “Amendment to ITA”).

From the Amendment to ITA we choose the most important changes:

  • exemption of income from transfer of securities traded on a regulated market after the expiration of one year time period for individuals;
  • exemption of income from the sale of securities, options and derivative transactions for individuals resulting from long-term investment savings after fulfilling the statutory conditions, including the income paid after 15 years from the beginning of long-term investment saving;
  • clarification of the tax expenditures in case of the sale of securities;
  • specifications in transfer pricing, clarification of the process of application and approval of valuation method, if the taxpayer applies for the approval by applying the Double Tax Avoidance Treaty and the states concerned do not agree;
  • adjustment of the acquisition prices of assets following the amendment to the Accounting Act;
  • clarification of taxation of gifts that were given to the health care provider by the holder (e.g. pharmaceutical company), i.e. legislation specification that the supplies concerned are not excluded from the scope of tax;
  • definition of taxation of monetary and non-monetary income that were provided to the health care provider from the holder (e.g. pharmaceutical company) as the other income of individuals;
  • exemption from tax of the income from dependent activities, which were provided as a social assistance due to emergencies and material need of employee from the social fund resources;
  • expenditures on standards and certificates with the acquisition value up to EUR 2,400 will be included to the tax base at once;
  • introducing the rules against abuse relating to the illegal payment of profit share;

The proposed provisions of the Amendment would be effective from 1 January 2016.

2. The amendment to the VAT Act

On 29 May, 2015 the draft of the law amending and supplementing the Act no. 222/2004 of the value added tax as amended (hereinafter the “VATA amendment”) was delivered to parliament. Consequently, there was proposed further amendment of the VATA (hereinafter the “further VATA Amendment”).

The Amendments provides, inter alia, the following important changes:

  • introducing of the option for VAT payers with annual turnover under EUR 75,000 to apply a regime of the VAT payment after the receipt of the payment;
  • cancellation of the obligation to register for VAT purposes for foreign persons providing services pursuant to Art 16 Sect. 14 of the VATA (telecommunications services, radio and television broadcasting services and electronically supplied services) and are identified for the application of special rules for such services in another Member State, or applying a special arrangements pursuant to Art. 68a of the VATA;
  • introduction of administrative arrangements that the change of registration of the VAT payer shall be realized by the tax authorities within 30 days from the date of receipt of the notification;
  • specification of the definitions and exemptions of triangular transactions;
  • cancellation of the obligation to pay a tax guarantee in case the taxable person at the time of application for voluntary VAT registration is not supplying the goods or services, but performs only preparatory business activities;
  • omissions of the reasons for a refusing requests for voluntary registration for VAT, which is the fact that the applicant did not paid the tax guarantee within the specified time period or in the specified amount;
  • adjustment of provisions of the VAT deduction defining the criteria under which a taxable person using tangible assets and services for business purposes as well as for purposes other than the business will determine the amount of VAT deductions;
  • extension of the cases of so called domestic reverse charge, in which a domestic taxable person is liable to pay VAT if the supplier is a foreign person;
  • liberalization of the conditions applicable to earlier refund of the excessive VAT deduction within 30 days following the day of filing of the VAT return for the taxation period in which the VAT excessive deduction has arisen and in which the VAT payer has ceased to be a VAT payer (the last taxation period);

Effectiveness of Amendment is proposed from 1 January 2016.

The further submitted Amendment proposes that the VAT payer shall be obliged to pay the VAT only from the invoices or amounts stated in other document of sale that has been paid to him. If those amounts were paid only partially, he will be obliged to pay the VAT proportionally to the paid amount. Also, it is proposed that the calculation of the excessive VAT deduction shall be conditioned by the amounts of paid invoices or other sale documents. It also proposed that it will be not possible to claim the input VAT from the not paid invoices or other sale document. The tax authorities will not return the VAT excessive deduction to the VAT payer who will apply for the excessive VAT deduction, who increases the excessive VAT deduction by additional VAT return and at the same time fails to pay the invoices.

The effectiveness of a further amendment is proposed from 1 November 2015.

Another proposed amendment, which will be subject to the approval process in the Parliament with proposed effectiveness from 1 November 2015 is introduction of the reduced VAT rate on selected foodstuffs.

3. Amendment to the Tax Administration Code

On 29 May 2015, the draft law amending and supplementing Law no. 563/2009 on Tax Administration (Tax Code) as amended (hereinafter the “Tax Administration Code Amendment”) was delivered to Slovak parliament.

From the amendment we choose the most important changes:

  • adjustment of a system of penalties reflecting the time aspects of the additional tax return and assessment of the correct amount of tax;
  • it is proposed that there will be possible to file an additional tax return even after the commencement of the tax audit within 15 days, which will result in imposing a lower penalty than if the penalty is imposed by the tax authorities based on the results of tax audits;
  • in case of imposing of fines there is introduced the principle of absorption. Conditions for the application of the principle of absorption will be committing several administrative offenses of the same kind in the same section of government by one person for which the competent tax authority is entitled to impose a flat-rate fine under the statutory provision at the highest rate of fines;
  • there is proposed a possibility of using the amount of VAT granted to the VAT payer for the payment of the tax arrears and also to cover the receivable of the Member State on the basis of issuing a request for international assistance for the recovery.

Effectiveness of Tax Administration Code Amendment is proposed from 1 January 2016.

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