overview of the most important legislative changes …...4 | overview of the most important...
TRANSCRIPT
Overview of the most
important legislative
changes in Slovakia as of
2017 I eBook
2 | Overview of the most important legislative changes as of 2017
INTRODUCTION
During the year 2016 almost all the important
acts influencing the business environment in
Slovakia were amended.
Starting from the January 2017 the minimum
wage increased and taxation on dividend paid to
individuals and companies has been introduced.
However, the new year also brought decrease of
corporate income tax rate to 21% and
introduction of interest payment in favour of a
taxable person in case a VAT refund is
postponed due to a tax inspection.
Read our eBook with the overview of the most
important changes you should be aware of.
3 | Overview of the most important legislative changes as of 2017
KEEP UP-TO-DATE WITH LEGISLATIVE NEWS IN SLOVAKIA
THAT MATTER TO YOUR BUSINESS:
TAXES 4
1.1 Value added tax ................................................................................................................... 4
1.2 Income tax ........................................................................................................................... 4
1.3 Tax administration and international exchange of information .................................................. 6
PAYROLL 8
2.1 Increased value of meal vouchers ......................................................................................... 8
2.2 Increase of minimum wage ................................................................................................... 8
2.3 Increase of maximum assessment base for social insurance contributions ............................. 8
2.4 Cancelation of maximum assessment base for health insurance contributions ......................... 8
2.5 Increase in daily assessment base ........................................................................................ 9
OTHER CRUTIAL CHANGES 10
3.1 Act on eGovernment ...........................................................................................................10
3.2 Special levies for selected subjects .....................................................................................10
3.3 Simple Joint-stock Company ................................................................................................11
3.4 Enlarging the list of criminal responsibility of legal persons .....................................................11
3.5 Amendment to Insolvency and Restructuring Law .................................................................12
3.6 Electronic motion to issue a payment order ...........................................................................12
3.7 Changes in execution procedure ..........................................................................................12
4 | Overview of the most important legislative changes as of 2017
TAXES
1.1 Value added tax
Interest payment in favour of a taxable person in the case a VAT refund
is postponed due to a tax inspection
An interest payment in favour of a taxable person in case a VAT refund is
postponed for more than 6 months due to a tax inspection is introduced. The
taxable person should receive interest payment for each day of delay after
the end of the 6-month period. The annual interest rate should be double
than the basic interest rate of the European Central Bank and not lower than
1,5%. The above mentioned shall apply also on the cases when the tax
control started before January 1, 2017 but will not be finished until January 1,
2017.
Reverse-charge mechanism when providing construction works
With regards on the issues arising from practical application of classification
of construction works under particular sections of the CPA classification
according to the Guideline of European Commission (EU) No. 1209/2014 the
implementation of a legal fiction was introduced that shall be effective as of
January 1, 2017. In case that there will be a legitimate assumption of the
supplier that provided supply of construction work shall fall under the reverse-
charge mechanism he/she will state in the invoice „application of reverse-
charge mechanism“. In such case the taxpayer, who is the recipient of
a supply, shall be obliged to pay the tax without further verification whether
the activity was classified correctly in accordance with the CPA classification,
or not.
For more information, click HERE.
1.2 Income tax
Reducing of the corporate income tax rate
The corporate income tax rate is decreased from the current 22% to 21%.
New rate will be applied in the tax calculation for the tax period starting
earliest as of January 1, 2017.
Taxation of dividends paid to individuals
Starting January 1, 2017 dividends paid to individuals, residents and non-
residents, by domestic companies are subject to withholding tax at the rate
of 7% if the applicable double tax treaty does not determine otherwise. If the
recipient is an individual from the non-contracting state, the tax rate of 35%
will apply. In case that the individual will receive dividends from abroad, those
5 | Overview of the most important legislative changes as of 2017
dividends will be taxed within the separate tax base at rate either of 7% or of 35% if the dividends will
be from foreign sources of the non-contracting state. As a consequence of the introduced taxation of
dividends paid to individuals these dividends are not a subject to healthcare insurance contribution.
Taxation of dividends paid to companies
Dividends paid to domestic companies are taxed within the separate tax base at rate of 35% and
only if the distributing entity is based in a jurisdiction that does not have a tax treaty in force with the
Slovak Republic. Dividends paid by domestic companies to foreign companies based in jurisdictions
that do not have a tax treaty in force with the Slovak Republic are subject to a 35% withholding tax.
Transfer pricing
A taxpayer who is by means of transfer pricing deliberately decreasing the tax base or increasing the
tax loss shall pay stricter penalties. Such taxpayer will in this case pay twice as much. However, if
the taxpayer recognizes the breach and pays up the rest of the assessed tax in the given amount,
the stricter penalty will not apply. Stricter rules shall apply on the additionally assessed tax from the
tax control which starts after December 31, 2016.
The fee for applying for APA depends as of January 1, 2017 no longer on the value of the business
case, but is to be set as follows:
for unilateral APA: 10 000 EUR,
for bilateral and multilateral APAs: 30 000 EUR.
License fees as tax expenses only after payment
License fees will be added to the list of expenses that fall under payment condition. Expenses falling
under payment condition can be claimed as tax deductible expense only if paid. This change shall
apply for tax periods for which tax returns shall filed on or after January 1, 2017.
Testing and demonstration vehicles
If the holder of a new vehicle (car manufacturer, representative of the manufacturer, authorized
retailer) will not transfer possession of the vehicle to another person up to 1 year and 15 days after
that date will not pay the full amount of the registration fee pursuant to a special regulation, he/she
will be obliged to increase the tax base by related tax depreciation charges, cost of operation,
technical improvements or repairs. Above mentioned shall apply to motor vehicles registered in
Slovakia as of February 1, 2017.
Expenses for material humanitarian aid provided abroad
Material humanitarian aid provided abroad, that will be free of charge granted to the Ministry of the
Interior based on deed of covenant, will be considered to be a tax expense as of January 1, 2017.
Increased rate of lump-sum expenses which can be claimed by a sole entrepreneur
The rate of lump-sum expenses which can be claimed by a sole entrepreneur as tax deductible
expenses are increased from 40% of the income to 60% of income since January 1, 2017. The
maximum amount of such lump-sum expenses cannot exceed EUR 20,000.
For more information, click HERE.
6 | Overview of the most important legislative changes as of 2017
1.3 Tax administration and international exchange of
information
Accelerated levying procedure
Should any doubts arise concerning correctness, truthfulness or completeness of
submitted tax return or its attachments, a tax administrator can invite a tax payer
to remove them. Should the tax payer fail to do so within the time period specified
by the tax administrator, in the case of inadequacies having impact on the amount
of tax, the tax administrator may perform a tax inspection or levy tax by means of
a new instrument the so-called “levying order”.
The tax payer has a possibility to file a protest against such levying order, which
initiates a standard procedure for levying the tax (a tax inspection and tax levying
procedure). If no protest is filed by the tax payer, this shall be deemed as its
approval with tax levying and hence no legal remedy shall be permitted.
Deferral of payment of tax
Amendment to Tax Code will be effective as of 1.1.2017. The amendment
cancels the required security in the case of tax payment deferral or payment of
tax in instalments when the amount of due tax or of the arrear does not exceed
3 000 EUR.
Automatic exchange of advance cross-border binding rulings
Following decisions or rulings issued by Slovak tax authority will be subject of the
automatic exchange of information based on the Amendment to the Act on
international assistance and cooperation in tax administration:
Decisions on approval of the specific method on determining of tax base
of permanent establishments
Decision on approval of transfer pricing method (transactions between
related parties)
Advance cross-border binding rulings issues in compliance with Tax
Code.
Decisions issued during period of 2012-2016 will be subject of a single exchange
till 31.12.2017.
7 | Overview of the most important legislative changes as of 2017
Country by country reporting for multinational groups
Considering the EU rules, so-called country by country reporting will be implemented into Slovak
legislation as of 1.3.2017. However, this change has not been approved yet.
Introducing the aforementioned reporting, multinational groups with total consolidated group
revenue reaching 750 million EUR or more shall file an annual report on inter alias amount of
taxes paid in particular countries to the tax authority based on the particular states. These data
should be subject to the automatic exchange between countries where the members of multinational
group are seated.
In this connection also notification obligation on identification of notifying subject (that will submit the
reporting for group) will be introduced. This duty should apply to all Slovak members of multinational
groups.
The aforementioned report should be submitted for the first time for the year 2016
For more information, click HERE.
8 | Overview of the most important legislative changes as of 2017
PAYROLL
2.1 Increased value of meal vouchers
The minimum value of a meal voucher increased from 3.15 EUR to 3.38 EUR
starting from 1 December 2016. The value of a meal voucher can reach up to
4.50 EUR.
In case of business trip, employees won't receive meal vouchers because
they are entitled to meal allowance that also underwent a change in case of
inland business trip starting December 2016. The amount of meal allowance
depends on the duration of the business trip as follows:
5-12 hours: 4.50 EUR
12-18 hours.: 6.70 EUR
more than 18 hours: 10.30 EUR
Find out more about the increased minimum wage HERE.
2.2 Increase of minimum wage
The monthly minimum wage increased from the actual amount of EUR 405 to
EUR 435 starting from 1 January 2017. The minimum hourly wage increased
from current EUR 2,328 to the amount of EUR 2,50.
Increased minimum wage also means higher wage allowances for night
work, standby duty and difficult work performance that also calculated based
on the minimum wage.
2.3 Increase of maximum assessment base for
social insurance contributions
Since 1 January 2017 the maximum assessment base for social insurance
contributions of employees as well employers has increased to 7-times the
average wage in Slovakia (i.e. 6 181 EUR).
2.4 Cancelation of maximum assessment base for
health insurance contributions
Based on the approved Amendment to the Act on health insurance, the
maximum assessment base for health insurance contributions is canceled as
of 1.1.2017. For purpose of annual reconciliation of health insurance for
2016, the rules valid till 31.12.2016 will be applicable, i.e. the maximum
assessment base of 51 480 EUR should be taken into consideration.
9 | Overview of the most important legislative changes as of 2017
2.5 Increase in daily assessment base
From 1 January 2017, the maximum daily assessment base of sickness insurance contributions
increased. From January 2017, the assessment will be calculated based on a twofold figure of
general assessment base rather than time-and-a-half of general assessment base. Thus, daily
assessment base increases from EUR 42.3123 to EUR 58.0603.
Thus changes will be made in statutory sick pay paid to the Employees by the Employers for
the first 10 days of their sick leave .
10 | Overview of the most important legislative changes as of 2017
OTHER CRUTIAL CHANGES
3.1 Act on eGovernment
Based on the amended Act no. 305/2013 Coll. on the electronic performance
of tasks by public authorities that came into force as of July 1, 2015, electronic
mailboxes of all legal entities and registered branches in Slovakia should be
automatically activated. The process of the activation was supposed to be
completed on January 1 2017. However, the transition period – during which
all the electronic mailboxes will be activated – was extended and will
terminate on 1.7.2017.
Find more information about this news HERE.
3.2 Special levies for selected subjects
Special levy on income from regulated activities
With effect starting September 1st, 2012 a temporary special contribution
applies. The special duty has to be paid, even after 2016, despite the fact
that it should be effective only until the end of 2016. The definition of the
taxable base for special duty was amended with effect from January 1st,
2017 so that the duty applies only if the accounting result of at least EUR 3
million is reached and only on income from regulated activities. The monthly
rate was temporarily increased to 0.726% for the period from 2017 to 2018.
Then the rate will be gradually decreasing so that in the period from 2019 to
2020 the monthly rate will be 0.545% and in the period from 2021 the rate will
be again 0.363%.
Special levies by banks
Since January 2012, banks and branches of foreign banks operating in the
Slovak Republic, established according to special legislation on banks, are
subject to a bank levy. The rate of 0.2% annually shall not change during the
period from 2017 to 2020. Starting 2021, the rate will be zero.
Introduction of special levy on non-life insurance premiums
The amendment to the Act on insurance introduces levy on all forms of non-
life insurance for insurance companies operating in Slovakia. The levy of 8%
from the received insurance premiums became effective as of 1.1.2017 and is
applicable to insurance contracts concluded after 31.12.2016.
11 | Overview of the most important legislative changes as of 2017
3.3 Simple Joint-stock Company
An amendment to the Commercial Code has become effective since January 1, 2017. The
amendment establishes a new corporate form and that is a simple (or “simplified”) joint-stock
company.
The new corporate form brings the following benefits:
Minimum share capital is set to EUR 1;
Simplified entry and exit of a shareholder to/from a company where shareholders can
enter into a shareholders’ agreement, in which they can agree separate rights, specifically
the tag-along right, drag-along right, and deadlock mechanism (shootout);
Supervisory Board is only facultative, while this is a statutory obligation for a joint-stock
company.
3.4 Enlarging the list of criminal responsibility of legal persons
The list of criminal offences of legal persons enlarged from the beginning of the year (criminal
responsibility of legal persons is enacted in the law of the Slovak Republic from July 1, 2016). The list
has been extended to include in particular the following criminal offences: defraudation, fraud, credit
fraud, insurance fraud, fraudulent insolvency, culpable insolvency, harm done to a creditor, preferring
a creditor, unauthorised trading, misstatement of financial data and business records, insider trading,
market manipulation, public procurement and public tender machinations, obstructing the execution of
an official decision; while these criminal offences implicitly apply to physical persons as well.
12 | Overview of the most important legislative changes as of 2017
3.5 Amendment to Insolvency and Restructuring Law
A new amendment to restructuring procedure has become effective since January 1. Starting from the
effect of the amendment, unsecured creditors shall be, in general, to be satisfied in the restructuring
procedure minimally at 50% of their claim.
At the same time, the amendment establishes a random selection of restructuring trustees, and
thereby prevents potential relations between a debtor and a trustee.
3.6 Electronic motion to issue a payment order
A new Act on Reminder Procedure becomes effective as of February 1, 2017. The act provides an
electronic alternative to existing payment order regime, whereby:
Electronic procedure shall only apply to the proceedings the subject-matter of which is a
finance dispute;
Only District Court Banská Bystrica shall have the jurisdiction;
The payment order shall be issued within 10 working days from the filing of the motion
(and statutory requirements are fulfilled); and
Court fees shall be at 50% of the court fee for the procedure in a standard “paper” form.
As implied in the merits, the motion will be solely submitted via electronic means to the electronic
mailbox of the court and it will have to be signed with a qualified electronic signature.
3.7 Changes in execution procedure
The so-called large amendment to the code of execution procedure takes effect in 2017. The
amendment introduces the following changes:
Establishment of the sole Execution Court in Slovakia which is District Court in Banská
Bystrica,
In general, establishment of a random selection of court-appointed executor for each
execution procedure;
Introduction of flat costs which will bring better financial predictability for the both debtors
and court-appointed executors;
Greater disciplinary responsibility of executors.
Disclaimer
Please note that our material has been prepared for general guidance on the matter and does not represent a customized professional advice. Furthermore, because the legislation is changing continuously, some of the information may have been modified after the material has been released
and 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.
13 | Overview of the most important legislative changes as of 2017
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AUTHORS
Katarína Balogová
Tax Director
Monika Berežňáková
Payroll Methodist
Patrícia Kráľová
Legal Consultant I Senior Associate
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