Welcome to the Tax & Legal Highlights newsletter. This page will provide you with the latest information on tax and legal related issues from around Central European region. For more specific information – choose your country and find out more about local tax practices and news around the region.
Bulgaria
Bulgaria signed the MLI
On 7 June 2017, under the framework of the OECD BEPS project, 68
jurisdictions, including Bulgaria, signed the Multilateral
Convention to Implement Tax Treaty Related Measures to Prevent BEPS
(MLI).
Draft law proposed for CbC reporting
A draft law presented to the parliament on 5 June 2017 would
implement EU Council Directive 2016/881 on country-by-country (CbC)
reporting into Bulgarian law. The draft law generally follows the
provisions of the EU directive.
Amendments to the Regulation for the Implementation of
the VAT Act came into force on 21 March 2017
The most important changes are regarding rules on the mixed
business and private use of goods, adjustments of VAT deduction,
calculation of the quotient for proportional VAT credit deductions,
and zero-rated supplies related to international transport.
Reminder: Possibility for filing a correction annual
corporate income tax return
As part of the number of new tax rules applicable in Bulgaria as
from 1 January 2017, the tax payers will be able to file a one-off
correcting corporate income tax return in case of mistakes
identified after 31 March of the following year and the submission
of the regular corporate income tax return.
Mandatory electronic submission of returns as of 1
January 2018
As of 1 January 2018, tax payers will be obliged to submit all
returns under the CITA electronically.
Croatia
Advance Pricing Agreement Procedure
Regulations
The Croatian Tax Authorities have published Advance Pricing
Agreement Procedure Regulations, which provide the taxpayers with
an option for tax risk minimisation.
Czech Republic
Interest in Trust Funds on the Rise
The legal institute of trust funds has recently become more
attractive, namely owing to the media hype surrounding the former
minister Andrej Babia. However, it should be noted that Andrej
Babia was neither the first nor the only one who made use of the
option of organizing his asset portfolio via a trust fund. The
number of trust funds created between 2014 and 2016 exceeds six
hundred and the interest in the institute keeps rising.
Upcoming Changes in Income Taxation
The Ministry of Finance has published further material regarding
the new Income Taxes Act. The Legislative Department of the
Ministry of Finance has published a draft version of the material
entitled "Outline of the Innovative Solution Regarding the
Regulation of Income Taxation and Income-Related Insurance
Payments" for public consultation. The material provides a
theoretical background to the concept of the new Income Taxes
Act.
Everybody May Be Held Liable for VAT Fraud! Do Not Pay
Taxes for Others!
Fight against tax evasion is one of the issues handled by the tax
administration in the Czech Republic and across European Union. A
large portion of ongoing tax audits is initiated due to suspected
involvement in a VAT fraud. The tax administration uses data
provided by the businesses themselves to identify any involvement,
although unconscious, in a VAT fraud.
Hungary
The planning schemes in EU focus
The European Commission is expected to publish its draft on 21 June
2017, which stipulates that tax advisors are required to inform the
competent tax authorities of the tax planning schemes that they
designed.
Multilateral Treaty against tax planning
The multilateral treaty signed on 7 June 2017 by 68 countries,
including Hungary is a spectacular result of the fight against BEPS
(Base Erosion and Profit Shifting), and brings significant changes
to the interpretation of international transactions by modifying
several thousands of bilateral tax treaties through one single
legal act.
Latvia
The taxpayer is obliged to indicate all objections
against the circumstances determined by the State Revenue Service
already at the initial stage of dispute
On 28 February 2017, the Supreme Court of the Republic of Latvia
delivered a judgment regarding obligations of the taxpayer during
the appeal of a decision of the State Revenue Service (hereinafter
- SRS).
Lithuania
Amendments to order "Regarding the rules on
electronic reporting of trade with European Union Member States
performed by VAT payer of the Republic of
Lithuania"
On 7 June 2017 Customs Department under the Ministry of Finance of
the Republic of Lithuania issued Order No 1B-432 Regarding the
rules on electronic reporting of trade with European Union Member
States performed by VAT payer of the Republic of Lithuania".
The order lays down the grounds for an updated Intrastat system as
well as terminates the previous agreements on online Intrastat data
submission.
New functionalities of e-invoicing subsystem
presented
As of 8 June 2017 users of e-invoicing services subsystem (i.SAF)
of smart tax administration system (i.MAS) enjoy a possibility not
only to submit VAT invoice registers, issue and receive electronic
VAT invoices (service provided to small business only), but also to
order preliminary VAT return service.
New Labour Code adopted
On 6 June 2017 the Parliament adopted new wording of the Labour
Code.
The Article 61 of the Lithuanian Law on Tax
Administration was amended
On 23 May 2017, the amendment of the Article 61 of the Lithuanian
Law on Tax Administration setting an obligation for taxpayers that
meet certain requirements to provide information concerning the
participants of multinational enterprise groups to the STI was
adopted.
Amendments to the Law on Legal Status of Foreigner
adopted
On 25 May 2017 the Lithuanian Parliament adopted amendments to the
Law on Legal Status of Foreigners and thus replaced former
regulation on temporary residence permit issue for intra-group
secondment cases.
Poland
Effective June 11, 2017 simplification of visa
application process for Ukrainian citizens entering Poland and the
European Union
The Ukrainians have been waiting a long time for abolition of entry
visas to the EU territory. Negotiations between the European
Commission and the Government of Ukraine in respect of the
abolition of EU entry visas for Ukrainian citizens began in 2008.
At the end of May 2015, the European Commission concluded that
Ukraine meets the criteria for abolishing the visa regime, and
formally recommended in May 2016, that the EU states abolish the
visa requirement for Ukrainian citizens.
Freight package: the monitoring obligation extended to
vegetable oils and animal fats
On 12 June 2017 the Ordinance on goods whose freight is subject to
the monitoring obligation (henceforth: the "Ordinance")
was submitted to the Minister of Development and Finance for
sign-off.
Budget 2018: Improving the effectiveness of the tax
system instead of increasing VAT rates. The Ministry of Finance
wants to extend the scope of automated tax
inspection
On 6 June 2017, the Government approved 2018 budget assumptions.
VAT rates will remain unchanged, while income from taxes is to grow
thanks to improved effectiveness of inspection and preventing of
VAT-related fraud.\
Romania
Romania becomes associate member of Plan BEPS –
Base Erosion and Profit Shifting
Romania becomes associate member of Plan BEPS – Base Erosion
and Profit Shifting on the 9th of June when Law no 124/2017 comes
into force. The main objective of BEPS is to prevent the use by
companies of legislative mismatches from national tax systems in
order to transfer profits to lower tax jurisdictions.
Conventions for avoidance of double taxation concluded
by Romania will be amended
Romania and other 67 countries signed the Multilateral Convention
to Implement Tax Treaty Related Measures to Prevent BEPS (MLI) on
the 7th of June. Romania has 91 conventions for avoidance of double
taxation.
Multinational enterprises have new reporting obligations
regarding automatic exchange of information on fiscal
area
Any parent company or any other reporting entity resident in
Romania and part of a multinational group of companies with a
consolidated income in amount of minimum EUR 750 million has the
obligation to submit a country-by-country report for each reporting
year that includes information on the amount of revenue,
profit/losses, stated capital, accumulated earnings, number of
employees and tangible assets. The provisions were introduced by a
Government Emergency Ordinance amending the Fiscal Procedure
Code.
Posting of employees in the framework of transnational
provision of services on the territory of Romania,
clarifications
Some aspects regarding the posting of employees in the framework of
transnational provision of services on the territory of Romania
were clarified by methodological norms (Decision no 337/2017). For
example, the norms present some factual elements to be taken into
account by the Labor Inspection in order to identify the existence
of actual transnational postings.
A new Regulation regarding the reception of construction
works and corresponding installations shall enter into force on 29
July 2017
The Regulation dated 18 May 2017 regarding the reception of
construction works fully replaces the Regulation for reception of
construction works and installations dated 14 June 1994. The
Regulation brings some welcome changes related to constructions, as
well as some clarifications regarding aspects previously
regulated.
Serbia
New Ministry of Finance Rulings – Value Added
Tax
Obligation to obtain a single administrative document as a
condition for tax exemption for services regarding transport of
import – related goods
New Ministry of Finance Rulings – Value Added
Tax
The right to deduct input VAT for transport services related to
import of goods
New Ministry of Finance Rulings – Value Added
Tax
The place of supply of warehousing services where the entire
immovable property is not intended for the exclusive storage of
goods
New Ministry of Finance Rulings – Value Added
Tax
The place of supply of services involving rental of vehicles for
the period longer than 30 days
Ministry of Finance Rulings – Value Added
Tax
The right to deduct input VAT paid on import of goods
New Ministry of Finance Rulings – Value Added
Tax
Determining the tax debtor for the supply of geodetic services
New Ministry of Finance Rulings – Value Added
Tax
Determining the place of supply of services involving clinical
examination of medicines that a VAT payer provides to a foreign
entity
Slovakia
Interdepartmental Circulation of Comments on the
Amendment to Act No. 222/2004 Coll. on VAT, as amended (hereinafter
the "VAT Act")
In connection with the 2017 Plan of Legislative Tasks of the
Government of the Slovak Republic, an interdepartmental circulation
of comments was undertaken from 15 May 2017 to 2 June 2017 on the
draft amendment to the VAT Act, which is to enter into effect on 1
January 2018.
OECD Multilateral Convention and BEPS
Initiative
Ministers from 76 countries signed a multilateral convention to
reduce tax avoidance and update the existing network of bilateral
tax treaties.
2017 – 2018 Action Plan to Tackle Tax
Fraud
The Government of the Slovak Republic approved the 2017 –
2018 Action Plan to Tackle Tax Fraud on 26 April 2017. The document
contains 21 new measures aimed at eliminating new forms of tax
fraud.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.