Central Europe Tax & Legal Highlights

Albania

Amendments to the legislation on the residence of foreigners
On 03.10.2018, the Council of Ministers has approved some amendments on the legislation on the residence of foreigners. This decision aims to partially approximate domestic legislation with some of the European Union directives such as Directive 2004/114/EC, Directive 2003/86/EC2003 and Directive 2009/50/EC.

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Bulgaria

Tax legislation changes for 2019
On 27 November 2018 amendments to the Corporate Income Tax Act, the Personal Income Tax Act (“PITA”), the Value Added Tax Act (“VATA”), the Excise Duty and Tax Warehouses Act, and the Local Taxes and Fees Act were published in the State Gazette. Most of the amendments will enter into force on 1 January 2019.

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Mandatory transfer pricing documentation proposed in Bulgaria for the first time
Bulgaria’s Ministry of Finance on 5 November proposed mandatory transfer pricing documentation requirements. The proposed rules are part of the draft changes to the Tax and Social Security Proceedings Code, published on the ministry’s website. Public comments on the draft are due on 5 December 2018.

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Croatia

Amendments to the tax legislation from 1 January 2019
The Croatian Parliament voted in the amendments to the Corporate Income Tax (“CIT”) Act, Value Added Tax (“VAT”) Act, Personal Income Tax (“PIT”) Act and Real Estate Transfer Tax (“RETT”) Act on 21 November 2018. The amendments will be in force from 1 January 2019.

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Czech Republic

Current Situation as Regards the Tax Package Approval Procedure
GFD’s New Guidance Note on the Binding Assessment of Transfer Pricing and the Method of Determining the Tax Base for Permanent Establishments
On 9 November 2018, a new guidance note, D - 32, of the General Financial Directorate (“GFD”) was published in the Financial Bulletin of the Ministry of Finance on the binding assessment of the pricing method between related parties and the method of determining a tax non-resident’s tax base on activities performed through a permanent establishment (hereinafter jointly as the “binding assessments”).

Effect of a new Czech and Korean double tax treaty
The new version of the double tax treaty between the Czech Republic and the Korean Republic is currently under discussion. The new double tax treaty shall replace the initial version of the treaty dating back to 1992 and substantially changes some areas. The new version provides a wider definition of a permanent establishment and changes the withholding tax rates on interest and dividends.

A New Draft Act to Prevent the Double Taxation of Transactions with Taiwan
The Czech Republic has not concluded the standard international double tax treaty with Taiwan, as it has with the majority of other countries (as the Czech Republic does not acknowledge the territory of Taiwan as a state, it cannot conclude the contract).

The Court’s New View on the Utilisation of Clinical Studies as Part of the R&D Deduction
The Supreme Administrative Court (the “SAC”) has found against Vestra Clinics s.r.o. (the “Plaintiff”) in the matter of the possibility of utilising clinical studies as deductible items for research and development (“R&D”). Although the Court confirmed that clinical studies do meet the definition of R&D (as is, after all, indicated in Guidance Note D-288 and the Frascati Manual), the SAC ruled that the Plaintiff’s activities constitute the following of clearly defined instructions as prescribed by the clinical trial report, without containing any elements of novelty or clarifying scientific uncertainty.

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Kosovo

Kosovo enacts protectionist customs duties on imports from Serbia and Bosnia and Herzegovina
The Government of Kosovo has enacted 100% customs duties on imports from Serbia and Bosnia and Herzegovina.

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Lithuania

The Supreme Administrative Court of Lithuania allowed ministers to make mistakes
The Supreme Administrative Court of Lithuania delivered the judgment in a landmark case in which Deloitte Legal represented the defended – the ex-minister of the Interior.

State Data Protection Inspectorate has prepared guidelines on the implementation of appropriate organizational and technical data security measures

Seimas will review the new draft legislation of the Law on Trade Marks
On November 6, the draft project of the Law on Trade Marks which implements the European Parliament and Council directive (EU) 2015/2436 of 16 December 2015, was submitted to Seimas for revision.

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Poland

New VAT rates. Draft act published
The expected draft act on VAT rates has been published on the Governmental Legislation Centre website.

Mandatory reporting of tax-planning schemes. Change of Polish tax law provisions
The amendment to Polish tax provisions adopted by Polish Parliament on 26 October 2018 introduces into the Polish Tax Ordinance Act mandatory reporting of so-called tax-planning schemes (Mandatory Disclosure Rules – MDR). The amendment imposes new obligations not only on advisors (attorneys-at-law, legal counsels, tax advisors), but also on their clients.

Can services be “paid for” with personal data? Analysis by EDPS
Social digitalization enforcing new business models based on the processing of personal data, made available by consumers in exchange for digital contents or services, provides substantial challenges, not only with regard to consumer rights, but also their privacy. EU bodies see the need to revise the current regulations and fill gaps in the existing consumer rights protection system. Therefore, intense works are being carried out to prepare “A New Deal for Customers” legal package.

Key amendments to the waste law in 2018
Awareness regarding environmental obligations of business becomes increasingly important. New competencies of Inspectorate of Environmental Protection and high fines for non-compliance with environmental regulations provide additional incentives to undertake necessary measures.

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Romania

CJEU decision on annual leave. Impact over domestic regulations
Court of Justice of the European Union (“CJEU”) ruled that, in certain conditions, the right to annual leave may be lost if the employee refuses without justification to exercise this right.

Amendments made to the immigration law concerning the right to stay and work in Romania for non-EU/EEA/Swiss citizens
Law no. 247/2018 for modifying and completing some normative acts regarding the regime of foreigners in Romania was published on November 7, 2018. The changes are in force starting November 2018 and cover the conditions to acquire residency and to work in Romania.

Reauthorization of the temporary storage and customs warehouse require a customs global guarantee
In order to obtain reauthorization, the economic operators holding authorizations for temporary storage or customs warehousing will also have to obtain an authorization for using a global guarantee. The deadline for reauthorization is the 1st of May, 2019.

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Slovakia

Information on the Deduction of R&D Expenses (Costs) under the Income Tax Act from 1 January 2018
The Financial Directorate of the Slovak Republic published information on the deduction of R&D expenses (costs), which contains definitions of terms related to R&D and illustrative examples.

Methodological Instruction on the Application of a Tax Bonus for Interest Paid on Housing Loans
The Financial Directorate of the Slovak Republic published a methodological instruction on the application of a tax bonus for interest paid on mortgage loans, which may be applied for the first time in the 2018 taxation period.

New Draft Guideline on the Determination of the Contents of Transfer Pricing Documentation
The Ministry of Finance of the Slovak Republic issued a first draft of a new guideline on the determination of the contents of documentation pursuant to Article 18 (1) of Act No. 595/2003 Coll. on Income Tax, as amended.

Insurance Tax as a New Form of Indirect Tax in Slovakia
From 1 January 2019, the Slovak Republic will introduce an insurance tax on non-life insurance if the insured risk is located in Slovakia. The insurance tax rate is 8%. Taxable persons are primarily insurance companies, but in special cases, an entity other than an insurance company may also be a payer of this tax.

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Slovenia

VAT Act amendments adopted
Slovenian Parliament adopted amendments to the VAT Act, which shall enter into force on 1 January 2019.

CIT Act amendments adopted
In order to transpose certain provisions of Council Directive (EU) 2016/1164 of 12 July 2016 into national legislation Slovenian Parliament adopted amendments to the CIT Act as well.

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Previous editions

• Central Europe Tax&Legal Highlights, October 2018 (PDF)
• Central Europe Tax&Legal Highlights, September 2018 (PDF)
• Central Europe Tax&Legal Highlights, August 2018 (PDF)
• Central Europe Tax&Legal Highlights, July 2018 (PDF)
• Central Europe Tax&Legal Highlights, June 2018 (PDF)
• Central Europe Tax&Legal Highlights, May 2018 (PDF)
• Central Europe Tax&legal Highlights, April 2018 (PDF)
• Central Europe Tax&Legal Highlights, March 2018 (PDF)
• Central Europe Tax&Legal Highlights, February 2018 (PDF)
• Central Europe Tax&Legal Highlights, January 2018 (PDF)
• Central Europe Tax&Legal Highlights, December 2017 (PDF)
• Central Europe Tax&Legal Highlights, November 2017 (PDF)
• Central Europe Tax&Legal Highlights, October 2017 (PDF)
• Central Europe Tax&Legal Highlights, September 2017 (PDF)
• Central Europe Tax&Legal Highlights, August 2017 (PDF)