Central Europe Tax & Legal Highlights

Estonia

Amendments to the Income Tax Act
On 1 January 2019 new version of the Income Tax Act came into force. The law is supplemented with a new chapter, where are provided measures against tax avoidance arising from the Directive 2016/1164.

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Czech Republic

Changes in the Implementation of Double Tax Treaties Applicable From 2019 Onwards
On 1 January 2019, the new Treaty for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income and Capital that the Czech Republic signed in 2016 with Turkmenistan will start to be implemented.

Public Consultation on Virtual Currencies
We would like to draw your attention to an initiative of the Ministry of Finance (MF) which has raised the topic of cryptocurrencies, or virtual assets, and the blockchain technology.

TaxAlert: Complications in calculating the super-gross salary from January 2019
The President of the Czech Republic signed the amendment to the Income Taxes Act on 11 December under which employers will have to distinguish a country in which an employee participates in a system of compulsory insurance (social security and health insurance) in calculating prepayments for employment income tax starting from 1 January 2019. The same procedure will apply to tax returns from the 2019 taxation period.

Current information on the debate on the tax package
The tax package will not be approved by the end of the year, the tax changes will therefore not be effective from the New Year.

VAT Act Amendment
On 4 December 2018, the Chamber of Deputies debated an amendment to the VAT Act. A series of motions to amend the Act were presented (which are likely to be subsequently voted on during the course of January) and we specifically draw attention to the proposal to retain the current VAT treatment of payments made to statutory executives and members of statutory bodies and the proposal to temporarily retain the current definition of a finance lease of goods (through the end of 2019).

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”).

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Latvia

Deloitte Latvia releases Transfer Pricing Documentation Tracker
Based on the amendments to the law “On taxes and duties” prepared by the Ministry of Finance and approved by the Cabinet of Ministers in relation to the legal requirements for transfer pricing documentation, Deloitte has prepared a Transfer Pricing Documentation Requirements tracker.

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Lithuania

Ineffective transactions shall not always be considered as one of the counterparties’ unfair competition actions
On 12 December 2018 the Supreme Court of Lithuania (LAT) ruled on interpretation and application of legal norms, regulating actions on unfair competition, derivative claim and the responsibility of the head of the company

An obligation for legal entities to identify their ultimate beneficial owners was established according to the Law on the Prevention of Money Laundering and Terrorist Financing of the Republic of Lithuania
The amendment of Law on the Prevention of Money Laundering and Terrorist Financing of the Republic of Lithuania (Law) came into force on 1 January 2019

Draft of amended law, implementing the Directive (EU) 2018/843, will improve legal regulation of money laundering and terrorist financing prevention
The Government approved the draft amendment to the Law on the Prevention of Money Laundering and Terrorist Financing of the Republic of Lithuania (Draft of amended law) on 20 December 2018 and submitted it to the Parliament

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Montenegro

Economic Citizenship Program in Montenegro
The Government of Montenegro has adopted the Decision on criteria, method and procedure of electing individuals who may acquire a Montenegrin citizenship by admission in order to implement a special investment program of great economic and business interest for Montenegro, which will start to apply as of 1 January 2019.

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Poland

VAT changes: No more traditional VAT returns and launch of the Central Invoice Register as of 1 July 2019
The draft amendments to the VAT Act and the Tax Code have been published by the Ministry of Finance. They eliminate the requirement to file some VAT returns, in addition to establishing the Central Invoice Register. It has been proposed that the new legislation come into effect as of 1 July 2019.

Limited number of goods that are subject to the requirements of the transport law package
The amended excise law, which reduces the list of goods the transport of which is subject to the monitoring obligation under the transport law package (SENT), come into effect as of 1 January 2019.

Support in cloud computing, big data, IoT or AI services
Regulation on a framework for the free flow
of non-personal data in the European Union. Regulation (EU) No 2018/1807 of the European Parliament and of the Council of 14 November 2018 on a framework for the free flow of non-personal data in the European Union has come into effect. Its requirements will have to be complied with as of 28 May 2019.

The geo-blocking prohibition comes into effect
Regulation (EU) No 2018/302 of the European Parliament and of the Council on addressing unjustified geo-blocking and other forms of discrimination based on customers’ nationality, place of residence or place of establishment within the internal market and amending Regulations (EC) No 2006/2004 and (EU) 2017/2394 and Directive 2009/22/EC entered into force on 3 December 2018.

Digital employee files – changes as of 1 January 2019
The Act of 10 January 2018 amending some laws due to the shortening of the employee file retention period and file digitization comes into effect on 1 January 2019. It introduces numerous changes to the way in which records related to the employment relationship are kept and retained.

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Romania

The list of dual-use items has been updated
In order to ensure better control of exports, transfer, brokering and transit of dual-use items, an update was necessary concerning the dual-use list provided by the Council Regulation (EC) 428/2009 setting up a Community regime for the control of exports, transfer, brokering and transit of such items.

EU Regulation: Unlocking e-commerce in the European Economic Area
Regulation (EU) 2018/302 on the prevention of unjustified geoblocking and other forms of discrimination based on citizenship, nationality or domicile headquarters on the internal market entered into force on December 3rd.

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Serbia

Amendments to the Corporate Income Tax Law introduce new tax incentives
Amendments to the Serbian Corporate Income Tax Law introduce tax incentives for the knowledge based industry - R&D deduction, IP box and tax credit on investments in start-up companies.

Amendments to the Law on Personal Income Tax
Main amendments to the Serbian Personal Income Tax Law encompass amendments to the tax treatment of employee share plans (wherein, such benefits would be exempt from salary tax subject to certain conditions) as well as exemption from salary tax of employer’s expenses related to recreation of employees.

Law on amendments to the Law on Mandatory Social Security Contributions
The most important amendment is cancellation of employer’s mandatory social security contributions for unemployment.

New Customs Law
The most significant changes are:

• exchange of information (including submission of customs declarations) between customs offices and businesses, as well as storage of those, which should be completely done electronically;
• security (collateral) for collection of customs debt – an obligation to provide mandatory security has been envisaged for coverage of potential and actual customs debts for the majority of customs procedures.

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Slovakia

Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting
Notice of the Ministry of Foreign and European Affairs of the Slovak Republic on the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting was published in the Collection of Laws.

Amendment to the Social Insurance Act Implementing Annual Reconciliation of Social Security Premiums. The Amendment also Amends the Income Tax Act
The proposed amendment to the Social Insurance Act was adopted and will be effective from 1 January 2019.

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Previous editions

• Central Europe Tax&Legal Highlights, November 2018 (PDF)
• 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)