Central Europe Tax&Legal Highlights

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Central Europe Tax & Legal Highlights

September 2018

Welcome to the Tax & Legal Highlights newsletter. This page provides you with the latest information on tax and legal related issues from around the Central Europe region. For more specific information – choose your country and find out more about local tax practices and news around the region.

Albania

Amendments to the Law on Income Tax
On 18 and 19 September 2018, amendments to the income tax law included in the first part of the fiscal package for 2019 were published in Albania’s official gazette. The amendments include changes to the profit tax law that initially were not accepted by the president and were returned to the parliament for approval.

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Czech Republic

Currently on ATAD implementation
The proposed amendment to the Income Taxes Act (included in the government package of tax law amendments), whose primary objective is to implement the EU Anti Tax Avoidance Directive – ATAD from 1 January 2019, is awaiting debate in the Chamber of Deputies in the first reading. A question mark is therefore beginning to appear regarding whether or not the proposed amendment will be able to go through the whole legislative process by the year end.

Tax changes in the taxation of investment funds
In the June issue of dReport, we informed you about the amendment included in the planned change in the taxation of basic investment funds. On 19 July 2018, an act was adopted (with effect from 1 January 2019) which includes a narrowing of the definition of a basic investment fund, and removes from the definition those funds whose shares are admitted to trading only on the European regulated market and do not fulfil the other conditions enumerated by law. These funds will now be subject to the standard corporate rate of 19% and not the current rate of 5%.

The flat expense charge-off for entrepreneurs will not increase
The Chamber of Deputies rejected an amendment intended to restore the cap on the flat expense charge-off (“paušální výdaje”) to the past year’s level, i.e. in relation to the annual income of CZK 2 million.

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Hungary

Adoption of IFRS accounting seems to be a reasonable answer to HTA audits
According to a recent announcement of Hungarian Tax Authority (HTA) and the Chamber of Hungarian Auditors, HTA will more seriously treat cases where Hungarian members of multinational groups do not keep their books in accordance with Hungarian accounting standards (i.e. in line with US GAAP or IFRS) but adjust such accounting manually to meet the Hungarian requirements.

The Republic of Kosovo and the Republic of Netherlands have cancelled their Double Tax Agreement (DTA)
The Double Tax Agreement made between the former-Yugoslavia and Netherlands is not in use and not applicable since 1st of September 2018.

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Kosovo

The Republic of Kosovo and the Republic of Netherlands have cancelled their Double Tax Agreement (DTA)
The Double Tax Agreement made between the former-Yugoslavia and Netherlands is not in use and not applicable since 1st of September 2018.

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Lithuania

The Bank of Lithuania launches its regulatory sandbox
FinTech companies as of 15 October 2018 will be able to test their innovative products in a live environment under the guidance and supervision of the central bank of Lithuania by submitting an application to enter the Bank of Lithuania regulatory sandbox.

Lithuania seeks to be among the first ones in the world to legalise virtual office
The Ministry of Economy made a proposal to legalise the virtual office, which means enabling the establishment of companies that do not have a physical address of their premises so that they could be able to do communication with public authorities and other entities in virtual space. Following the adoption of this decision, Lithuania would become among the first ones in the world to legalise the virtual office.

State Data Protection Inspectorate contributes to the implementation of the personal data protection reform in Lithuania
The State Data Protection Inspectorate, contributing to the implementation of the personal data protection reform in Lithuania, prepared and published Guidelines for small and medium-sized business, which would help to apply new legal regulation of personal data protection in practice.

The unlawful decision of the head of the company does not in all cases constitute his/her material liability
The Supreme Court of Lithuania adopted a decision on the interpretation and applicability of the substantive law governing the conditions for the material liability of the head of the company.

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Poland

Tightening excise regulations. Certain regulations come into effect
On 19 September 2018 certain regulations included in the Act of 20 July 2018 amending the Excise Act and the Customs Duty Act (the “Amendment”) came into effect. The other regulations included in the Amendment shall become effective as of 1 January 2019.

Act on Collective Persons’ Liability: amendments included in the newest draft of 5 September 2018
On 5 September 2016 the Ministry of Justice published another draft of the Act on Collective Persons’ Liability. The former one had been released for consultation in May 2018. The introduced changes include both procedures and guidelines regarding collective person’s liability. Further, collective persons are offered possibilities to be released from the liability.

Enhanced oversight of non-public securities trading
The Council of Ministers completed the work on a draft act amending certain acts in relation to enhanced oversight and investment protection on the financial market.[1] The draft introducing organizational changes in the Polish Financial Supervision Authority, establishing the Fund for Financial Education and implementing changes to trading in bonds of security, certificates issued by closed-end investment funds and corporate bonds, was accepted on 4 September 2018[2] and submitted to the Parliament.

Employee Equity Schemes approved by Government
The Standing Committee of the Council of Ministers approved the draft Act on Employee Equity Schemes (EES), the version of 4 July 2018, without any additional amendments. Now, the draft shall be transferred to the Parliament. Its effective date falls on 1 January 2019.

Definite-term employment contracts to become indefinite soon
The period of 33 months of the effective date of regulations amending the principles of concluding definite-term employment contracts shall end on 22 November. As of that date, all valid definite-term employment contracts concluded prior to 22 February 2016 shall be automatically transformed into indefinite-term ones.

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Serbia

Rulebook on work permits
New Rulebook on work permits (“Official Gazette RS” no. 63/2018) has been published with regard to the Law on Employment of Foreigners and the recent amendments to the Law. Rulebook is in force as of 25 August 2018.

Social Security Agreement between Serbia and China
Draft of the Law on Ratification of Social Security Agreement between Government of Serbia and Government of People’s Republic of China has been published. The Social Security Agreement has been signed in Belgrade on June 8th 2018, in Serbian, Chinese and English language.

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