Central Europe Tax&Legal Highlights


Central Europe Tax & Legal Highlights

February 2019

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.


Positive changes in R&D tax incentive rules
A significant part of Hungarian based businesses with negative or non-significant pre-tax profit (e.g. subsidiaries operating on a cost-plus basis) seem to miss out on the fact that the cost of research and development activities pursued by them or in cooperation with other organisations may have various tax advantages. The costs directly related to R&D activities may be deducted from the taxable income for corporate income tax, local business tax and innovation contribution purposes with tax benefit also available for the social contribution tax amount.

Losing money on non-reclaim of foreign VAT
As regards VAT paid abroad, NAV has recently questioned on several instances, i.e. in a number of its resolutions, the recognition of non-reclaimed VAT paid to foreign tax authorities as VAT expense. This all means that in this case the VAT paid abroad, in addition to eventually burdening the business, may not be recognised as expenditure for corporate tax purposes.

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New Law on the Protection of Personal data has been published.
The new Law on Protection of Personal Data is another step towards approximating the legislation of Kosova with the regulations of the European Union.

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Withholding Tax (WHT). New rules of criminal liability
Certain significant amendments concerning withholding tax take effect as from 2019. It is worthwhile to have a closer look at them, considering that parallel changes have been introduced into the penal fiscal code too.

New withholding tax (WHT) rules. Clarifications provided by the Ministry of Finance – what to pay attention to regarding withholding tax (WHT) before 01 July 2019
During the consultations held on 04 February 2019, the Ministry of Finance (further called: MOF) started clarifying the doubts raised so far regarding new provisions on the so-called withholding tax (WHT). The general conclusion is that various circles voice a great number of concerns, and MOF does not yet have a consensus view on many issues. Nonetheless, MOF declared that it would publish draft clarifications at the beginning of March, to be followed by further consultations in writing the final version of which would be announced in April.

GDPR: video surveillance under scrutiny
President of the Personal Data Protection Office announces inspections at employers.

GDPR: first inspections to be launched
The President of the Personal Data Protection Office to commence inspections at telemarketing companies.

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Changes brought to the tax risk assessment criteria, in the case of VAT registration
The decision approving the VAT registration will be issued by the tax authority, under certain conditions, on the same day the VAT registration request is submitted, according to the Order published in the Official Gazette on January 31st, 2019.

Decision to set quota for work authorizations that can be issued to foreigners during 2019
On Thursday, January 31st 2019, the Decision setting the quota for work authorizations that can be issued to foreigners for the year 2019 has been published.


Members of Parliament’s Amendment to the Income Tax Act
The National Council of the Slovak Republic approved an amendment to Act No. 595/2003 Coll. on Income Tax, which amends one of the existing conditions by reducing the minimum amount of the 13th salary to be entitled to an income tax exemption.

Guideline on the Exemptions of Income from Advertising for Charitable Purposes from Income Tax and Related Tax Base Adjustments
The Financial Directorate of the Slovak Republic (hereinafter “FDSR”) issued a guideline to ensure a consistent procedure for exempting income from advertising for charitable purposes earned by selected types of taxpayers not established or not incorporated for business activities with effect from 1 January 2018.

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Proposed PIT Act amendments
The Ministry of Finance has prepared a proposal for tax changes, which aim to relieve the tax burden on labour, and consequently support economic growth with higher consumption. On the other hand, loss of income in the state budget would be partially covered by higher taxation of income from capital and more efficient tax collection. Changes related to holiday allowance are planned to be enforced this year, the rest of proposed changes should be enforced in 2020.

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