Central Europe Tax&Legal Highlights


Central Europe Tax & Legal Highlights

October 2017

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.

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Proposed changes in Latvian VAT Law
The Ministry of Finance has published draft amendments to the Latvian VAT law (further – draft amendments). Proposed amendment to the Latvian VAT Law would introduce reduced rate of 5%, which will be applicable to specific fresh berries, fruits and vegetables characteristic to Latvia, including those that have been washed, peeled and packaged, but not thermally treated. The amendments (if announced according to current draft) will be into force from 1 January 2018 to 31 December 2020.

Damages Directive transposed: Should competition law infringers be scared?
The effectiveness of the fundamental objectives of competition law may be jeopardized if those who have incurred damages due to infringements of competition law are not able to bring actions for damages in an efficient manner. Although Article 21 of the Competition Law provides for the right to claim damages from the infringer, such actions are rarely brought in Latvian courts. Even more rarely the damages are compensated.

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Draft of a new Tax Ordinance
After over two years of works of the General Taxation Law Codification Committee, the Ministry of Economic Development and of Finance issued a draft of a new Tax Ordinance. The draft modifies the existing institutions and introduces a number of new solutions to the tax law.

A watercraft not to be treated as a tax warehouse
Tax warehouses need to be in located in immovable property. According to the Supreme Administrative Court (NSA), the Excise Duty Act does not allow the possibility of running a tax warehouse under a movable formula (e.g. on a barge) - see: decision of 03 October 2017.

Ban on commercial activity on Sundays effective as from 01 January 2018
The Sejm standing subcommittee for labour market issues has accepted almost all modifications introduced by MPs to the citizen-initiated bill on restriction of commercial activity on Sundays.

Tax on shopping malls and offices
A bill tabled for discussion in the Sejm

The Commission of Public Finance has finished works on the draft bill on amending the Personal Income Tax Law. Currently, the draft legislation is still under review of the Parliament
Compared to the previous version of the draft, the Commission has introduced important modifications as regards the application of 50% deductible cost of earnings to remuneration of employees transferring copyrights to works executed within their employment duties to their employer, as well as to taxation of employee incentive share plans.

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New criteria for assessing the fiscal risk in case of optional VAT registration and cancellation of VAT number
New procedures for optional VAT registration, but also for cancellation of the VAT number were implemented through Order no. 2856/2017.
The normative act, applicable starting October 2017, also contains the new criteria for the assessment of fiscal risk, criteria that remind us of the 088 form for assessing the intention and ability to perform economic activities.

New obligations for exporters on declaring origin of goods
New regulations and rules on declaring origin of goods in trade between the European Union and third countries will come into force. Among these, the most important is the obligation of registration of exporters in the Registered Exporter System (REX). In specific cases, deadline for required registration is December 31, 2017.

New national regulations on excise duties
The Order of the minister of public finance, which stipulates the procedure and the conditions under which the tax warehouses, registered consignees, registered consignors and authorized importers, are authorized, was recently published.

Decision of the Court of Justice of the European Union on deduction of VAT invoiced by inactive taxpayers
The Court of Justice of the European Union (“CJEU”) allows the deduction of VAT incurred by taxable persons on purchases made from inactive taxpayers. The decision is general and mandatory and its effects are not limited in time. Thus, the decision can also be applied for operations performed prior to its issuance.
Moreover, we believe that CJEU decision opens the right to deduct VAT also for other cases where VAT deduction was blocked because the supplier had its VAT number cancelled.

Romania has received EU Council’s approval to increase the VAT exemption threshold to EUR 88,500 (RON 300,000)
The UE Council has authorized Romania to increase the VAT exemption threshold for small enterprises from EUR 65,000 to EUR 88,500. The measure derogates from the provisions of the VAT Directive and is valid only for a period of three years (1st of January 2018 to 31st December 2020).

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Rulebook on Tax Return forms for determining personal income tax paid via Tax Assessment- PPDG-1R, PPDG-2R and PPDG-3R
Rulebook on Tax Return Forms for determining personal income tax paid via Tax Assessment was published on October 6th, 2017 (hereinafter: the Rulebook) in the “Official Gazette RS” no. 90/2017.

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Information on the Child Tax Bonus at the Beginning of the School/Academic Year
FDSR published information on the child tax bonus at the beginning of the school/academic year.

Information on Taxable Persons Not Established or Not Founded for Business, Tax and Accounting Issues
FDSR published Information on Taxable Persons Not Established or Not Founded for Business from the Tax and Accounting Perspective.

Amendment to the Commercial Code
The National Council of the Slovak Republic has approved an extensive amendment to the Commercial Code, which awaits approval by the President.

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