Central Europe Tax&Legal Highlights

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Central Europe Tax & Legal Highlights

July 2017

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

Estonia

Amendments to Income Tax Law related to intra-group loans
The Estonian government’s plan to introduce corporate income tax on outgoing loans (so-called pledge tax) was rejected by the parliament. Instead, alternative amendments to the Estonian Income Tax Act were adopted by the Estonian Parliament on 19 June 2017 and the Estonian President announced the Law on 29 June 2017. In accordance with the amended law, the Estonian Tax authority will have the right to tax the loans granted by Estonian companies to their parent or sister companies, in case the loan conditions indicate that in substance the loan may be a hidden profit distribution.

Are you ready for the new General Data Protection Regulation?
The new EU General Data Protection Regulation (GDPR) is coming into effect next year in May, bringing along a number of new obligations for data processors. It is important to bear in mind that GDPR affects absolutely every company, which is dealing with processing of personal data in its everyday business – be it the clients’ data or even the data of its own employees. It is also crucial to note that GDPR does not merely concern the companies established in the EU, but also those that process data in the EU – for example, offer their products or services on the EU market.

Deloitte Legal is the official advisor of the Estonian e-Residency team
The Republic of Estonia is the first country to offer e-Residency, a government issued digital identity that empowers entrepreneurs around the world to set up and run a location-independent business. Deloitte Legal is the official legal advisor to the Estonian e-Residency team. What is e-Residency? How does it work? What are the legal aspects to be aware of? How to take advantage of it? Find out from Merit Lind’s interview to LexisNexis, a global provider of legal research and analytics.

Amendments to the Estonian Income Tax Law
Amendments to the Estonian Income Tax Law were adopted by the Estonian Parliament on 19 June 2017 and Estonian President has announced the Law on 29 June 2017. There are many different changes in the above mentioned law that make the employers’ life easier when providing bonuses to the employees, on the other hand there are new income tax rates, as well as the imposed advance corporate income tax to credit institutions, not to mention additional anti-avoidance provisions related to loans issued to other group entities.

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Kosovo

Entry into Force of Administrative Instruction on Transfer Pricing
The new Administrative Instruction MoF-No 02/2017 on Transfer Pricing is the first general guideline that regulates related party transactions in accordance with Article 27 of the Law on Corporate Income Tax No. 05/L-029.

Signing of the Fiscal Package 2.0
The Kosovo Government has approved the Fiscal Package 2.0 that contains twenty two (22) measures to improve the business environment and make domestic producers competitive within the Balkans region.

Forthcoming Deadline for Public Debt Forgiveness
The deadline for benefiting from public debt forgiveness is fast approaching, and the Tax Administration is advertising the set deadline of 01 September 2017.

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Latvia

Payroll Taxation
The main focus of the tax reform is to change the current regime of the corporate income tax (CIT), however there will also be several changes regarding payroll taxes. It is proposed that the new rules enter into force starting January 1, 2018, therefore the new laws have been developed quite urgently and provisions have been amended multiple times. On July 11 amendments regarding payroll taxes have been considered by the Cabinet of Ministers and it is planned that new regulation will be considered by Parliament at the final hearing on July 27.

Proposed changes to the Latvian VAT Law
The Ministry of Finance has published draft amendments to the VAT law (further – draft amendments), which will enter into force as of January 1, 2018. However, the draft amendments have not been adopted yet, thus there might be changes during the discussion process. The proposed amendment to the Latvian VAT Law relates to the following areas:

  • VAT registration threshold for taxpayers registered in Latvia;
  • Domestic reverse charge mechanism applicable to certain supplies of goods and services

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Poland

Country-by-Country Reporting — Ordinance of the Minister of Economic Development and Finance on the detailed scope of data to be included in the information about a group of entities
On 21 June 2017 the Ordinance of the Minister of Economic Development and Finance of 13 June 2017 on the detailed scope of data to be included in the information about a group of entities was published in the Journal of Laws. The Ordinance implements the Council Directive 2011/16/EU of 15 February 2011 on administrative cooperation in the field of taxation and repealing Directive 77/799/EEC.

Excise duty revolution on the e-cigarette market
On 21 June 2017, a bill amending the Excise Duty Act of 14 June 2017 was published on the website of the Governmental Legislation Center. The bill assumes introduction of two new classes of excise goods: liquids for e-cigarettes and so-called innovative tobacco products that will be subject to excise duty.

Posting of workers under scrutiny of the National Labour Inspectorate
A recent report on the activity of the National Labour Inspectorate in 2016 provides interesting insights on the areas under close scrutiny of the institution and employer issues identified. According to the in-depth report, one of the key areas of interest was posting of workers to and from Poland. Key information about inspection findings and irregularities detected have been presented below to help readers prepare to possible future inspections.

Centrum Obsługi Kluczowych Podatników - Key Taxpayers’ Service Centre. Change of the clearing rules applicable to large entities
The pilot project called Centrum Obsługi Kluczowych Podmiotów - Key Taxpayers’ Service Centre (COKP for short) was launched within the First Mazovian Tax Office on 03 July 2017. In the long term, COKP is planned to provide services to approx. 3,000 entities earning more than 50 million in revenue a year.

Transportation package – further amendments and extension of obligations to cover railway transport
The Government Legislation Centre published a bill amending the Act on the system of monitoring road transport of goods and certain other acts (hereinafter: “bill” or “amendment”) which changes the transportation package regime (hereinafter also: “the Act”).

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Romania

The conditions of issuance of the European Unique Identifier (EUID)
The Order of the Ministry of Justice regarding the approval of the EUID structure for the professionals registered with the Trade Registry and the standard model of the registration certificate is currently under public debates and is expected to be approved and enter into force starting with 7 July 2017.

Transfer Pricing: OECD releases new edition of transfer pricing guidelines
An updated version of the OECD Guidelines - Transfer Pricing Guidelines for Multinational Companies and Tax Administrations was published on 10 July 2017 by the Organization for Economic Cooperation and Development (OECD). The previous version of the guidelines was issued in 2010. The Romanian Fiscal Code recommends complying with the OECDTransfer Pricing Guidelines.

The stamp is no longer mandatory for documents submitted to the customs authorities
Stamping the declarations, applications, contracts or any other documents to be submitted to the customs authorities is not mandatory, states the General Customs Directorate on its own website, www.customs.ro.

Commission's Electronic Decision System, applicable from 2 October 2017
Information sharing related to applications and decisions between customs authorities in the European Union, as well as between economic operators and customs authorities in the European Union, will be carried out by using electronic data processing techniques, starting with 2 October 2017.

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Slovenia

More detailed instructions for submission of the CbCR and CbCR notification in Slovenia
On July 1, 2017, amendments to the rules on the implementation of the Tax Procedure Act came into force. A guideline for the respective amendments was published in the Official Gazette of the Republic of Slovenia, no. 30-2017 from 16.6.2017.

Topical changes brought about by the amendments concern the added VI Chapter on reporting and exchanging of country-by-country reports (CbCR) based on chapter III.B of the Tax Procedure Act.

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