Central Europe Tax & Legal Highlights

Bulgaria

CbC reporting rules adopted
New rules for MNE groups with a presence in Bulgaria

Act of Parliament
Act for the amendment of the Public Offering of Securities Act

Decree of the Council of Ministers
Decree No. 141 of 13 July 2017 for Establishing a New Minimum Salary for the Country

Ordinance of the Bulgarian National Bank
Ordinance for the amendment of Ordinance No. 8 of 2014 on the Capital Buffers of Banks

Ordinance of the Bulgarian National Bank
Ordinance for the amendment and supplementation of Ordinance No. 2 of 2006 on the Licenses, Approvals and Permits issued by the Bulgarian National Bank under the Credit Institutions Act

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Croatia

Increase of national VAT threshold
The Croatian Tax Authorities have requested European Commission an authorization to apply as of 1 January 2018 an increase of the national VAT threshold to €45,000 (HRK 300,000)

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Czech Republic

The SAC issued a ground-breaking judgement on the interpretation of tax non-deductible expenses relating to income
Possibility of reassessing the previously applied treatment in connection with Section 24 (2) (zc) of Act No. 586/1992 Coll., on Income Taxes (“ITA”) and consequently Section 23 (4) (e) of the ITA

The Supreme Administrative Court of the Czech Republic Has Ruled on the Amount of the Flat Expense Charge-off for Professional Athletes
On 13 July 2017, the Supreme Administrative Court issued a ruling on the case of the Czech professional footballer David Lafata. The case dealt with the amount of the flat expense charge-off that professional athletes performing their activities based on a trade licence may deduct from their taxable income.

Legislative Amendment to the Act on Country-by-Country Reporting Approved by the Senate
At a recent session of the Senate (dated 16 August 2017), an amendment to the Act on International Cooperation in Tax Administration was approved; implemented in the Czech legal code, this Act is to regulate the so-called country-by-country (CbC) reporting duties. The draft amendment is yet to be signed by the President. The Act will become effective on the day of its publishing in the Collection of Laws

Including VAT in the Tax Base for Calculating Real Estate Acquisition Tax
The Supreme Administrative Court (“SAC“) has issued a long-awaited ruling in which it took the side of taxable entities by deciding that no value added tax (“VAT”) is to be included in the tax base for calculating real estate acquisition tax according to the legal guidance valid until November 2016.

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Kosovo

Issue of Public Explanatory Decision on the Application of Reverse Charge for Purchased Services Outside of Kosovo
The Tax Administration has issued the Public Explanatory Decision No. 03/2017 to clarify the tax treatment of VAT for services purchased abroad when the application of reverse charge is required, but was not applied by taxable persons, taking into account decisions of the European Court of Justice.

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Latvia

Latvia adopted amendments to interest limitation provisions in accordance with the Anti-Tax Avoidance Directive (ATAD) rules
Starting from January 1, 2018 Latvia will apply interest deduction limitation rule based on 30% of taxpayer’s earnings before interest, tax, depreciation and amortization (EBITDA) limitation as provided in the ATAD. The rule includes a de minimis threshold of EUR 3 million and permit interest expenses of up to EUR 3 million to be deducted, regardless of a taxpayer’s EBITDA. The new rule will apply together with existing debt-to-equity ratio.

On Friday, 28 July 2017 amendments to Cabinet of Ministers Regulations on preparations of VAT returns (further - Regulations) were adopted
According to the adopted amendments the threshold for reporting each tax invoice separately in appendixes of VAT return PVN1-I (input VAT on local acquisition) and PVN1-III (output VAT on supplies) has been reduced to EUR 150 excluding VAT (previously EUR 1’430). The reduced threshold is applicable starting from January, 2018 VAT return.

Insight in Amendments of Latvian Commercial Law
Amendments of June 15, 2017 of the Latvian Commercial Law (hereinafter – the Amendments) concern many important aspects of commercial activity, including – company’s transactions with its related person; regulation on employee stocks and employee options; increase of joint stock company’s share capital, and other aspects. Part of the Amendments have come into force on July 13, 2017; however, part of the Amendments will come into force on January 1, 2018.

Significant Amendments in Latvian Labour Law
On July 27, 2017 broad and significant amendments have been adopted in the Latvian Labour Law (hereinafter – the Amendments), which have come into force on August 18, 2017. The most important aspects of the Amendments will be shortly discussed below.

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Lithuania

The release of the new edition of the OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations
On 10 July 2017 the Organisation for Economic Co-operation and Development (hereinafter – OECD) released new edition of the Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations (hereinafter – the Guidelines), which replaced the 2010 edition of the Guidelines.

New rules regarding documentation of excise goods and determination of the time of release of the excise goods for consumption have entered into force
On 2 August 2017 State Tax Inspectorate under the Ministry of Finance of the Republic of Lithuania (hereinafter - STI under MF) informed that some legislation amendments will enter into force as of 1 November 2017. The amendments relate to:

STI under MF clarification on taxation of excise duties on energy products
On 27 July 2017 STI under MF clarified that energy products which are used for purposes other than as motor fuel, heating fuel or fuel additives are exempted from excise duty in accordance with Article 43 (1)(3) of the Lithuanian Law on Excise Duty. The clarification is also valid in cases where the relevant quantities of energy products are used as samples for tests and analysis.

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Poland

City – port dualism or the untapped potential for city development
The “Port Services 2017” report published by Deloitte singles out certain global tendencies in the ports and logistics sector. The majority of them are associated with using innovative technologies and tools to optimize processes, management and ensure data security. Nonetheless, a certain trend referred to in the report, namely unlocking the potential associated with city - port interrelations, seems rather unexpected.

Employee Capital Plans (Pracownicze Programy Kapitałowe, PPK) and what you should know about them. Assumptions of the Draft Act amending Employee Pension Schemes
The Ministry of Development and the Ministry of Labour are working on a Draft Act to reform the Polish pension system. According to the latest information from the Ministry of Development, the intended Open Pension Fund (OFE) reforms will take effect beginning from July 2018 rather than from January 2018 as was originally scheduled.

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Romania

Additional implementation guidance on CbC reporting
The OECD Guidelines on 18 July released additional guidance on the implementation of the country-by-country (”CbC”) reporting requirement introduced in the BEPS Action 13 final report.

VAT split payment – Draft of Govern Ordinance
Romania intends to apply the VAT split payment from 1 January 2018, according to a draft Government Ordinance, published by the Ministry of Public Finances.
Taxable persons registered for VAT purposes will have to open a separate bank account (the VAT account) to receive the VAT charged to customers and pay the VAT invoiced by suppliers.

Amendments to the Labor Code by Emergency Ordinance no. 53/2017, published on August 7, 2017, have as their primary purpose the fight against undeclared work and mainly target:
• Define the concept of undeclared work
• The sanctioning regime
• Introducing new obligations for employers

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Serbia

Tax alert - VAT
The Proposal of the new Rulebook on the form, contents, manner of keeping VAT records, and on the form and contents of the VAT calculation breakdown

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Slovakia

Draft Amendment to Act No. 595/2003 Coll. on Income Tax, as Amended
A draft amendment to the ITA is undergoing interdepartmental circulation of comments. The draft amendment proposes, inter alia, the following changes:

Draft Amendment to Act No. 563/2009 Coll. on Tax Administration (Tax Procedure Code)
The Ministry of Finance of the Slovak Republic submitted a draft amendment to the Tax Procedure Code, which proposes a number of changes, for interdepartmental circulation of comments.

Updated Global Overview of Transfer Pricing Information

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Previous editions

• Central Europe Tax&Legal Highlights, July 2017 (PDF)
• Central Europe Tax&Legal Highlights, June 2017 (PDF)
• Central Europe Tax&Legal Highlights, May 2017 (PDF)