Central Europe Tax&Legal Highlights

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Central Europe Tax & Legal Highlights

August 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.

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Bulgaria

Bulgaria introduces mandatory transfer pricing documentation

The new law introduces mandatory transfer pricing (TP) documentation in Bulgaria and transposes the European Union Directive that implements the Mutual Agreement Procedure as a mechanism for dispute resolution with regard to the international double taxation.
 
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Croatia

Amendments to the Croatian Personal Income Tax Legislation from 1 September 2019

The Amendments to the Personal Income Tax Regulations were published in official Gazette no. 80/19 effective from 1 September 2019. We present a summary of the main amendments below.


Council Directive (EU) 2018/822

Additional requirements for transparency regarding cross border arrangements.


Register of Beneficial Owners

Central online database which contains information about beneficial owners of legal entities and trusts where they need to enroll by December 31, 2019.

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Czech Republic

Introduction of digital tax in the Czech Republic

The Ministry of Finance has presented a legislative draft of the taxation of income from digital services, a so-called “digital tax”, and it has sent it for external consultation.


Investment incentives and their end for the manufacturing industry?

Are you planning investments in production in the coming months? If so, it is a good time to consider whether to apply for an investment incentive now. If you file an application before the amendment to the Act on Investment Incentives becomes effective, the existing conditions will apply.


What is the future of electronic sales records?

During June, the Chamber of Deputies approved in the third reading an amendment to the Act on Sales Records. As such, the voting lasted several days because of more than 800 motions to amend. During July, the amendment was considered by the Senate, which dismissed it. The proposed amendment will thus be returned to the Chamber of Deputies.


The most significant changes in the field of labour migration after the amendment to the Act on the Residence of Foreigners

The amendment to the Act on the Residence of Aliens, which was signed by the President of the Czech Republic on 4th of July and was sent to be published in the Collection of the laws should come into effect in August 2019. The implementing regulations which are part of the amendment should come into effect in September 2019. Based on the EU transposition directive, the changes will enable foreign university students and researchers to stay in the Czech Republic up to nine months after completing their studies or research activities on the basis of a long-term residence for the purpose of finding a job or starting a business.

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Poland

Withholding tax (WHT)

Introduction of new rules of levying WHT for CIT remitters postponed until 31 December 2019


What’s new with ECP?

Starting with 1 July, the largest employers are obliged to introduce ECPs. Since June, financial institutions are also publishing their proposals. There are 19 of them as at the date of publishing this text. This means that for the largest organisations, the next few months will mean making strategic decisions and complying with administrative obligations. In the heat of implementing this obligation, it is worth remembering about the important amendments to the Act on Employee Capital Plans (ECPs) introduced in June.


IP Box (Innovation Box) - a preferential 5% income tax rate. Clarifications of the Ministry of Finance

On 16 July 2019 the Ministry of Finance published Clarifications concerning the use of IP Box (Innovation Box). Below are the most important details which will help you use IP Box in practice.


Zero PIT for taxpayers below 26. New taxpayer obligations

As of 1 August 2019 taxpayers aged below 26, generating income under employment and outwork contracts, employed by cooperatives or working on contracts of mandate, shall enjoy new PIT exemption. The exemption limit for income generated after 1 January 2020 shall be PLN 85,528, while in the period from 1 August to 31 December 2019 it shall be proportionally reduced to PLN 35,636.67 (i.e. to 5/12 of the exempted amount). The exemption does not apply to income subject to a lump sum tax.


New VAT rate matrix passed through Senate

On 2 August the Senate passed the final amendments to the draft bill amending the VAT Act. The new VAT rate matrix will probably come into effect in its current version.


Changes in excise regulations and the SENT system regarding trading in heating oil. President signed the amended Act

On 6 August 2019 the President signed the Act Amending the Act on Road and Railway Cargo Transport Monitoring System and Certain Other Acts of 19 July 2019 (henceforth: the “Amendment”). Some changes provided for in the Amendment shall come into effect on 1 September 2019, although the biggest ones may become binding even as late as at the end of March 2020.


Material modification of Article 15e of the CIT Act and APA regulations

A failure to file an APA motion by the end of 2019 shall result not only with disability to use the exemption under Article 15e regarding tax-deductibility of intangible assets for 2018, but also expenses incurred in 2019.


Future of non-public joint stock companies Substantial changes in the code of commercial companies

On 19 July 2019 the Sejm passed an important amendment to the Code of Commercial Companies, now awaiting the sign-off by the President. Joint stock companies, in particular the non-public ones, so far operating as closed corporations with a small number of shareholders, may expect material changes.

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Serbia

Convention on Mutual Administrative Assistance in Tax Matters

On 22 July 2019, the National Assembly of the Republic of Serbia has adopted Law on Ratification of the Convention on Mutual Administrative Assistance in Tax Matters. The Convention expands the number of the countries with which Serbia may exchange tax information.

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Slovakia

Holiday Vouchers To Be Mandatory for All Employers

A group of members of the National Council of the Slovak Republic submitted a draft amendment to the Labour Code to the National Council of the Slovak Republic that would introduce an obligation for all employers to provide “holiday vouchers”, regardless of the number of company employees.


Parliamentary Draft Amendment to the Income Tax Act

“Interdepartmental circulation of comments under which the corporate income tax rate will be decreased from 21% to 15% with proposed effect as of 1 January 2020.”


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