Tax news, August 2017

Several Ministry of finance rulings have been published in the past period, aimed at clarifying and elaborating on the implementation of provisions of the Law on Value Added Tax (hereinafter “VAT Law”), Law on Corporate Income Tax and Property Tax Law.

Value added tax

Contents of an invoice for performed supply of goods or services for the purpose of claiming the right to deduct input tax

If an invoice for the performed supply contains all the data prescribed by the VAT Law and the applicable bylaws, but does not contain some of the data stipulated by other regulations, these circumstances do not constitute grounds for challenging the right to deduct the input tax.

(Ministry of Finance ruling, no. 413-00-00083/2017-04 as of April 6, 2017)

Supply of goods and services in the field of construction

Activities such as heating pump reparation, regular service inspection of burners and heating installations, venting the radiators (including its draining and refilling) and periodic inspection of gas boiler plants are listed in the activity code 43.22 – Installation of water supply, sewage, heating and air conditioning systems. The tax debtor for such a supply is the recipient of goods.

(Ministry of Finance ruling, no. 011-00-1501/2015-04 as of June 1, 2017)

Corporate Income Tax

Determining the selling price of immovable property when the transfer of property is subject to VAT for the purpose of defining the capital gain

When the transfer of immovable property is subject to VAT, for the purpose of determining the capital gain the selling price is considered to be the contracted price net of VAT.

(Ministry of Finance ruling, no. 430-00-126/2017-04 as of June 22, 2017)

Obligation to exclude fixed assets from depreciation group to which they belong in case of making a decision to terminate the recognition of the value of tangible and intangible assets

When a taxpayer decides to terminate recognition of the value of tangible assets, as well as intangible assets – equipment (due to technical and technological obsolescence), such fixed assets should be excluded from the depreciation group (from II to V) to which they belong.

(Ministry of Finance ruling, no. 430-00-93/2017-04 as of May 29, 2017)

Determining the (total) transaction value with a related entity for the purpose of preparing the abbreviated transfer pricing report

When determining the transaction value, i.e. total transaction value with one related entity in order to define the fulfilment of conditions for abbreviated report submission, the value of the transaction with related entity represents the value of said transaction net of VAT, whereby (the total transaction value with related entity) does not include the value of provided or received advanced payments according to Article 2, para 3 of the Rulebook on transfer prices and methods that are according to the “arm’s length” principle applicable for determination of transaction prices between related entities.

(Ministry of Finance ruling, no. 011-00-465/2017-04 as of June 21, 2017)

Property Tax

Property tax on wind turbines and determination of the depreciation group for the purpose of computing the tax depreciation

A wind turbine as an energetic facility installed in the land, i.e. in a concrete substrate – a foundation incorporated in the land, so it cannot be moved from place to place without damaging, is considered a property which is taxable by property tax and represents a unique entity with all its parts, and in order to determine depreciation for tax purposes it is classified in the depreciation group I.

(Ministry of Finance ruling, no. 413-00-00057/2017-04 as of June 22, 2017)