Tax Alert - June 2015

New Ministry of Finance rulings

Several Ministry of Finance rulings have been published in the past period aimed at clarifying and elaborating the implementation of provisions of various tax laws, including the Law on Value Added Tax (“VAT Law”), Personal Income Tax Law and Law on Excise Duties. The following have been selected:

Reduction of the VAT base for the taxable supply

If the base for the taxable supply is subsequently altered – reduced, the VAT payer that made the supply can alter the VAT amount only if the recipient reduces input VAT on this account and informs the supplier in written form that the correction has been made. In this case, the supplier should issue a document in line with Article 15 of the Rulebook on determining cases in which there is no obligation to issue an invoice and cases where certain information may be omitted from the invoice.

(Ministry of Finance Ruling, no. 011−00−1190/2014−04 from April 14^th, 2015)

VAT treatment of staff leasing services

On staff leasing services that the VAT payer provides to a local entity, VAT is computed and the VAT base is the total amount of compensation that the VAT payer receives (without VAT), including all auxiliary costs recharged to the service recipient (wages, travel costs and the like). The VAT regulations do not specify which type of costs may be recharged to the service recipient, as this depends on the contracted conditions.

(Ministry of Finance Ruling, no. 011−00−1290/2014−04 from April 14^th, 2015)

Refund of excise duties paid on fuel used for transportation purposes

When the buyer – final consumer (legal entity, entrepreneur) purchases fuel (used for transportation purposes) from a licensed wholesale and retail distributor of oil derivatives, using corporate (non-payment) cards issued by that entity, and when that entity issues a fiscal receipt and an invoice related to the supply of fuel, the buyer may be entitled to an excise duties refund. This is due to the fact that the fiscal receipt and the invoice (with the fiscal receipt’s serial number) were issued by the same subject – licensed distributer engaged in both wholesale and retail distribution of oil derivatives.

(Ministry of Finance Ruling, no. 011−00−78/2015−04 from April 8^th, 2015)

The inability of opting to tax with VAT the supply of а building in case of a status change whereas only one company is involved

When a supply of a building is made on the basis of a status change agreement involving two or more companies, under this agreement it may be stipulated that VAT is to be computed on this supply. However, in case of a status change in which only one company is involved, Article 10 para 2 item 2) of the VAT Law cannot be applied, i.e. there is no option to tax the supply of a building in this case.

(Ministry of Finance Ruling, no. 011−00−00304/2015−04 from April 29^th, 2015)

The tax treatment of rendering ADSL services to employees for both business and private purposes

The decrease of 60% on the commercial price of the selected ADSL package provided by the employer to its employees, at their place of residence, whereas internet is used for both private and business purposes is treated as salary and subject to personal income tax.

(Ministry of Finance Ruling, no. 430−01−42/2013−04 from April 14^th, 2015)

The tax treatment of providing benefits to employees when organizing team building activities

When the employer finances team building activities for its employees, such remuneration constitutes a benefit in kind that is treated as salary and, as such, is subject to personal income tax and mandatory social security contributions.

(Ministry of Finance Ruling, no. 430−01−29/2013−04 from April 14^th, 2015)

VAT treatment of transferring the leasing company’s portfolio

When the VAT payer that provides financial lease arrangements on movable goods transfers, against consideration, part of its property comprising of rights and liabilities from financial lease agreements on movable goods, as well as title on those goods, it is deemed that no VAT-able supply took place, provided that:

1)    the acquirer is a VAT payer, or becomes a VAT payer,

2)    the acquirer continues to perform the same activity as the transferor, and

3)    the transferor does not have the capacity to perform financial leasing activities on movable goods, at the moment of the transfer – meaning that it does not have other movable goods in its possession that could be subject to financial lease.

(Ministry of Finance Ruling, no. 413-00-333/2014-04 (1) from April 23^th, 2015)