Central Europe Tax&Legal Highlights

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Central Europe Tax & Legal Highlights

June 2018

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.

Albania

New Law “On accounting and financial statements”
In the Official Gazette no. 79, dated 30 May 2018 was published the Law no. 25/2018 “On accounting and financial statements” (“New Law”), which will replace the Law no. 9228, dated 29.04.2004 “On accounting and financial statements” (“Current Law”), with effect as of 01 January 2019. The New Law is partly harmonized with the European Union legislation on financial statements and other reports of economic entities.

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Bosnia and Herzegovina

On the 146th regular session held on 07.06.2018 the Government of the Federation of BiH established the Proposal of the Law on Contributions
The Government of the Federation of BiH Sarajevo, after a 90-day public hearing, conducted on the basis of the conclusions of both Houses of the FBiH Parliament, established the Proposal of the Law on Contributions. The proposed provisions will result in simplification of the calculation and payment of contributions, strengthening of supervisory function and financial discipline. The proposed solutions have also been harmonized with the provisions of the Labor Act and the Pension and Disability Insurance Act.

On the 146th regular session held on 07.06.2018 the Government of the Federation of BiH established the Proposal of the Law on Income Tax
The law provides progressive taxation of two rates, namely 10 and 20 percent, on a predetermined basis of income. A taxpayer on income tax is a natural person who realizes income. Thus, a taxpayer is an individual (and not a legal person) who receives a salary, fee, or authoring fee, owns income-generating craft etc. The taxpayer is considered a resident and a non-resident. A resident is a person residing in the Federation. A non-resident is a person who does not have a permanent or temporary residence in BiH, but realizes income in the FBiH. Income tax will not be paid if an individual receives funds from state, entity and cantonal budgets, as well as out-of-budget funds, regardless of the amount he received.

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Czech Republic

Tax Changes in the Taxation of Investment Funds
In the March issue of dReport, we informed you about the planned change in the taxation of basic investment funds. The Senate proposed narrowing down the definition of the basic investment fund, excluding the funds the shares of which were listed for trading on a European regulated market but that failed to meet other conditions stipulated by law. The funds would be subject to the corporate income tax of 19% rather than being taxed at the current 5% rate.

Making Insurance Contributions on Behalf of “Outsourced” Employees
It is not necessary to have a legal relationship to make insurance contributions.

Intercompany Services as a Tax Deductible Expense
Management services or marketing support are the most common types of intercompany services. However, although it is economically justified, the provision of these services presents certain tax challenges that need to be taken into account. Namely given the fact that tax authorities focus more and more of their attention on the issue of intercompany transactions.

The Amendment to the Investment Incentives Act in Preparation
In a relatively short time after the major amendment (from 2015), another draft of the Investment Incentives Act has been prepared. It originated in response to the current economic situation, taking into account the requirement to amend the structure of projects so far funded by the government by way of investment incentives.

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Hungary

The government would appoint NAIH as the supervisory authority according to the GDPR
The government would appoint the National Authority for Data Protection and Freedom of Information (NAIH) as the supervisory authority according to the GDPR and would set a warning for violating data protection regulations for the first time.

Real-time transfer of domestic invoice data
The amendment of the invoicing decree was announced in the 1 June 2018 issue of the Official Journal of Hungary, which makes real time transferring data of domestic invoices to the tax authority compulsory from 1 July 2018. There are less than four weeks left for the finalisation of the necessary developments, in which Deloitte supports its clients, too.

How much must neighbours tolerate and how far can developers go?
The recent upturn in the construction industry makes the question relevant: where is the border between disturbing neighbours necessarily and unnecessarily, and can an architecturally justified solution be unnecessarily disturbing at the same time? In our experience, neighbours taking action against developers’ disturbing behaviour first complain about noise and dust pollution, typically followed by a property protection case at a notary’s office, claims at the construction administration, then lawsuits in court. In this newsletter, practical experience of property protection disputes related to construction investments are summarised, including the Curia’s latest analysis of the topic.

Summary of the new tax bill
On 19 June 2018, the government presented the bill on the modification of certain tax laws and related other laws.

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Kosovo

The Republic of Kosovo and the Republic of Austria have signed an Agreement for the Elimination of Double Taxation and Prevention of Fiscal Evasion
The entry into force and applicability of the Double Tax Agreement is subject to ratification by each countries’ legislative authority.

The Tax Administration of Kosovo extends new electronic services for taxpayers
The new electronic services provide “Reimbursement Management” and have been integrated in the existing Electronic System – EDI.

The Government has published a series of Draft Laws on taxation in the Republic of Kosovo
Among the proposed amendments, the key measures include the introduction of dividend taxation and the reduction in the carry forward of tax losses to four (4) years.

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Poland

Transport Package. Finished work on amendments
On May 30, 2018, the bill amending the act on the system of monitoring the road and railway transport of goods and some other acts was published in the Journal of Laws (Journal of Laws 2018 item 1039). The new regulations come into force on 14 July 2018.

Thorough changes to the Public Procurement Law. Selected propositions of changes presented during the first consultation meeting
On 11 June 2018, the first consultation meeting was held between representatives of the Ministry of Development and Entrepreneurship, Office of Public Procurement, and other interested parties to discuss the framework of the new Act on Public Procurement (hereinafter: „Framework”). From the outcome of the meeting, we can expect that, despite talks of far reaching changes to the Act on Public Procurement, there will be significant changes to some laws, but no new act altogether.

The government introduced a proposition of minimal wage and minimal hourly rate in 2019
According to the proposition of the Council of Ministers, the minimal monthly wage in 2019 will amount to 2.220 PLN, whereas the minimal hourly rate for contracts of mandate and service contracts will amount to 14,50 PLN.

Controversial changes in posting workers passed by the European Parliament. Stricter regulations may limit the number of postings from Poland to EU countries.
On 29 May 2018, the European Parliament passed controversial changes in Directive 96/71/EC from 16 December 1996 concerning posting workers in the provision of services. Although Member States will have 2 years to implement the new regulations, the new rules mean more strict regulations that may influence the number of postings from Poland to European Union Member States.

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Romania

European Commission issues detailed technical proposal for definitive VAT system
On 25 May 2018, the European Commission released a proposal containing detailed technical amendments to the EU VAT Directive that supplement the recently proposed overhaul of the system to reinforce fraud-resilience.

Approval of the Multilateral Competent Authority Agreement on automatic Exchange of country-by-country reports
The Ministry of Finance or its authorized representative as Competent Authority will automatically exchange on an annual basis country-by-country reports ("CbC reports") received from each reporting entity, resident for tax purposes in Romania, with the other Competent Authorities of the jurisdictions with which the agreement is in force and where, based on the information in the CbC Report, one or more constituent entities of the MNE Group are either resident for tax purposes or are subject to the tax rules corresponding to their permanent activity.

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Slovakia

Amendment to the Act on Employment Services
The amendment facilitates the employment of third-country nationals for selected employers.

Treaty Between the Slovak Republic and the Federal Democratic Republic of Ethiopia on Double Taxation Avoidance and Prevention of Tax Evasion with Respect to Income Taxes
The Slovak Republic and the Federal Democratic Republic of Ethiopia signed a Treaty on Double Taxation Avoidance and Prevention of Tax Evasion with Respect to Income Taxes.

Treaty Between the Slovak Republic and the Islamic Republic of Iran on Double Taxation Avoidance and Prevention of Tax Evasion with Respect to Income Taxes
The Slovak Republic and the Islamic Republic of Iran signed a Treaty on Double Taxation Avoidance and Prevention of Tax Evasion with Respect to Income Taxes.

Regulation of the Ministry of Labour, Social Affairs and Family of the Slovak Republic on Meal Allowance
The Ministry of Labour, Social Affairs and Family of the Slovak Republic has published a regulation amending the meal allowance.

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