Changes in the amendment to the law of income tax from 1.1.2016

The amendment to the law on income tax is approved. Some significant changes in income tax from 1.1.2016.

On 09.22.2015 the National Council approved an amendment to Act no. 595/2003 Coll. on income tax, as amended ….

1. Taxation of income from copyrights and other intellectual activity

The amendment to the law on income tax is approved. Some significant changes in income tax from 1.1.2016.

On 09.22.2015 the National Council approved an amendment to Act no. 595/2003 Coll. on income tax, as amended (‘the Law on income tax’). Detailing some of the provisions that came into force earlier this year and coming to an improvement for taxpayers.


Revenue work creation and administration of a performance under the Copyright Act (actively copyright income) and income from use of the work and the use of a performance (copyright passive income) will be primarily subject to withholding tax at the rate of 19%.

Agreement on failing to collect income tax withholding, the payer (the publisher or copyright management organization) must notify the tax authority (tax office) no later than the fifteenth day after the end of the calendar year in which it was concluded.

This procedure does not apply to all receipts from royalties or other creative activities. Only for tax purposes will be taxed income from:

  • issue, reproduction, dissemination of literary works and other works at his own expense,
  • creation or execution of another subject of intellectual property,
  • the use of another of the Intellectual Property
  • assignment of rights to the intellectual property.


2. The special tax base of capital assets

Investment income, excluding income taxed by deduction, individuals will be taxed at the special tax base, to which is assigned a tax rate of 19%. Most of the revenue from capital from sources in the Slovak Republic will continue to be tax withholding at the rate of 19%, and most of the revenue from capital from foreign sources will be included in a separate tax base. According to the previous wording of the investment income from foreign sources they included the exemption and taxed in the tax return.


3. Condition for the non-taxation of a share in profits (dividends)

Share of profit (dividend) is not subject to tax (for legal entities) only to the extent to which it is a tax expense by the taxpayer paying the share of the profits (dividends).

If the amount of the taxable profit share (dividend) tax expense (eg. In foreign countries), the share of profits (dividends) will be subject to tax in the Slovak Republic.

4. The emergence of “service-permanent establishment”

Counting time crucial for the establishment of so-called service-permanent establishment specifies the six months to 183 days.

Service-permanent establishment arises if the non-resident (taxpayer with limited tax liability, respectively. Simplistically foreign entity) or person for him working will be taken in any twelve consecutive months (attention, not only in the calendar year) to provide the SR services (eg . consulting, management services, IT services) continuously or in several periods for more than 183 days.


5. Reconciliation method of determining the taxable permanent establishment fee

Permanent establishment is situated in the Slovak Republic is a foreign related party non-resident (taxpayer with limited tax liability, respectively. Simplistically foreign entity), and in determining the tax base to be applied to the procedure used for transfer pricing. Non-resident may apply for approval of a particular method of determining the tax base permanent establishment, but from 01.01.2016 shall apply mutatis mutandis the provisions for “standard application for approval valuation methods”. It also means charging applications. Since in most cases will also take account of international treaties on avoidance of double taxation, the amount in these cases at least 5,000 Euros.


6. Tax expenses after payment

From 1 January 2015 in the tax base includes expenditures (expenses) for consulting and legal services only after payment. The provisional text of the Law on Income Tax suggest that these are all services whose nature is counselling.

From 1 January 2016 there is a clarification of consulting services. It is her accounting services, bookkeeping, auditing and tax consulting. It is the name of the service according to the statistical classification of products by activity in the European Economic Area. More precisely, it is about services that can be classified into the following subcategories:

  • 20.10 financial audit,
  • 20.21 auditing,
  • 20.22 preparing the financial statements,
  • 20.23 bookkeeping;
  • 20.24 payroll services,
  • 20.29 Other accounting services
  • 20.31 consulting and training in the field of corporate taxation,
  • 20.32 preparation and planning in the field of taxation of individuals,
  • 20.40 Insolvency and receivership.

On the expenditure (costs) to include in the tax base only after the payment, there is the introduction of a limit for cash expenditures (costs) to obtain the standards and certifications. Their inclusion in the tax base will not defer (the tax base will be included once) if the price does not exceed 2,400 euros.

For those standards and certifications expenses (costs) for obtaining exceed 2,400 euros, will also pay from 01.01.2016 current rules included in the tax base:

  • The taxable amount shall include line basis over the period of their validity,
  • maximum of 36 months, beginning with the month in which they were paid.

In accordance with the transitional provisions specified the definition of services and the cash limit in obtaining standards and certifications also apply when filing a tax return after December 31, 2015, ie, for example, for the calendar year 2015th


7. Overdue liabilities included in the tax base – a new procedure

In the case of confirmation of a restructuring plan to the court the taxpayer reduces the tax base by the amount of commitments that in the past the tax base increase. Effected in the tax return for the tax period in which there was a confirmation of the restructuring plan to the court. Regarding the inclusion of outstanding commitments in the tax base, this procedure does not apply to obligations contained in the restructuring plan, endorsed by the court. On the other commitments are the conditions of the applicable tax base without modification.

For taxpayers, where he was declared bankrupt will be the tax base also reduces the amount of the liability, which in the past increased the tax base. The tax base is reduced in the fiscal period ended on the day preceding the effective date of the bankruptcy.

In accordance with the transitional provisions for regulations effective from 01.01.2016 is given a new procedure be used for the first time in the tax declaration after 31.12.2015, ie the calendar year 2015th


8. The provisioning and write-off of receivables accessories such as tax expense

The accessory will be receivable are provisioned if the following conditions are met:

  • the risk that it (accessories are interest, arrears, late payment charges and costs associated with application claims) the debtor fails to pay fully or partially,
  • It was included in taxable income
  • from the due date of the claim to which the accessory binds any period longer than 1,080 days.

Adjustments will be possible to create up to 100% of its outstanding accessories or parts, ie well below 100%. If possible the accessory claims are provisioned, it will also be written off.

In accordance with the transitional provisions for regulations effective from 1.1.2016, the creation of provisions, respectively. write-off of receivables of accessories used for the first time in the tax declaration under 31 December 2015, ie even when filing tax returns for the calendar year 2015th


9. Abolition of tax licenses for landowners and repealing the company without liquidation

Tax license will not pay land community have reached the only income derived from:

  • implementation of primary agricultural productionand of the related processing or conditioning of agricultural products
  • forest managementand water surfaces.

In addition to the conditions defined by the second income must also be satisfied the requirement that the annual turnover may not exceed 10,000 Euros. Turnover will examine as in the case of determining the amount of tax license pursuant to § 6. 4 of the Act no. 479/2009 Coll. on state administration bodies in the field of taxes and fees and the amendment of certain acts as amended.

Abolition of tax license for landowners was first used when filing a tax return after the 31.12.2015. Land Community will not pay a tax license, for example, already in the calendar year 2015th

Tax licenses shall be valid or company (eg. Ltd.) starting with the tax period in which the application for the dissolution without liquidation. This does not apply to cases where a company is wound up without liquidation and the assets are transferred to the beneficiaries. The amendment to the Law on Income Tax shall also cover cases where a company (taxpayer) withdraw a proposal for dissolution without liquidation or court before the decision to dissolve the Company finds that the company has assets and order its liquidation. Then (the taxpayer) compulsory tax license and pay the grant.

The above changes effective from 1.1.2016 was first used when filing a tax return after the 31.12.2015. Tax license in 2015, for example, the company does not apply if you filed for dissolution without liquidation during the year 2015 and a tax return after the 31.12.2015.


10. Changes in the implementation of depreciation in property leased

From 01.01.2016 and under the transitional provisions in the filed tax return after 31.12.2015 (ie the year 2015) will be in the application of tax depreciation of leased fixed assets into account the extent and duration of the lease.