Taxation of individuals & corporates chamcham presentation 2012 - bw update


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Tax Seminar 2012:Slovakia, new fiscal reform

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  • We expected a lot of changes with the anticipated reform of the tax and contribution system. This would introduce the so-called super-gross salary to calculate all taxes and contributions from. However, this was currently all stopped. We’ll see after the elections if this idea will be picked up again.
  • Let us hope that this 19% can be maintained after the elections, as we consider it a very strong selling point for foreign investors
  • Just marginal increase compared to previous year. But still below the 2010 levels.
  • We repeat this change from 2011 because it will be applied now for the first time when preparing the 2011 tax statement. Tax allowance shall not be used on passive income already upon preparation of personal income tax return for a tax period of 2011. No additional allowances shall be already used in 2011.
  • No changes in the 2012 law, but remember the changes of 2011, basically the taxation of the pocket money on the travel allowances.
  • So here as well de-facto no changes in 2012 tax
  • Here as well, no changes
  • Real estate: -remember: exempt now only after 5 years for real estate acquired after 01.01.2011 and no effect of the permanent address anymore. Health care: - In an attempt to fight corruption and to decrease the costs in health-care, the government has introduced a series of laws that have also an impact in accounting and tax: - A health care provider or its employee/medical staff cannot decrease the income received by corresponding expenses, i.e. expenses in this regards are tax non-deductible - explicitly selected persons - a holder of license for manufacturing of medicines, holder of permission for wholesale of medicines, manufacturer, of medicines, manufacturer of health instruments, manufacturer of diet groceries or from the 3rd person So take the example that you are working for a medical centrum and the producer of certain medical equipment would invite you for a trip to the Seychelles: you will have to declare the value of the trip in your tax statement. And you can not deduct any costs you would have made in connection with this (e.g. if you paid your plane ticket yourself). But we see immediately several practical problems that will have to be dealt with: - you need to know the amount you have tax - even if you are a normal employee, in this case you have to file a tax statement and can not longer use the system of annual reconciliation by the employer.
  • Should the individual receive personal account number before the end of March, tax is due by 2 April 2012. Otherwise 8 days period applies. This can happen when e.g. you are an employee with some unforeseen income (e.g. medical staff) or if you decide to file a tax statement because you had more than 1 employer during the year. So then you are not registered at the tax office and thus the tax office first has to generate your account number. The personal account number is hence not required if you perform the tax via the annual reconciliation done by the employer.
  • We just wanted to repeat this issue, because it is still a hot topic. First of all there is some discrepancy between the law: profit created for periods starting after 01.01.2011, so in our opinion if your accounting periods starts 01.01.2011, it will be profits as from 01.01.2012! But the Ministery of Health has issued a guideline to the Health insurers that it has to be for all year 2011. Anyhow, still some time to clear up, because this will be done at the beginning of 2013 for payments obtained in 2012. Note: if the receiver of dividends is not in the capital, i.e. is not a direct partner or shareholder, then also social contributions will be due.
  • The same applies to 2011 and 2012 (Ada priklada v materialoch)
  • To be regularly changed as of 1 January
  • ADJUSTMENTS a) TND items – representation, fuel consumption over statutory limit, unpaid fines & uncontractual penalties and unpaid rental due to individuals (debtor side), creation of some statutory provisions (e.g. bonuses and premiums, claims) and adjustments (e.g. to tangible assets, to receivables while time test is not met) , higher accounting than tax depreciation charges, provision of gifts, some unpaid costs, costs relating to exempt revenues b) Items subject to taxation outside accounting result – actually received contractual penalties or sanction interests of previous tax periods at a side of creditor c) Decrease – lower accounting than tax depreciation charges, release of some statutory provisions and adjustments, revenues belonging to other tax periods, paid contractual penalties, sanction interests, rental to individuals (at a side of a debtor)
  • DEPRECIATION tax depreciation of tangible assets was unified irrespective of the way of purchase of the assets (deleting the specific depreciation of tangible assets purchased via financial lease agreement that was concluded after 31 December 2011 ) only aliquot depreciation charges can be applied for tangible assets upon straight-line and accelerated depreciation in the first year based on the number of months of using the asset in a relevant taxation period – this procedure shall be applied on assets put into use after 31st December 2011 HEALTH CARE Law on advertising Health care provider must notify of national centre of list of all medical staff taking part on educational seminar financed by health care provider Health carte provider is forbidden to finance, make a sponsorship or support educational activities of medical staff , medical staff is not allowed to attend such courses Pharmaceutical companies cannot motivate medicine doctor to prescript some drugs Medical sales representatives are not allowed to visit doctors during opening hours – sanction EUR 3 320 No gifts may be accepted by medicine doctors Income of companies – tax base should include monetary and non-monetary income provided to health care provider from the following persons - a holder of license for manufacturing of medicines, holder of permission for wholesale of medicines, manufacturer, of medicines, manufacturer of health instruments, manufacturer of diet groceries or from the 3rd person
  • TAX ON EMISSIONS emissions of 2011 and 2012 are subject to taxation Tax rate – 80% Deadline for filing of the tax return – 30 June TAX INCENTIVES Tax relief period was prolonged to 10 years – can be applied only by tax payers who were issued Decision on investment aid as of 1 August 2011 onwards and concurrently do not apply tax relief according to the previous legislation (effective until 31 July 2011) Art 30a (2) of 595/2003 Coll. – A tax payer may apply tax relief on the part of the tax base multiplied by coefficient ( option to choose ): “ actual” coefficient: (eligible costs on purchase of tangible and intangible assets)/(equity + eligible costs) “ fixed” coefficient 0.8 (NEW as of 1 August 2011) The act introduces duty of the tax authorities to perform tax inspection on tax reliefs drawn according to the previous income tax act (366/1999 Coll.)
  • TAP Taxable party will be allowed to request for remittance of the tax prepayment should the prepayment be paid without any legal justification (e.g. double payment by mistake), the tax administrator will refund the prepayment within 30 days as of the date of delivery of the this kind of application Tax non-residents will be allowed to request for paying of tax prepayments from the income from dependant activities in other way than calculated based on the amount of the income WHT Revenues where tax is already withheld and considered as final, shall not be included in the tax base (row 240) ORGANISATIONAL UNIT shall cease to be a tax payer on income from dependant activities as of 30 June 2012, or will be ex officio (z uradnej moci) de-registered as at 31 December 2012 Tax will be paid by its founder
  • PAYMENT OF TAXES Should the company receive its personal account number before the end of March, tax is due by 2 April 2012. Otherwise 8 days period applies.
  • 2% assignation - originally enacted in the way that a proportion will be changed to 1.0%/1.5% (1% financial gift) for taxpayers (corporates) ending tax period as of 1 January 2012 onwards Reason – funds provided last year (as at 31.12.2010) by tax payers to NGO’s declined by almost 20% comparing to 2009 (financial crisis, lower tax bases, lower taxes paid, lower amounts of 1.5%/2%) Therefore in order to keep supporting the NGO’s activities, proportion of 1.5%/ 2% (0.5% financial gift) is kept for another year (2012)
  • Should the tax payer was not yet notified of his personal account No, he will be obliged to pay the tax within 8 days after receiving it. Be careful – different Variable symbol for each payment, different prefix number based on the kind of tax. The corporate income tax return form was deleted an obligation to have stamp of the company inserted, signature is sufficient Notification obligation – threshold for calendar year increased from EUR 3 319.39 to EUR 5 000, deadline moved from the end of January till end of March
  • UPDATED according to the newsletter
  • Taxation of individuals & corporates chamcham presentation 2012 - bw update

    1. 1. Bart Waterloos Changes in the Income Tax (Individuals and legal entities)
    2. 2. <ul><li>Taxation of individuals: </li></ul><ul><ul><li>Overview </li></ul></ul><ul><ul><li>Determining the tax base </li></ul></ul><ul><ul><li>Different types of income </li></ul></ul><ul><ul><li>Technical issues </li></ul></ul><ul><li>Taxation of Corporates </li></ul><ul><ul><li>R </li></ul></ul><ul><ul><li>S </li></ul></ul><ul><ul><li>s </li></ul></ul><ul><li>Questions and Answers </li></ul><ul><li>About VGD-AVOS </li></ul>Table of contents
    3. 3. <ul><li>Subject to personal income tax are the following types of income: </li></ul><ul><ul><li>Employment income </li></ul></ul><ul><ul><li>Entrepreneurial and rental income </li></ul></ul><ul><ul><li>Investment income </li></ul></ul><ul><ul><li>Other income </li></ul></ul><ul><li>Tax statement is due by 31 March, but the deadline can be extended with 3 to 6 months by sending an announcement to the tax office . </li></ul><ul><li>Flat tax of 19% remained unchanged </li></ul>Taxation of individuals Overview
    4. 4. <ul><li>The tax free amount : </li></ul><ul><ul><li>Is calculated as 19,2 times the life-minimum valid per 1st of January of the year (19,2 x 189,83 € = 3.644,74 €) </li></ul></ul><ul><ul><li>Compared to 3.559,30 € for the year 2011 </li></ul></ul><ul><ul><li>Tax payer can claim the entire tax free amount only if the yearly taxable base is less than 100 times the life-minimum (i.e. less than 18.983 €; compared to 18.538 € for the year 2011 </li></ul></ul><ul><ul><li>Usually managers and expats are above this limit and can thus not enjoy the tax free amount at all (yearly taxable base is above 33.561,94 €, or 2.797 € monthly) </li></ul></ul>Taxation of individuals Determining the Tax Base
    5. 5. <ul><li>Tax free amount (allowance) limited to ‘active income’, i.e.: </li></ul><ul><ul><li>Employment income </li></ul></ul><ul><ul><li>Entrepreneurial or other income from self-employment </li></ul></ul><ul><ul><li>No longer applicable on “passive” income - e.g. rental income </li></ul></ul>Taxation of individuals Determining the Tax Base <ul><li>Tax loss reported in the tax period ending after 31 December 2011 can only be utilized on entrepreneurial income, however cannot be utilized on rental income </li></ul>
    6. 6. Taxation of individuals Types of income: employment income <ul><li>Consists of: </li></ul><ul><ul><li>Gross salary </li></ul></ul><ul><ul><li>Bonuses </li></ul></ul><ul><ul><li>Fringe benefits </li></ul></ul><ul><li>No changes in 2012 </li></ul>
    7. 7. Taxation of individuals Types of income: entrepreneurial income <ul><li>Taxable income: </li></ul><ul><ul><li>Income from small business </li></ul></ul><ul><ul><li>Independent profit-making activities (self-employed) </li></ul></ul><ul><ul><li>Rent of real estate </li></ul></ul><ul><li>Lump-sum expenses of 40% can be claimed, or proof real expenses </li></ul><ul><li>Tax-free amount of 500 € for rental income </li></ul>
    8. 8. Taxation of individuals Types of income: investment income <ul><li>Taxable income: </li></ul><ul><ul><li>Interests </li></ul></ul><ul><ul><li>Winnings </li></ul></ul><ul><ul><li>Yields from additional pension and life insurance </li></ul></ul><ul><li>Mostly there is a withholding tax, whereby this withholding tax is now considered final in many occasions </li></ul>
    9. 9. Taxation of individuals Types of income: other income <ul><li>Taxable income: </li></ul><ul><ul><li>Income from occasional activity </li></ul></ul><ul><ul><li>Income from the sale of real estate </li></ul></ul><ul><ul><li>Transfer of securities, options, shares </li></ul></ul><ul><ul><li>Monetary and non-monetary income provided to health care provider or its employee/medical staff by explicitly selected persons, no expenses can be applied </li></ul></ul>
    10. 10. Taxation of individuals Technical issue: allocation of tax to NGO’s <ul><li>For individuals: </li></ul><ul><ul><li>2% still available to donate </li></ul></ul><ul><ul><li>Unlike legal entities, no conditions and no gifts </li></ul></ul><ul><ul><li>Another 1% (3% in total) can be assigned by those volunteers who worked for any NGO’s for free for 40 working hours a year – applicable on tax period of 2012 </li></ul></ul><ul><ul><li>Should the conditions be not met, penalty of 1% applies </li></ul></ul>
    11. 11. Taxation of individuals Technical issue: payment of taxes <ul><li>New personal account numbers </li></ul><ul><ul><li>Taxes are to be paid to new bank accounts </li></ul></ul><ul><ul><li>Individual marks on the tax return whether he/she received his personal number </li></ul></ul><ul><ul><li>If no personal number was provided until the end of March, income tax is due within 8 days after its receipt from tax authorities </li></ul></ul>
    12. 12. Health insurance Dividends <ul><li>Dividends are subject to contributions </li></ul><ul><ul><li>10% contribution is due by the individual receiving the profit shares </li></ul></ul><ul><ul><li>on the amount exceeding the monthly minimum calculation base </li></ul></ul><ul><ul><li>Applicable on profits generated for accounting periods starting after 1 January 2011 </li></ul></ul><ul><ul><li>Includes also the liquidation balance </li></ul></ul><ul><ul><li>No obligation for company paying out the dividends </li></ul></ul><ul><ul><li>Combine with overall maximum annual calculation base </li></ul></ul>
    13. 13. Social insurance Periodicity of remuneration <ul><li>No longer linked to the type of contract : </li></ul><ul><ul><li>Employment contract vs. Mandate contract </li></ul></ul><ul><li>But depending now on the intended periodicity of the remuneration: </li></ul><ul><ul><li>Regular vs. non-regular income </li></ul></ul><ul><ul><li>Law indicates only: non-regular income is paid out on another than a monthly basis </li></ul></ul>
    14. 14. Social insurance Other issues <ul><li>Even though there is no annual reconciliation, </li></ul><ul><ul><li>Premium calculation for non-regular income will require allocation over earlier months when this non-regular income was not paid out </li></ul></ul><ul><ul><li>So e.g. Executive bonus paid out in August of 8.000 € will be subject to premiums for 8 months, and each month will be below the maximum calculation base </li></ul></ul>
    15. 15. Social and health insurance Overview premiums 2012 Insurance Maximum calculation base % employee % employer Health 2.307,50 € 4% 10% Sickness 1.153,50 € 1,4% 1,4% Pension 3.076,00 € 4% 14% Invalidity 3.076,00 € 3% 3% Unemployment 3.076,00 € 1% 1% Accident no limit - 0,8% Guarantee fund 1.153,50 € - 0,25% Reserve fund 3.076,00 € - 4,75% 13,4% 35,20%
    16. 16. Corporates Tax base <ul><li>Follows accounting result: </li></ul><ul><ul><li>Reported from double-entry bookkeeping </li></ul></ul><ul><ul><li>Reported according to IFRS </li></ul></ul><ul><ul><li>Difference between revenues and costs (non-resident w/o obligation to keep bookkeeping) </li></ul></ul><ul><li>Adjustments: </li></ul><ul><ul><li>Increase by tax non-deductible items or items booked in incorrect amount </li></ul></ul><ul><ul><li>Increase by amounts not included in accounting result, however subject to taxation </li></ul></ul><ul><ul><li>Decrease by items that shall not be included in tax base </li></ul></ul>
    17. 17. Corporates Tax deductible and tax non-deductible items <ul><li>Tax depreciation charges </li></ul><ul><ul><li>Unification of way of depreciation for all kinds of assets – depreciation over the period determined in the income tax act (financial lease depreciation cancelled) </li></ul></ul><ul><ul><li>First year of depreciation - aliquot depreciation charges as per months of the assets used </li></ul></ul><ul><li>Monetary and non-monetary contributions by health care providers to explicitly selected persons </li></ul><ul><ul><li>Shall not be treated as tax deductible expense </li></ul></ul><ul><ul><li>Regulation of Financial Directorate published </li></ul></ul>
    18. 18. Corporates Other taxes & tax incentives <ul><li>Tax on emission quotes </li></ul><ul><ul><li>Form of tax return launched in Financny spravodajca No 1/2012, including guideline </li></ul></ul><ul><li>Tax incentives </li></ul><ul><ul><li>Tax relief can be applied during 10 years (prolonged from 5) </li></ul></ul><ul><ul><li>Tax relief can be applied on tax base in the proportion of 0,8 </li></ul></ul><ul><ul><li>tax reliefs applied according to previous income tax act (366/1999 Coll.) are subject to mandatory tax inspections by tax authorities </li></ul></ul>
    19. 19. Corporates Other issues <ul><li>Tax advance payments (TAP) </li></ul><ul><ul><li>Opportunity to request for remittance of unjustifiably paid TAP </li></ul></ul><ul><ul><li>Tax non-residents may request to pay TAP in other way </li></ul></ul><ul><li>Withholding tax </li></ul><ul><ul><li>WHT from interests from bank accounts is considered as final tax (not advanced) already in 2011 </li></ul></ul><ul><li>Organizational unit </li></ul><ul><ul><li>tax payer on income from dependant activities only until 30 June 2012, or eventually until 31 December 2012 </li></ul></ul>
    20. 20. Corporates Other issues <ul><li>Payment of taxes </li></ul><ul><ul><li>Personal account numbers assigned to each taxpayer </li></ul></ul><ul><ul><li>Bank account number prefix determined based on the type of tax </li></ul></ul><ul><ul><li>Different variable symbols for each periods </li></ul></ul><ul><li>Financial Statements (FS) </li></ul><ul><ul><li>New forms of Balance sheet and P&L account for a period ending 31 December 2011 or later </li></ul></ul><ul><ul><li>Binding form of Notes to the FS published in Financny spravodajca No 11/2011 </li></ul></ul>
    21. 21. Corporates Assignation of portion of the income t ax paid to NGO ’s <ul><li>Legal entities are allowed to decide on purpose of use of its 1.5%/2% of the corporate income tax paid </li></ul><ul><li>Assigned money are used by NGO’s </li></ul><ul><li>Additional 0.5% (2% in total) upon concurrent provision of financial gift of 0.5% </li></ul>
    22. 22. Corporates Other issues <ul><li>Corporate income tax return form </li></ul><ul><ul><li>Taxpayer marks whether notified or not of personal account number for payment of taxes </li></ul></ul><ul><ul><li>No need to stamp the tax return, signature is sufficient </li></ul></ul><ul><li>Notification obligation to tax authorities </li></ul><ul><ul><li>Payments to individuals of over EUR 5 000 </li></ul></ul><ul><ul><li>Deadline by 31 March of the next calendar year </li></ul></ul>
    23. 23. Questions & Answers
    24. 24. The VGD group <ul><li>A professional organization of auditors, accountants, payroll, tax consultants, legal and deal advisors; </li></ul><ul><li>30 Partners, 500+ Staff, 30 offices </li></ul><ul><li>Present in 10 Mid-European countries </li></ul><ul><li>Started in 1981, constantly growing; </li></ul><ul><li>Offering high quality services and integrated solutions in the Mid-European region. </li></ul><ul><li>Member of Nexia International </li></ul>
    25. 25. VGD AVOS Slovakia <ul><li>More than 10 years of experience in SK </li></ul><ul><li>Rapidly expanding and growing </li></ul><ul><li>Offices in Bratislava and Piestany </li></ul><ul><li>Focus on international clients and larger local SME’s </li></ul><ul><li>More than 60 staff members in accounting, tax, audit and payroll administration </li></ul><ul><li>Foreign languages spoken: English, Dutch, German and French </li></ul>
    26. 26. VGD AVOS office locations THE SLOVAK REPUBLIC Bratislava Moskovsk á 1 3 811 0 8 Bratislava tel: +421 2 5541 0624 fax: +421 2 5541 0631 [email_address] OTHER COUTRIES Czech Republic Praha, Liberec, Olomouc Belgium Brussels, Beringen, Brugge, Gent, Willebroek-Blaasveld, Antwerpen, Antwerpen L.O., Kuume, Machelen, Dendermonde, Zele Bulgaria Sofia Germany Düsseldorf, Leipzig, Essen Luxembourg Luxembourg The Netherlands Tilburg, Oisterwijk Hungary Budapest Poland Warszawa Russia Nizhny Novgorod Piešťany Námestie SNP 1476/4, 921 01 Piešťany tel: +421 033 7767 321  Tel: +421 033 7743 895 [email_address]
    27. 27. Thank you for your attention