Tax Seminar 2015

© 2015 Grant Thornton Consulting, k.s. All rights reserved.

February 5, 2015

Dr. Wilfried Serles

IB Grant Thornton Consulting, k.s.

Changes in the Income Tax Act valid from 1 January 2015

Bart Waterloos

VGD – AVOS AUDIT s.r.o.

2

Changes in the Income Tax Act

New classes and rules for tax depreciation

Luxury limits for passenger cards

Limits on writing off to certain receivables

Tax deductible costs after payment

Thin capitalization rules

Transfer Pricing

Private use of assets

Research and Development super bonus

Other changes

3

Changes in depreciation groups

• The number of depreciation groups was increased from 4 to 6.

• Assets in the 3rd depreciation group with present period of depreciation of 12

years (production technologies) will be depreciated for 8 years. Assets in the

6th depreciation group with present period of depreciation of 20 years will be

depreciated for 40 years. This change concerns assets such as

administrative buildings, hotels and residential buildings.

• Applicable to assets that are put in use after 31-12-2014

4

Depreciation groups and period of depreciation

from 01.01.2015

Depreciation groups and period of depreciation

until 31.12.2014

Group

Period of

depre-

ciation

Assets

(examples) Group

Period of

depre-

ciation

Assets

(examples)

1 4 years

Computer equipment, office machines,

passenger vehicles, telecommunication

equipment etc.

1 4 years

Computer equipment, office machines,

passenger vehicles, telecommunication

equipment etc.

2 6 years

Compressors, pumps, fork-lift trucks,

furniture, other electric equipment and

devices etc.

2 6 years

Compressors, pumps, fork-lift trucks,

furniture, furniture, other electric

equipment and devices etc.

3 8 years

Generators, transformers, electricity supply

devices, furnaces and air-conditioning

equipment etc. 3 12 years

Generators, transformers, electricity

supply devices, furnaces and air-

conditioning equipment, containers,

boats, ships etc. 4 12 years Containers, boats, ships, sport and

recreational boats etc.

5 20 years

Buildings with exception of buildings

classified into the 6th depreciation group

and engineering works (e.g. roads,

bridges) with exception of engineering

works classified into the 4th and 6th

depreciation groups 4

20 years

Buildings and engineering works

(e.g. roads, bridges)

6 40 years

Residential buildings, hotels,

administrative buildings, buildings for

cultural purposes (e.g. cinemas,

theatres), entertainment purposes etc.

Changes in depreciation groups

5

Example Change in the method of depreciation period of an administrative building from

20 to 40 years

In 2009 the company acquired an administrative building for a purchase price of

EUR 500.000. As the administrative building will be classifed to the 6th

depreciation group, the depreciation period will be changed from 20 to 40 years

with effect from 1 January 2015.

The procedure of depreciation will be as follows:

5

Year Calculation Tax depreciation

2009 – 2014 (1 – 6 year) 500 000 EUR / 20 25 000 EUR

2015 – 2042 (7 – 34 year) 500 000 EUR / 40 12 500 EUR

6

Example Determination of the depreciation group for buildings

If a building is used for several purposes, the main use will be decisive to

determine to which depreciation group it belongs.

Depreciation group 5: 1 000 m2 i.e.. 33,33 % and depreciation group 6: 2 000 m2

i.e. 66,67 %

6

Use Area used % from the area

used

Classification

code

Depreciation

group

Office space 1 500 m2 50 % 1 220 6

Shops 1 000 m2 33,33 % 1 230 5

Ambulancie 500 m2 16,67 % 1 264 6

Total 3 000 m2 100 % -

7

Change in method of depreciation

• The use of the accelerated depreciation method will be limited to the assets

classified into the 2nd and 3rd depreciation group.

• Given this, such assets as electric equipment and devices, air-conditioning

equipment, furnaces and furniture can be further depreciated using

accelerated depreciation method.

• All other assets have to be depreciated using the straight-line depreciation

method, whereby the method of depreciation must be changed from 1

January 2015, i.e. in case the assets were depreciated using accelerated

depreciation method this has to be changed to straight-line depreciation

method as of 1 January 2015. Depreciation charges for the previous years

will not be adjusted.

8

Example Change in the method of depreciation for assets classified to the 1st depreciation

group

In January 2014 the company acquired a passenger vehicle for purchase price of EUR

36,000. In 2014 the passenger vehicle was depreciated using the accelerated depreciation

method.

As the passenger vehicle will be classified into the 1st depreciation group, the depreciation

method must be changed from the accelerated to straight-line depreciation method with

effect from 1 January 2015.

The procedure of changing of the depreciation will be as follows:

Year Input price

Accelerated

depreciation

method

Change from

accelerated to

straight-line

depreciation method

Residual value

2014 36,000 9,000 - 27,000

2015 36,000 13,500 9,000 18,000

2016 36,000 9,000 9,000 9,000

2017 36,000 4,500 9,000 0

9

Example Change in the method of depreciation in case of reclassification of tangible asset

from the 3rd to the 4th depreciation group

In January 2010 the company acquired a container for purchase price of EUR

12,000. The container was classified into the 3rd depreciation group with period

of depreciation of 12 years and in the years 2010 – 2014 it was depreciated

using the accelerated depreciation method.

As of 1 January 2015, the container has to be reclassified to the 4th depreciation

group (also with depreciation period of 12 years). As the accelerated depreciation

cannot be used for the assets classified into the 4th depreciation group as of 1

January 2015, it is necessary to change the accelerated depreciation method to

the straight-line depreciation method with effect from 1 January 2015.

10

Example Change of depreciation method in case of reclassification of tangible asset from the

3rd to the 4th depreciation group (acquisition price EUR 12,000)

Year Accelerated

depreciation

Residual value

using accelerated

depreciation

Change from

accelerated to straight-

line depreciation

Residual value in

case of change to

straight-line

depreciation

2010 1,000 11,000 - 11,000

2011 1,834 9,166 - 9,166

2012 1,667 7,499 - 7,499

2013 1,500 5,999 - 5,999

2014 1,334 4,665 - 4,665

2015 1,167 3,498 1,000 3,665

2016 1,000 2,498 1,000 2,665

2017 833 1,665 1,000 1,665

2018 666 999 1,000 665

2019 500 499 665 0

2020 333 166 - 0

2021 166 0 - 0

11

Losses on sale

Losses on sale of passenger vehicles, motorbikes, ships, sport and recreational

boats, and losses on sale of property classified into the 6th depreciation group

will not be tax deductible any more.

Example

In January 2013 the company acquired a passenger vehicle for purchase price of

EUR 36,000. In March 2015 the company will sell this vehicle for EUR 17,000.

The following table shows the impact on the tax base in 2015:

Year Tax depreciation Tax residual value

Recorded

sales

revenues

Increase of the tax

base

2013 9,000 27,000 -

2014 9,000 18,000 -

2015 0 17,000 1,000

12

Interruption of depreciation

From 1 January 2015 the conditions under which depreciation of tangible

assets must be interrupted will be extended:

• In tax periods, in which the asset is not used for business purposes;

• In case of change of the tax period to the fiscal year (if the tax period is

changed for the second time during a period of two consecutive calendar

years);

• If the validity of the preliminary permission for use of building is not extended.

• But it will be no longer possible during a tax control, respectively for tax

periods over which a tax control has been performed.

13

Changes in financial lease

• Tangible fixed assets, that were acquired under the financial lease contract

have to fulfil the condition of the period of lease representing at least 60% of

the period of depreciation. The condition of the minimum duration of the

period of lease of 3 years was cancelled.

• The possibility of depreciation of the assets acquired under the financial lease

contract during the period of financial lease, which in the practice led to much

shorter period of depreciation, was cancelled. From 1 January 2015 they will

be depreciated according to the rules of the standard tax useful life.

• This new rule applies to subjects of financial lease that were leased under

contracts concluded after 1 January 2004.

14

Example Changes in depreciation of the subjects of financial lease

In February 2014 the company concluded the contract on financial lease of

passenger vehicle at the amount of EUR 24,000 for the period of February 2014

– January 2017.

Amount of depreciation (in

case of depreciation period of

36 months until 31.12.2014)

Amount of depreciation (in

case of depreciation period

48 months from 01.01.2015)

Residual value

2014 7,334 (February – December) - 16,666

2015 8,000 6,000 10,666

2016 8,000 6,000 4,666

2017 666 (January) 4,666 0

15

Example Changes in depreciation of the assets acquired under the financial lease contract

In January 2013 the Company acquired a building used for administrative

purposes with value of EUR 600,000 under the financial lease contract. The

period of lease was agreed for a period of 12 years (January 2013 – December

2024).

Annual amount of

depreciation

(depreciation period of 144

months until 31.12.2014)

Annual amount of depreciation

(depreciation period of 480

months from 01.01.2015)

Residual value

2013 50,000 - 550,000

2014 50,000 - 500,000

2015 – 2047 -

15,000

(cumulative amount of

depreciation EUR 495,000)

5,000

(residual value as at

31.12.2047)

2048 - 5,000 0

16

Financial lease / Technical improvements

• Technical improvements of the subjects of financial lease will not be

depreciated separately as „Other assets“ anymore.

• For the purposes of calculation of tax-deductible depreciation the acquisition

costs of the assets acquired under the financial lease contract will be

increased by the amount of technical improvements.

• In this way the period of depreciation will be extended accordingly.

17

Example

Depreciation in case of technical improvements of the assets acquired under

financial lease contract

In January 2015 the company concluded the contract on financial lease of

passenger vehicle in the amount of EUR 28,000 for the period of 40 months,

from January 2015 to April 2018. In January 2017 technical improvements in the

amount of EUR 2,000 will be performed.

Tax depreciation Residual value

2015 7,000 21,000

2016 7,000 14,000

2017 7,500 8,500

2018 7,500 1,000

2019 1,000 0

18

Depreciation of passenger vehicle

• The amendment introduces the luxury limit in the amount of EUR 48,000 for

passenger vehicles, but it only concerns taxpayers who use passenger

vehicles for business purposes and whose tax profit is lower than EUR

12,000. This limit of tax base will be increased in case of the use of several

passenger vehicles, depending on the number of these vehicles. For

instance, if a taxpayer uses 2 passenger vehicles, the limit of profit will be

EUR 24,000.

• Taxpayers who do not exceed the respective limit of profit may depreciate the

passenger vehicle on the basis of acquisition costs limited to the amount of

EUR 48,000. Taxpayers with higher tax profits may depreciate the vehicle in

full amount.

• This rule does not apply to lessors of luxury passenger vehicles who may

apply depreciation in individual tax periods up to the amount of income from

lease of these vehicles.

19

Example Depreciation of passenger vehicle

In 2015 the company will purchase a passenger vehicle for purchase price of

EUR 70,000. The following table shows impact during the depreciation period in

years 2015-2018:

Year

Amount of

depreciation from

acquisition price of

EUR 70,000

Amount of

depreciation from

limited acquisition

price of EUR 48,000

Tax base

Increase of tax base

of EUR 5,500 (=17,500-

12,000) at the tax base

< EUR 12,000

2015 17,500 12,000 10,000 5,500

2016 17,500 12,000 12,000 -

2017 17,500 12,000 11,000 5,500

2018 17,500 12,000 22,000 -

For the purposes of calculation of tax residual value the tax depreciation charges

in the amount of EUR 17,500 will be used, i.e. the tax non-deductible

part of tax depreciation charges will not be considered as tax

deductible through the tax residual value of passenger vehicle.

20


Top cars sold in 2014 in Slovakia:

Source: http://bestsellingcarsblog.com/2015/01/slovakia-november-2014-skoda-yeti-vw-golf-sportsvan-shine/#more-49701

os Model 11.14 % Oct 2014 % Pos

3 Skoda Octavia 318 5.3% 2 3 757,00 5.3% 1

2 Skoda Fabia 324 5.4% 3 3 725,00 5.2% 2

1 Skoda Rapid 331 5.5% 4 3 571,00 5.0% 3

4 VW Golf 187 3.1% 5 2 524,00 3.5% 4

8 Kia Cee’d 111 1.9% 6 2 376,00 3.3% 5

7 Hyundai i30 117 2.0% 9 1 948,00 2.7% 6

227 Suzuki SX4 0 0.0% 1 1 655,00 2.3% 7

14 Opel Astra 94 1.6% 12 1 281,00 1.8% 8

6 Kia Sportage 152 2.5% 7 1 252,00 1.8% 9

31 VW Polo 49 0.8% 11 1 063,00 1.5% 10

21

In September 2015 the company acquires a passenger vehicle for an amount

of 60 000 eur. Based on the new rules, if the tax base of the company:

1. > = 12 000 (yearly depreciation limit from 48 000 eur) – no correction is

required

2. < 12 000 (yearly depreciation limit from 48 000 eur) – the correction to the

tax base is required.


Year

Amount of decpreation

from acquisition price

(60 000/4)

Amount of depreciation

from limited acquisition

prices (48 000/4)

Tax base

Increase of tax Base

if tax base is <

12.000 EUR

2015 5 000 (15 000/12x4, sept. -

dec.)

4 000 (12 000/12x4 sept. -

dec.) 10 000 1 000

2016 15 000 12 000 13 000 -

2017 15 000 12 000 7 000 3 000

2018 15 000 12 000 12 500 -

2019 10 000 (15 000/12 000x 8,

jan. – aug.)

8 000 (12 000/12x8 jan. –

aug.) 8 000 2 000

Total correction tax base: 6 000

22


In January 2015 the company will purchase 2 passenger vehicles, each for

purchase price of EUR 70,000. The following table shows impact during the

period of depreciation in years 2015-2018:

Year

Amount of

depreciation from

acquisition prices of

EUR 140,000 (70x2)

Amount of depreciation

from limited acquisition

prices of EUR 96,000

(48x2)

Tax base

Increase of the tax

base of EUR 11,000

(=35,000-24,000) at

tax base < EUR

24,000

2015 35,000 24,000 18,000 11,000

2016 35,000 24,000 25,000 -

2017 35,000 24,000 11,000 11,000

2018 35,000 24,000 28,000 -

23

Lease of passenger vehicle

• On the side of lessee the annual tax costs of lease are limited to EUR 14,400

if his tax profit is lower than EUR 14,400.

• In case of the tax base higher or equal to EUR 14,400 the costs of lease will

be tax deductible in full amount.

• This limit of profit will be increased in case of use of several passenger

vehicles, depending on the number of these vehicles. For example, if the

taxpayer uses 2 passenger vehicles the limit of profit will be EUR 28,800.

24

Example Lease of passenger vehicle

In January 2015 the company will lease a passenger vehicle with value of EUR

70,000 for the period of January 2015 – December 2018, whereby the annual

cost of lease will be EUR 20,000. The following table shows impact on the tax

base during the period of lease.

Year Recorded cost of

lease

Limited cost of

lease Tax base

Increase of the tax base

of EUR 5,600 (=20,000-

14,400) at tax base < EUR

14,400

2015 20,000 14,400 10,000 5,600

2016 20,000 14,400 12,000 5,600

2017 20,000 14,400 15,000 -

2018 20,000 14,400 22,000 -

25


In April 2015 the company will lease a passenger vehicle with value of EUR

60,000 for the period of April 2015 – March 2019, whereby the annual cost of

lease will be EUR 18.000. The following table shows impact on the tax base

during the period of lease.

Year Recorded cost of lease Limited cost of lease Tax base Increase of the tax base

at tax base < EUR 14,400

2015 13,500 (April – December) 10.800 (April – December) 10,000 2.700

2016 18,000 14,400 20,000 -

2017 18,000 14,400 11,000 3.600

2018 18,000 14,400 16,000 -

2019 4.500 (January-March) 3,600 9.000 900

26


In January 2015 the company will lease 2 passenger vehicles, each with value of

EUR 70,000, for the period of January 2015 – December 2018, whereby annual

cost of lease will be EUR 20,000/vehicle. The following table shows impact on

the tax base during the period of lease.

Year

Recorded cost of

lease for 2 passenger

vehicles

Limited cost of lease

for 2 passenger

vehicles

Tax base

Increase of the tax base

of EUR 11,200 (=40,000 –

28,800) at tax base <

EUR 28,800

2015 40,000 28,800 10,000 11,200

2016 40,000 28,800 12,000 11,200

2017 40,000 28,800 30,000 -

2018 40,000 28,800 29,000 -

27

Write off of receivables

Tax deductible write off of irrecoverable receivables (e.g. in case of termination of

bankruptcy proceeding, restructuring or execution proceedings , issue of the

court´s ruling or death of the debtor) will be possible only for receivables that

were initially included in taxable income.

28

Example

Write off of receivable in case of termination of the bankruptcy proceeding due to

the lack of assets of the debtor

The company reports in the accounting a receivable from loan in the amount of EUR

13,000. The amount of the outstanding principal is EUR 10,000 and outstanding

interest on the loan represent the amount of EUR 3,000. Due to the lack of assets of

the debtor the bankruptcy proceeding was terminated. The receivable from the loan in

the amount of EUR 13,000 will be written off in the year of termination of the

bankruptcy proceeding.

Impact on the tax base:

Bankruptcy proceeding terminated

in 2014

Bankruptcy proceeding terminated

in 2015

Receivable Amount

in EUR

Accounting

write off 2014

Tax write off

2014

Amount in

EUR

Accounting

write off 2015

Tax write off

2015

Principal 10,000 10,000 10,000 10,000 10,000 0

Interest 3,000 3,000 3,000 3,000 3,000 3,000

29

Tax deductible costs after payment

The amendment extends the group of costs that will be tax-deductible no sooner

than settled:

• Costs of marketing studies and other studies, costs of market survey

• Costs of consulting and legal services;

• Payments to taxpayers resident in states with which the Slovak Republic has not

concluded international double taxation treaty, will be considered as tax-deductible

after the withholding tax will be remitted to the tax authority and the respective

notification will be delivered to the tax authority or after the security of tax is performed

on these payments.

• Agency commissions, including those paid under mandate and similar contracts (e.g.

commercial on commercial representation), will be tax-deductible after their payment

up to 20% of the value of mediated transaction. This provision does not apply to certain

financial institutions (e.g. banks, insurance companies and their branches, etc.),

• Costs of obtaining of standards and certificates will be included in the tax base evenly

during their validity, but not longer than during a period 36 months starting from the

month of their payment;

• The change in tax deductibility of costs after their payment will have to be reflected in

the calculation of deferred tax.

30

Tax non-deductible reserves

Reserves for:

• unbilled supplies and services,

• preparation, audit and publication of annual financial statements, including

their annex,

• preparation of tax return

will not be tax-deductible any more.

31

Example Tax deductible costs after payment and reserves

During the year 2015 the company recorded the following transactions:

• Invoice for consulting services in the amount of EUR 2,000 and invoice for

market survey in the amount of EUR 3,600; none of the invoices was settled

by 31.12.2015;

• Reserve for unbilled supplies in the amount of EUR 4,500;

• Reserve for the preparation of annual financial statements and tax return for

FY2015 in the amount of EUR 4,000;

• Unpaid contract fine toward the contract partner in the amount of EUR 500.

32

Example Tax deductible costs upon payment and reserves

In 2016 the company will pay:

• Invoice for consulting services from the year 2015 in the total amount of EUR

2,000,

• Invoice for market survey from the year 2015 in the amount of EUR 3,600,

• Invoice for unbilled supplies in the amount of EUR 4,500 and invoice for

annual financial statements and tax return in 2015 in the amount of EUR

4,000; for this purpose the company used provisions recorded in 2015.

• The company will record provision for preparation of annual financial

statements and tax return in the amount of EUR 3,500;

• The company will further record contract fines and late payment interest in

the amount of EUR 300, which were not paid as at 31.12.2016.

33

Example Tax deductible costs after payment and reserves

Illustration of impact on the tax base of the company in 2015 and 2016:

Year 2015 2016

Retained earnings 16,000 20,000

Costs of consulting services + 2,000 - 2,000

Costs of market survey + 3,600 - 3,600

Provision for unbilled supplies + 4,500 - 4,500

Provision for preparation of annualfinancial statements and tax return + 4,000 - 4,000

+ 3,500

Contract fines and late payment interest + 500 + 300

Tax base 30,600 9,700

Tax 22% 6,732 2,134

34

Non-deductible costs

• Tax deductible advertising items, the value of which must not exceed EUR 17

per unit, do not include tobacco products and alcoholic beverages; these

advertising items will be tax-deductible only at producers of tobacco products

and alcoholic beverages.

• Wine is an exception. Wine bottles as advertising gift will be tax deductible in

the total amount up to 5% of the tax base of the taxpayer. These limiting rules

do not apply to producers of alcoholic beverages.

• Contract fines and contracted late payment interest or default charges, that

were tax-deductible after payment, will not be tax-deductible any more.

35

Tax deductibility of interest costs

• So-called „thin capitalisation rule“ for financing between related parties is

introduced.

• Costs of credits and loans provided by related party will be tax-deductible up

to 25% of EBIDTA (earnings before interest, taxes, depreciation and

amortization).

• Activated interest in fixed assets remains unaffected by this prohibition of

deduction.

• Leasing companies, banks and insurance companies are exempt from this

rule.

36

Profit & Loss Statement Line Value

Revenues from production line 05+06+07 04 1,200,000

Revenues from production and services (601,602,606) 05 1,200,000

Production line 09+10 08 1,250,000

Consumption of material, energy( 501, 502 , 505A) 09 100,000

Services (accounting class 51) 10 1,150,000

Gross profit from production and services line 03+04-08 11 (50,000)

Total personnel costs 12 1,750,000

Depreciation of non-current tangible assets and amortization of non-current intangible assets (551) 18 1,250,000

Other operating revenues(644,645,646,648,655,657) 22 1,350,000

Other operating expenses (543,544,545,546,548,549,555,557) 23 2,200,000

Operating income, line 11-12-18+22-23 26 (3,900,000)

Interest revenues (662) 38 7,600,000

Interest expenses (562) 39 2,800,000

Profit/loss from financial activities line +38-39 46 4,800,000

Profit/loss from commercial activities before taxation line 26 + 46 47 900,000

Income tax from ordinary profit/loss line 49+50 48 450,000

- Payable (591,595) 49 50,000

- Deferred (+/-592) 50 400,000

Profit/loss from commercial activities after taxation line 47 - 48 51 450,000

Example Tax deductibility of interest costs

A Slovak production company received from its parent company a loan for building of its

production plant. Total interest expenses of the company amount to EUR 2,800,000, of which

interest paid to the parent company represent the amount of EUR 2,500,000.

37

Example Tax deductibility of interest costs

After consideration of the rate of the corporate income tax the additional tax

burden in this specific case represents the amount of EUR 277,750.

Indicator (line 47 + line 39 + line 18) 4,950,000

25% of the value of the indicator 1,237,500

Interest on loan from parent company 2,500,000

Increase of the tax base 1,262,500

Additional tax burden 22% 277,750

38

Transfer pricing

From 1 January 2015 it is necessary to include transactions between domestic

related parties in the transfer pricing documentation.

39

Example Transfer pricing

In 2014 and 2015 the company Alfa SK is engaged in the following transactions

with the parent company Alfa AT established in Austria and affiliated related

company Beta SK established in Slovakia.

The obligation to report the transactions in the transfer pricing documentation in

the company Alfa SK in 2014 a 2015:

Description of transaction

Obligation to include the transaction in the transfer

pricing documentation

2014 2015

Purchase of vehicles from Alfa AT yes yes

Reception of loan from Alfa AT yes yes

Sale of vehicles to Beta SK no yes

Purchase of spare parts from Beta SK no yes

Provision of business advisory services to Beta SK no yes

Reception of maintenance services from Beta SK no yes

40

Private use of assets

• Costs of acquisition, operation and maintenance of assets that are used for

both business and private purposes must be reduced in the proportion to their

actual use for private purposes.

• It will be further possible to deduct 80% of costs without provision of special

evidence.

• So either proof of actual percentage of use; or the lump-sum of 80%

• The same percentage will then apply to the depreciation

41

Example Use of assets for private purposes

In January 2015 the company will acquire for its employees 10 notebooks at cost of

EUR 2,000/unit. The employees can partially use NTB for private purposes. In 2015

the company will incur costs of repair of NTB in the amount of EUR 500. The

company will decide to apply the lump-sum amount of 80% on the depreciation

charges of NTB and the repair costs.

Impact on the tax base:

For the purposes of calculation of the tax residual value of NTB the tax depreciation

charges in 100% amount have to be used, i.e. the 20% of the tax depreciation

charges considered as tax non-deductible will not be reflected in the tax residual

value and will represent final tax non-deductible cost.

Costs recorded in connection

with depreciation and repair of

NTB in 2015

Amount of costs

recorded in 2015

Amount of costs

deducted from tax

base in 2015 (80%)

Adjustment of the tax

base in 2015 (in the

amount of 20%)

Depreciation of NTB for FY2015 5,000 4,000 + 1,000

Costs of repair 500 400 + 100

Total 15,500 12,400 + 3,100

42

Example Depreciation of passenger vehicle, used for 80%

In 2015 the company will purchase a passenger vehicle for purchase price of

EUR 80,000. The following table shows impact during the depreciation period in

years 2015-2018:

Year Really applicable

depreciation

Amount of

depreciation from

limited acquisition

price of EUR 48,000

Tax base

Increase of tax base

of EUR 4.000 (=16.000-

12,000) at the tax base

< EUR 12,000

2015 20.000 / 16.000 12,000 7,000 4.000

2016 20.000 / 16.000 12,000 14,000 -

2017 20.000 / 16.000 12,000 11,000 4.000

2018 20.000 / 16.000 12,000 16,000 -

43

Research & Development

• Research and development will be tax-supported in the following period.

• The support will have the form of a 125% „super-deduction“ of R&D costs.

• The super-deduction applies to:

- All research and development costs

- Personnel costs of graduates working in the area of research and

development

- Increase of R&D costs

• Its application is made conditional upon a written research and development

project, which must be submitted in case of tax audit.

44

Example Tax deduction of R&D costs

In 2015 and 2016 the company will develop a new product. The project will be

implemented with participation of employees of company, for whom the legal

conditions for recognition of deduction in 2016 are fulfilled (graduates).

Calculation of tax deduction in 2016:

Recorded R&D costs R&D costs in

2016

In it personnel

costs of

graduates

R&D costs in

2015

Increase of R&D

costs (year 2016 –

year 2015)

Consumption of materials 20,000 10,000 10,000

Consumption of energy 15,000 12,000 3,000

Personnel costs 36,000 7,000 30,000 6,000

Total 71,000 7,000 52,000 19,000

Tax deduction in 2016

(25 %) 17,750 1,750 - 4,750

Total deduction in 2016: 24,250 (= 17,750+1,750+4,750)

45

Taxation of monetary and non-monetary benefits

provided by pharmaceutical companies

Subject of taxation:

monetary benefits and non-monetary benefits provided to the health care provider, its

employee or health professional by the marketing authorization holder, wholesale

distribution authorization holder, production authorization holder and from 01.01.2015 by

the pharmaceutical company.

Tax rate: 19%

Payment of withholding tax/notification obligation:

monetary benefits – the tax will be withheld by the provider upon payment of benefits by

the 15th day of each month for the previous calendar month. The notification obligation

arises to the provider in the same period.

non-monetary benefits – obligations resulting for the recipient and the provider of benefits

Recipient of non-monetary benefits – will pay the tax before the end of the calendar

month following the calendar quarter, in which the non-monetary benefits were received.

The notification obligation arises to the recipient in the same period.

Provider of non-monetary benefits – The provider of non-monetary benefits must fulfill

the notification obligation by the 15th day after the end of the calendar quarter, in which the

benefits were provided.

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Example Taxation of non-monetary benefits provided by pharmaceutical companies

In May 2015 a pharmaceutical company provides to the practitioner the free

participation in specialized event involving the presentation of new medical

products in the seat of the parent company abroad. In addition to the fee for

participation, the pharmaceutical company will reimburse to the practitioner the

transport and accommodation costs. The pharmaceutical company determined

non-monetary benefits for the practitioner on the basis of actually incurred costs

in the amount of EUR 1,500.

Obligations of the practitioner: tax payment in the amount of EUR 285 by

31.07.2015. Delivery of the notice of payment of the withholding tax to the tax

authority (using the form issued by FR SR)

Obligations of the pharmaceutical company: submission of the notice of

provision of non-monetary benefits (using the form issued by FR SR) by

15.07.2015. In addition to the basic data, the notice will indicate the amount

of non-monetary benefits and the date of their provision.

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Year Tax base

Clearance of tax losses Forfaited tax losses

2014 EUR -200,000 - -

2015 EUR -100,000 - EUR 50,000

(¼ of tax loss 2014)

2016 EUR 80,000 -EUR 75,000 (max. ¼ of tax losses 2014 and 2015)

-


-


-

2019 EUR 80,000 -EUR 25,000 (max. ¼ of tax loss 2015)

TAX losses

The amendment explicitly provides that tax losses must be evenly utilized over a

period of 4 years.

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Foreign services

• The withholding tax is applicable to services provided by service providers

not tax resident in Slovakia (commercial, technical and other consulting

services, services of agents, construction and assembly works, etc.) only in

case such services would be provided in the territory of Slovakia.

• It will lead to the decrease of the number of cases affected by the 35%

withholding tax rate.

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Example Consulting services provided by a Liechtenstein company

Service Invoiced amount Place of provision of

service Withholding tax

Business consulting 100,000 Slovakia 35,000

Business consulting 100,000 Liechtenstein 0

A Liechtenstein company will provide to a Slovak Ltd consulting services and

charge EUR 100,000 for them.

Option 1: The services will be provided in Liechtenstein

Option 2: The services will be provided in Slovakia

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Other changes

• Member contributions arising from the voluntary membership of a legal

person established in order to protect the interests of the taxpayer in total up

to 5% of the tax base, with a ceiling of 30,000 per year.

• Obsolete stocks

The inclusion in the tax base is limited for the cost of inventories at their

disposal because of the expiration date. However, conditions are introduced,

after fulfilment of which can the cost of liquidated stocks still be considered

tax deductible, if the tax payer:

- Until the expiry of that period demonstrably takes steps to promote their

sale by gradually reducing prices, or

- Delivers such food supplies free of charge to the Food Bank of Slovakia.

Equally the discarding of inventories due to their classification as dangerous

goods under the Consumer Protection Act will not be considered a tax

deductible expense.

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Other changes

• sunk costs

sunk costs relate to the amount reported as the acquisition of intangible and

tangible fixed assets recorded as assets under construction, upon the

cancellation of the work or the permanent stopping of the work, if not relating

to damage

This amount is included in the tax base evenly over 36 months from the

month in which the taxpayer decided upon the cancellation of work and

permanent suspension of work.

In the event that there is a work stoppage due to damage, then the costs of

failed investments are deemed non-taxable.

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Questions

& Feedback

Dr. Wilfried Serles

T +421 2 59 300 400

E [email protected]

IB Grant Thornton Consulting, k.s.

Križkova 9

SK-811 04 Bratislava

www.grantthornton.sk

Bart Waterloos

T +421 2 59 300 400

E [email protected]

VGD – AVOS AUDIT s.r.o.

Moskovska 13

SK-811 08 Bratislava

www.vgd.eu

Contacts

Thank you for

your attention

The material contained in this publication is provided for general information only. The application of the information

included in this publication will depend on specific circumstances. We recommend that readers seek professional advice

when dealing with any business or legal issues. The material does not represent, nor replaces legal and tax advisory

services. No liability is accepted for acts or omissions taken in reliance upon the contents of this publication

Tax Seminar 2015

Law

Transcript of Tax Seminar 2015