The President has signed an amendment to Law No. 595/2003 Coll. on Income Tax on December 20, 2017. Some of the changes are given below:
Related party transaction
In accordance with the current amendment, the text of the related party definition should be comprehensive by incorporating “otherwise related subject” in it. Note that, here the word “subject” in the definition should be considered as a trust or an association, which has no legal nature or other legal arrangement that owns or manages property assets.
Hybrid mismatches
An important change planned to fight against tax evasion is introduction of rules to avoid hybrid mismatches resulting from the different legal treatment of expenses from two jurisdictions.
Definition of permanent residence
The amendment extends the conditions for determining tax residence of individuals in Slovakia by including new condition of permanent residence to the current wording of tax residence as stated in Income Tax Act. Under the new law, the permanent residence shall be defined as “the possibility of accommodation, which does not serve only for occasional accommodation and where one can presume the intention of an individual to stay permanently at that place”.
VAT
For tax periods beginning in January 2018, comprehensive VAT statement, as well as the VAT tax return forms will be effective. These forms will be available from the beginning of February 2018. The last submission date is to be February 26, 2018.
Other tax
New tax treatment has also introduced such as, exit tax. Transfers of assets, property, or activities by legal entities both resident and non-resident of Slovakia is subject to tax. That means the main purpose of the new article make sure that the taxpayer who is transferring their assets, property by shifting their tax residence to a territory outside of the Slovak Republic has been charged a tax in the Slovak Republic on the economic value of all capital profits made on our territory, although this profit might not have been achieved at the time of the exit. The exit tax base will be calculated as a difference between fair market value of transferred assets/property and tax residual value of these assets/property by applying a rate of 21% and paid in five annual installments. It will be applicable to transfers carried out after December 31, 2017.
Companies who use a business vehicle, must submit a tax return for motor vehicle tax (Form DP to DzMV). The tax rate is set out in Annex no. (1 ) of the Motor Vehicle Tax Act and ranges from cubic centimeters for passenger cars, from kilowatts per hour in the case of electric cars and from the total weight and number of axles for lorries. Tax rate determined in accordance with Annex no. 1 is then adjusted according to the age of the vehicle.
