Tax and legal news

As we have informed you before, a part of the amendments to some tax laws, which are currently under review, are amendments to the Value Added Tax Act. The amendment includes an extensive amount of changes. Some of them relate to the amendment to the European Directive on VAT or the conclusions of European case law. We summarise briefly the fields affected by the proposed changes.

Personal income should be taxed progressively, and there should be changes to assessing the tax base of employees and self-employed persons.

Legal entities can expect new rules for the tax deductibility of expenses on financing, taxation of income of a controlled international entity, and taxation of the trans-border transfer of assets. The Parliament will deal with the Senate’s proposal for termination of the advantage of lower taxation for some kinds of investment funds.

Self-employed persons and persons with income from renting real estate whose total tax base is comprised of such income of more than 50 per cent can choose whether they use in their 2017 tax return a reduced amount of expense allowances (up to one half). By choosing this method, they can claim tax reliefs for a spouse and tax advantages for children; or the original amount of expense allowances without the opportunity to claim tax reliefs for a spouse and tax advantages for children.

Based on the VAT Action Plan, new methods of taxation on supplies of goods between member states should be introduced in the future (probably effective from 2022). The goal is to prevent tax evasion.

Last week, the Constitutional Court decided about cancelling some provisions of the Electronic Registration of Sales Act; the decision complies with requests of a group of members of parliament representing ODS and TOP 09. For tax payers who are not yet obliged to participate in the electronic registration of sales (the ERS), the most important thing is that the provisions which were supposed to start the third phase (from 1 March 2018) and fourth phase (from 1 June 2018) of the ERS have been cancelled, effective from 28 February 2018.