COVID-19: Slovak government measures

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COVID-19: Government measures

Implementation date: 02-04-20

The Slovak Parliament has approved on 2 April 2020 the following package of fiscal related measures to mitigate the inpact of Covid-19 for employees, self-employed persons, small and medium-sized enterprises:

  • The standard deadlines (expiring during the pandemic) for submission of Financial statements, Annual reports and Audit reports will be considered as met if the companies fulfill these obligations by the end of the 3rd calendar month following the month in which the end of the pandemics will officially be declared; or within the deadline for filing of the CIT return – please see below (whichever comes first). The same applies also the other accounting related obligations (bookkeeping, inventory counts, etc.) if there are objective reasons (technical, personal) for non-fulfilment).
  • The standard deadlines (expiring during the pandemic) for submission of the income tax returns, motor vehicle tax returns and announcements on non-monetary income by health care providers, as well as for payments of relevant tax liabilities / withholding of tax will be considered as met if the companies fulfill these obligations by the end of the calendar month following the month in which the end of the pandemics will officially be declared.
  • The standard deadlines for submission of the employers reports on tax settlement (“Hlásenie“), annual tax settlements for employees, confirmations on personal income tax paid for employees and declaration on assignment of share of income tax (“2%”) of individuals, will be considered as met if the companies fulfill these obligations by the end of the 2nd calendar month following the month in which the end of the pandemics will officially be declared.
  • Measures in relation to third sector were presented to ensure that share of the income tax paid by companies will be delivered to the non-profit organizations like in normal situation (“2%” of the paid tax).
  • Import of the medical material from non-EU countries will be exempt from import duties and VAT.
  • The black list of tax debtors and VAT payers will not be updated during pandemics.
  • Tax inspections and tax proceedings will be suspended, apart from those whose outcome will be the return of funds (e.g. focused on return of VAT excessive deductions). Tax distrainment procedures will be delayed as well.
  • Missing the statutory deadlines without submission of an application will be forgiven, i.e. without fees and the need to issue a decision (except for submission of tax return and paying taxes).
  • No payment of administration charges for actions that have to be taken as a result of the pandemic.
  • Matching delivery of correspondence by the tax administrator with the current post office rules. Further updates will follow.

Implementation date: 02-04-20

A new government of the Slovak Republic on Sunday, 29 March 2020, presented the following proposed fiscal and financial measures (not yet effective, subject to legislation change):

  • Companies and self-employed individuals will be able to deduct one-off unutilised tax losses reported in the taxation periods 2014 – 2018 in their 2019 tax return, up to the amount of the reported tax base.
  • Companies and self-employed individuals whose revenues decreased in the current month compared to the same month last year by at least 40%: the postponement will be announced to the tax authority in a form of an affidavit submitted electronically every month, and the postponement will be applicable for the relevant month / quarter only (i.e. taxpayers will be obliged to file such announcement every month should the drop in revenues compared to the last year persists). The (unpaid) advances will be settled in the 2020 tax return filed by the taxpayers.
  • (Measure approved by the Slovak Parliament on 2 April 2020) Employers will be able to postpone the payment of their social security and health insurance contributions if their revenues dropped by more than 40%.
  • (Measure approved by the Slovak Parliament on 2 April 2020) The Slovak Ministry of Finance in cooperation with the Slovak Investment Holding (SIH) has prepared a scheme of bank guarantees and interest subsidies. SIH earmarked 38 million euros, which will constitute a guarantee for loans provided to clients by contracted commercial banks. Aid in the form of loans to overcome the unfavourable period is intended for self employed persons and small and medium-sized enterprises. Overall, banks will provide loans of more than 80 million euros under this scheme. The interest subsidy will be granted up to 4%, which means that the interest will be borne by SIH, and the client can obtain a low-interest/non-interest loan if the employment will be unchanged. Supported enterprises will be able to use credit resources for their investment and operating costs in order to maintain employment unchanged.

There are also a series of further measures expected, however, none of them have been implemented or announced yet. Further updates will follow.
Implementation date: 18-03-20

A new government of the Slovak Republic has been appointed just very recently, on Saturday 21 March 2020 and is planning to implement a series of tax-related measures into legislation in the course of the following week/s. The following measures have already been taken by the leaving government of the Slovak Republic:

  • Standard deadline for filing of both personal and corporate income tax in Slovakia is 3 months after the end of the taxation period (e.g. on 31 March 2020 for financial years ending on 31 December 2019), with a possibility of extension by another 3 months (or 6 months in case of existence of a foreign sourced income) based on a written formal structured announcement (filed electronically – except for individuals who can file also a hard copy). In connection with the current situation, the Slovak Government issued a Regulation on 18 March 2020, based on which any penalties for late submission of both personal and corporate income tax returns and for late payment of corporate income tax will be waived (applicable for deadlines passing on 31 March, 30 April and 31 May 2020), if the income tax returns are filed and the tax is paid by 30 June 2020.
  • The same applies to a special announcement on withholding of tax filed by healthcare providers and on actual payment of the withheld tax.
  • The deadline for filing the February 2020 VAT return (being 25 March 2020) has not been extended; however, penalties could be waived upon considering individual circumstances by the relevant Tax Authority.

There are also a series of further financial measures communicated by both the leaving and the new Slovak Government; however, none of them have been implemented yet. Further updates will follow.

Courtesy of: BDO Slovakia

Register of Public Sector Partners in the Hands of Experts

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Are you a public sector partner? Do not forget to register!

In February 2017, the so-called act against shell companies came into force. This introduced the register of public sector partners. From now on, persons acting as public sector partners must be registered.

Mandatory registration applies to all persons who accept financial means or performance from public sources, and to selected persons (such as persons who enter into a contract as the result of a public tender, health care providers, organizations that hold a mining licence) and, in certain cases, their sub-contractors as well.

However, the act sets limits on the persons who have to be registered, so that not all persons, regardless of the financial means or performance accepted, have to register. The duty to register is established if the once-off amount of EUR 100,000 (or EUR 250,000 in total during a calendar year) is exceeded.

The aim of the act against shell companies is to uncover and disclose the property and management structure of persons “who do transactions with the state”. The most important disclosed data is information on persons who benefit from the business activity of these companies (so called ultimate beneficial owners).

The aim of the legislator is that identifying the ultimate beneficial owners should be carried out by so-called authorized persons who have the best overview of the property and management structure of the public sector partner, i.e. those who either suggested and set up the structure or came into contact with it. This means that these persons in particular include attorneys, tax advisors, auditors, banks and notaries.

Authorized persons have a legal duty to identify and confirm the identity of the ultimate beneficial owners on the basis of all available information. In practice, identification will mainly be based on founding documents, excerpts from registers, various agreements on the exercise of rights and distribution of profit, annual financial statements and business reports. This means that the extent of documents and sources of information will always depend on the specific public sector partner. Authorized persons have to act with due care and are not bound by the instructions of the public sector partner.

An application for registration of a public sector partner can only be filed by the abovementioned authorized persons electronically. Žilina District Court manages the registration within the statutory period of five days.

Sanctions for violation of the law are severe. The registrar can impose a fine of up to EUR 100 000 on a public sector partner or member of the statutory body. Apart from a financial sanction, the registrar may also delete a registered public sector partner from the register, which can have a major influence on their business activities.