Act No. 361/2014 Coll., on Motor Vehicle Tax and on Amendment to and Supplementing of Certain Acts entered into force on 1 January 2015 and implemented many changes in this area. The Act was adopted due to changes in fiscal rules, as the tax no more goes to the budgets of Higher Territorial Units, instead, it is sent directly to the state budget. Below you can find an overview of the most important changes you should be aware of when preparing the tax return on motor vehicle tax for 2015.
From 1 January 2015, motor vehicle tax is levied on the vehicles of the M, N, and O category, as it has been so far, as well as, on the vehicles of the L category. Under applicable decree, this category includes in particular small motorcycles, motorcycles, tri-cycles, four-cycles, etc.
As for taxpayers, the most significant changes are introduced in operating lease, i.e. use of a motor vehicle for business purposes is no more taxed by the vehicle owner, instead, it is taxed by the vehicle holder recorded in the vehicle’s registration book.
Further, the Motor Vehicle Act has been harmonised with other tax regulations and if a branch is recorded as vehicle holder in the registration book, legal person – founder of the registered branch shall be the taxpayer.
For the purposes of the Act, legislative definition of a passenger and utility vehicle is amended from 1 January 2015:
A passenger vehicle shall mean only the vehicle of the L and M1 category.
A utility vehicle shall mean the vehicle of the M2, M3, N1 through N3, and O1 through O4 category.
The definition of tax base applicable to passenger and utility vehicle remained unchanged however changes were made in the range of vehicles falling into individual categories. Through the amendment the tax administrator reaches higher tax collection compared to the existing rules, under which all vehicles of the M (M1 - M3) category fell into the category of passenger cars, in which tax rates are generally determined at a lower level.
Moreover, tax base of vehicles whose only power source is electricity has been specifically defined.
Tax rate and its definitions
The amendment introduces fixed tax rates for the whole territory of the Slovak Republic. Whereas when calculating the tax liability it is necessary that the annual tax rate is adjusted, at first, according to the number of months that have elapsed since the first month of registration of the vehicle in the SR. At second, it is possible that this adjusted (reduced or increased) tax rate is further reduced by 50% depending on the type of vehicle drive. This additional reduction applies to hybrid motor and hybrid electric vehicles, vehicles running on compressed or liquefied natural gas, and hydrogen-powered vehicles.
Origination and termination of tax liability – notification obligation
Unlike the rules in force in the tax year 2014, the origination and termination of tax liability applicable to the motor vehicles tax is determined as follows:
Tax obligation originates on the first day of the month in which the vehicle was used for business purposes;
Tax obligation terminates on the last day of the month in which:
- The vehicle was excluded or temporarily excluded from the registration;
- Business activities were terminated or suspended;
- The taxpayer was wound up without liquidation;
- The vehicle holder changed;
- The use of company vehicle or vehicle having other person recorded as vehicle holder in the registration book was terminated.
The origination and termination of tax liability shall be stated by the taxpayer in the tax return, except for, the use of employee´s vehicle for an employer’s business activities, in which case this information needs not to be stated in its tax return. Compared to the 2014, the tax administrator thus lifted administrative burden related with the obligation to notify the termination of tax liability to the tax on motor vehicles.
From 1 January 2015 notification obligation is introduced only if the taxpayer, in the respective tax period, does not use the vehicle for business purposes, does not account for the vehicle, does not record the vehicle in tax registration or waives the costs associated with the use of the vehicle. The tax liability for such vehicle shall expire as of 31 December of the previous tax period and this fact must be communicated to the tax administrator by 31 January after the end of the respective tax period.
Tax payment and tax prepayments
Once again, the calculation of tax liability is based on the number of months of use of the vehicle for business purposes in the respective tax period, which considerably simplifies the calculation of tax liability by the taxpayer, in particular, in the event of company vehicle use during business trips.
Tax prepayments continue to be determined on the basis of estimated tax for the next tax period, but as the sum of the annual tax rate adjusted by the number of months from the date of the first registration of the vehicle for any vehicle that is subject to tax as of 1 January of the next tax period.
The limits for establishing the quarterly and monthly prepayments have been set forth as follows:
If estimated tax is lower than € 700.00, the taxpayer pays no tax prepayments;
If estimated tax is higher than € 700.00 and lower than € 8,300.00, the taxpayer pays quarterly tax prepayments;
If estimated tax is higher than € 8,300.00, the taxpayer pays monthly tax prepayments.
Payment of tax prepayments shall not be affected by changed subject-matter of the tax, origination and termination of tax exemption, and reduction and increase in the annual tax rate during the tax period, and the filing of an additional tax return.