In our October issue of News Flash, we informed you about the most significant planned changes in the field of taxes as of 1.1.2018. These changes were already approved and some of them even published in the Collection of Laws.
Within the process of approval, there were also other changes approved by the Parliament except of those mentioned, based on the amending proposals from the end of November 2017. We would like to draw your attention to the most important changes:
Provision of transport for employees
Starting from 1.1.2018, new rules regarding the tax deductibility of expenses for providing transportation for employees to the place of work and back will apply. At the same time, specific rules regarding taxation, respectively tax exemption of benefits of kind by employees shall apply, as well.
Provable expenses on transport will be considered as tax deductible expenses in the full amount at the employer, if all the following conditions are met simultaneously:
- Public transport is not carried out at all, or not to the extent that is sufficient to employer´s needs,
- Employer uses motor vehicles listed under the code KP 29.10.3 for these purposes (motor vehicles for 10 and more people).
The benefit in kind in the form of transport, ensured and paid by the employer, will be exempted from personal income tax at the employee level only if all the following conditions will be met simultaneously:
- Employer provides the transport in the case the public transport is not carried out at all or only to the extent that is not sufficient to the employer’s needs,
- Employer uses for these purposes motor vehicle listed under the code KP 29.10.3
- Employees participate on the payment of at least 60% of the amount of provable expenses (30% in the case of manufacturing companies). If the participation is lower then the difference between the amount corresponding to 60% and the full amount of participation is the taxable income of the employee.
Income from the sale of stocks and business shares
Starting from 1.1.2018, income of a non-resident taxpayer from other EU member state sourced in Slovakia will cover also income from sale of shares on a Slovak company to a non-resident. For that reason, tax obligation can arise in Slovakia to such taxpayer, even if the taxpayer sells the share on a Slovak company to a foreign person, unless the double tax treaties provide otherwise.
Moreover, starting from 1.1.2018, corporate income tax exemption on income from sale of stocks or business shares will apply to legal entities (residents or non-residents having a permanent establishment in Slovakia).
This is not applicable to a taxpayer who trades with securities under special regulations. The following conditions for tax exemption must be met simultaneously:
- Minimum 24 month holding period of at least 10% share on registered capital;
- Taxpayer is not a letterbox company.
The interests paid from credits and loans for the acquisition of stocks or business shares shall be tax deductible only in the taxable period in which the sale of stocks and business shares occurs, if income from that sale is not exempted from tax.
Income of non-profit organizations from advertising
Starting from 1.1.2018, income from advertising by selected entities established for other than business purposes (civil associations, foundations, non-investment funds, non-profit organizations providing general beneficial services) will be subject to income tax only in the taxable period when the payment is received.
If these entities will use the income from advertising for selected beneficial purposes, the income can be exempted from taxation up to the amount of EUR 20 000 for one taxable period.
At the same time, expenses by taxpayer will be considered as tax expenses only after the payment.