If your company purchased goods or used services in other EU countries in 2024 and local VAT was charged on those transactions, do not miss this deadline!

Who is eligible to reclaim 2024 foreign VAT?

Hungarian businesses may reclaim foreign VAT if:

• they are eligible to deduct VAT in Hungary (e.g. they are not qualifying as tax-exemption businesses),
• the foreign VAT was incurred in connection with the company’s taxable business activities, and
• they do not have a registered seat or a permanent establishment in the respective Member State through which they generate revenue. (In such cases, VAT should be settled via local VAT returns.)

How to submit the application?

The refund application must be submitted via the Hungarian tax authority’s ÁNYK (General Form Completion Program) using form ELEKAFA. The deadline for submitting the claim for 2024 foreign VAT is 30 September 2025.

Important: The deadline is peremptory. If missed, the tax authority will not accept any justification, and there will be no further opportunity to reclaim the 2024 foreign VAT. While recent decisions by the European Court of Justice have slightly relaxed the previously strict practice regarding the deadline for providing missing information, meeting the peremptory 30 September deadline remains crucial.

Common mistakes to avoid

• Ensure you are using the latest version of the ELEKAFA form. Outdated versions may result in your application being rejected by the Hungarian tax authority.
  
• Before submitting the ELEKAFA form, it is recommended to check the entire form using the green check mark in the upper right corner of the program (“Check all forms”) to filter out any errors or warnings related to the form. It is also strongly recommended that you check the warnings marked in yellow to ensure that the submitted form is accepted and forwarded to the tax authority of the Member State concerned. An example of such an error would be if the country code in the address is not written in two capital letters. For example, if you enter the country code “De” for an address in Germany, at first glance it will appear as “DE” on the form, but the system of the Hungarian tax authority may still indicate an error that could result in the application being rejected. The successful submission of your application is confirmed by the KKI receipt issued by the Hungarian tax authority.

Reclaiming the 2024 foreign VAT may seem straightforward, but the process is riddled with administrative pitfalls. Even minor errors can lead to rejection by the tax authority. Especially for larger amounts, it is highly recommended to seek professional assistance. As in previous years, the experienced tax advisers of WTS Klient Hungary are ready to support you with your 2024 foreign VAT refund.

This article provides general information and does not constitute advice.

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What is the simplification about?

One important innovation of DAC9 is that it allows for the centralised filing of a global minimum tax return. This means that the parent company or a designated group member can submit the new return, updated in January, on behalf of the group for all members of the group, instead of each of them having to do it separately in their own country. A standardised Top-up Tax Information Return (TTIR) will be introduced within the EU and Member States will automatically share data relating to the global minimum tax.

A possible consequence of the change is that group members will be less involved in the return process at national level, but intra-group data reporting should still be encouraged.

What are the key deadlines?

The Directive provisions adopted at EU level must be transposed into national law by Member States by 31 December 2025. The change will also affect the financial year 2024, for which the reporting obligation will have to be fulfilled by 30 June 2026 at the latest. The deadline for transmitting the data to the relevant tax authorities is 31 December 2026, but for subsequent years the deadline will be three months from the date of receipt of the return.

Which group member should submit the global minimum tax return?

Consideration should be given as to which group member jurisdiction is the most appropriate to submit the global minimum tax return, i.e. which group member should be designated for this task. A possible consideration in this decision is whether a particular group member is covered by a temporary exemption (e.g. CbCR exemption, etc.) or, in the absence of such an exemption, whether the data required for GloBE compliance is already being collected.

Since the exchange of data will only be automatic within the European Union, if the group has a non-EU (third country) group member, it is also necessary to check whether the country concerned has acceded to the OECD (Organisation for Economic Co-operation and Development) Multilateral Competent Authority Agreement on the Exchange of GloBEInformation (GIR MCAA). If it has not acceded, it may still be obliged to submit a local global minimum tax return.

A transitional simplified jurisdictional reporting framework (Simplified Framework) will also be available as a transitional option, which could reduce the administrative burden for businesses.

What else should businesses look out for?

It is recommended to review reporting requirements in a timely manner to ensure that the systems used by the company are able to accurately capture and report the required information to ensure that the return obligation is properly fulfilled.

It is important to keep abreast of any changes in the regulatory background to the OECD’s Global Minimum Tax Information Return (GIR) and the EU’s Form TTIR.

It is also important to be aware of and comply with the rules because the 2025 tax inspection plan of the Hungarian tax authority concerning GloBE includes a priority review of the so-called covered taxes (corporate tax, innovation contribution, etc.).

Given that the top-up tax liability is already required to be included in the 2024 financial statement, the Hungarian companies concerned will have to perform the global minimum tax calculation shortly. The tax advisors at WTS Klient Hungary will be happy to assist you with the calculation and any other questions related to the global minimum tax return. As part of our tax planning and consulting services, we not only explain the details of the rules, but also develop the most optimal solutions tailored to your company. Contact us with confidence!

This article provides general information and does not constitute advice.

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Under a transitional rule, the Hungarian tax authority will impose the late payment interest for the period January to March 2025 in April 2025. Thereafter, the penalty will be imposed on a monthly basis. Taxpayers will be required to pay by the 20^th of each month (or the following working day if the deadline falls on a public holiday).

From 2025, the tax authority will calculate the late payment interest for all taxpayers in HUF without applying rounding rules.

In previous years, the tax authority notified taxpayers of their obligation to pay the interest for late payment once a year, after the calendar year concerned. The due date for payment fell on 15 November each year, which meant that there could be a gap of several months or even more than a year between the actual date of late payment and the due date for the interest.

What is the payment deadline for the 2024 late payment interest?

Due to the changeover to a monthly penalty calculation system, the due date for the payment of the 2024 late payment interest is also different from the previous one. The tax authority has already started notifying taxpayers of their late payment interest obligation for 2024, which will be due on 31 March 2025.

What remains under the old system?

The interest for late payment will remain unchanged at three hundred and sixty-fifths of the base rate of the Hungarian central bank at the time of the delay plus five percentage points for each calendar day.

Although the amount of the late payment interest will be charged on a monthly basis, the tax authority will not continue to impose late payment interest of less than HUF 5,000 per year. If the taxpayer reaches this threshold during the year, additional late payment obligations will be imposed on the tax account on a monthly basis.

The rules for calculating the net additional liability remain applicable. This means that any overpayment in the tax account at the time the debt is due for payment in respect of another tax type will reduce the basis for the late payment interest.

No further interest can be charged on the late payment interest in the event of late payment.

Taxpayers can continue to expect the tax authority to send a notice of the payment obligation. However, the tax authority will not send any further notifications of the obligation to pay the additional levy after the first notification in the year. Taxpayers are now responsible for following up any further additional penalty liabilities during the year, which they can do via the electronic interface set up by the Hungarian tax authority.

Following the changes in the legislation in relation to the increase in default penalty rates, the legislator is now using another tool to promote compliance by bringing the imposition and payment of the interest closer to the date of the late payment.

In view of the monthly imposition and payment of the late payment interest, it is now advisable to pay even greater attention to the fulfilment of the obligation imposed than before. If you need help with compliance work, the tax consulting team of WTS Klient Hungary is always at your disposal!

This article provides general information and does not constitute advice.

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The retroactive recovery of VAT on pharmaceutical tax payments is a great opportunity for pharmaceutical companies in Hungary to improve their cash-flow situation, so it is worthwhile for all those entitled to benefit from it. They can also claim interest on late payment in addition to the VAT refund.

How to claim back VAT on pharmaceutical tax payments?

There are several ways of claiming a refund, but the different ways of claiming involve different possibilities and risks.

On the one hand, companies can reclaim the VAT on pharmaceutical tax payments on the basis of the European Court of Justice’s judgment in the Novo Nordisk case. The mechanism of the payment of pharmaceutical tax is deceptively similar to payments made under funding volume agreements. In the Boehringer case, the European Court of Justice ruled years ago that the VAT base can be reduced ex post by the value added tax on funding volume agreements. The legal basis for the VAT recovery in both cases is therefore that these payments can be considered as a discount for VAT purposes, i.e. the supplier cannot freely dispose of part of the consideration received from the ‘purchaser’.

In addition to or instead of a claim, VAT on pharmaceutical tax payments can also be reclaimed in the VAT return under the provisions of the Hungarian VAT Act in force from 29 November 2024.

Which refund method should you choose?

When reclaiming VAT on pharmaceutical tax payments, there are a number of questions that need to be clarified beforehand in order to maximise the amount to be refunded (e.g. how and when to claim the refund, calculation of the limitation period, what other taxes/paid VAT may be reclaimed, interest claim, etc.).

The main dilemma to be clarified is the method of refund. As in the present case the European Court of Justice has ruled with a retroactive effect that the Hungarian VAT law is against the EU law, an application under Article 196 of the Hungarian Act on the Rules of Taxation can be made until the end of April 2025. After the 180-day statutory limitation period, it will no longer be possible to submit an application, and from then on, the retroactive reduction of the taxable amount will be possible only in the VAT return for payments of pharmaceutical tax made after 31 December 2023. It therefore makes a difference to the scope of the claim whether VAT is claimed back before or after the end of April 2024.

What are the advantages of making a claim?

A claim under Article 196 of the Hungarian Act on the Rules of Taxation allows you to claim back more VAT without risk than you could reclaim in a VAT return. This is because VAT on pharmaceutical tax payments made before 31 December 2023 (not time-barred) can be reclaimed under the application method, whereas this will not be possible under the return method. An additional advantage of the application procedure is that in the worst case, the applicant will not receive the VAT claimed, but will not be subject to a tax penalty. On the other hand, in the case of a refund in the VAT return, the Hungarian tax authority may impose penalties for any unauthorised claim.

In the case of an application under Article 196 of the Hungarian Act on the Rules of Taxation, another fundamental question is how the limitation period is to be interpreted: do the five-year limitation rules generally limit the scope of the VAT refund claim, or could the law be interpreted to mean that the 180-day limitation period in this type of case is also the limitation period itself, which starts to run from the publication of the European Court judgment. Under the latter interpretation, it would be possible to recover past VAT without any time limitation when making an application.

As can be seen from the above, the timing of the claim and the way in which it is made have a significant impact on the amount of VAT that can be recovered and the risk of recovery. Since more VAT can be recovered in a claim under Article 196 of the Hungarian Act on the Rules of Taxation with less risk, it is worthwhile to try to do so in the remaining few weeks for those who are entitled to a refund of VAT on pharmaceutical tax payments but have not yet done so for whatever reason.

The VAT advisers of WTS Klient Hungary are constantly monitoring domestic and international tax law cases and the changing regulations that follow them. If you need expert support on any of the above, please do not hesitate to contact us!

A VAT on pharmaceutical tax payments: the deadline for reimbursement is approaching bejegyzés először WTS Klient Hungary | tax | accounting | payroll | advisory | HR services | digital solutions | state aid-én jelent meg.

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Uncertain and unprepared companies

 The Minimum Tax Act came into force in Hungary in 2024, under which multinational groups with revenues of more than 750 million EUR will be subject to a global minimum tax. However, the great interest in the conference undoubtedly confirms, and a non-representative online survey by WTS Klient Hungary also revealed, that a significant proportion of business leaders, almost one third, are not even sure whether their company will be subject to the new tax. The survey also found about the same proportion of professionals who feel completely unprepared and those who were unaware that the companies concerned will have to report by the end of the year. 70% of respondents believe that the Pillar Two rules are more complex than average, and 22% of them also believe that they are extremely complex, revealed András Szadai, tax partner of WTS Klient Hungary and host of the event, at the beginning of the Global Minimum Tax Conference.

Reassuring developments

Although the deadline of 31 December is fast approaching, the required data reporting form has only recently appeared on the website of the Hungarian tax authority, and the default penalty can reach up to HUF 5 million, there are some reassuring developments.

For example, various exemptions can be claimed under the temporary CbCR Safe Harbour or the permanent Safe Harbour rules and, as Lars Behrendt, tax expert and partner at WTS Germany explained in his presentation, there are already cluster methods developed for what to do in case of involvement of countries (e.g. China, India or the US) where implementation has not yet been announced or where it is not yet foreseen in the near future. It is clear that if these economically important countries do not introduce the Pillar Two rules, it will be more difficult to apply the Hungarian rules or collect tax that Hungary may be liable for.

During the roundtable of the Global Minimum Tax Conference it was also mentioned that it is worth submitting the data reporting sheet even if the data is incorrect, as there will be a possibility to amend the data report. For the domestic declarations to be completed by the end of the year, domestic group members can decide to have a Hungarian group member designated by them complete the declaration of all Hungarian group members in one form. In addition, under the DAC9 proposal published by the European Commission in October, it is likely that it will be possible for the Globe Information Return (GIR) to be completed by the parent company or a designated group member and received through information exchange by the EU Member States concerned in 2026.

Pillar Two in Hungary: detailed rules still to come

Although the ministerial decree containing important detailed rules, which is also mentioned in the Global Minimum Tax Act, has not yet been published, dr. Szilvia Tormáné Boris, corporate tax expert at the Hungarian Ministry of Finance, tried to reassure the participants: despite the fact that the detailed rules concerned have not yet been introduced in detail into the Hungarian legal environment, the OECD model rules at international level apply in accordance with the principles of the law.

The international development of the Pillar Two rules is ongoing: the latest international negotiations aim at identifying tax avoidance structures and transactions related to the global minimum tax and at enabling mutual exchange of data on the global minimum tax (GIR) reporting between Member States at EU and global level (DAC9 Directive proposal and OECD Multilateral Competent Authority Agreement), said the expert.

Tax advisors at WTS Klient Hungary keep abreast of domestic and international Pillar Two regulations and will be happy to help you navigate the topic. As part of our tax planning and consulting services, we not only explain the details of the rules, but also develop the most optimal solutions tailored to your company. Contact us with confidence!

A WTS Klient Global Minimum Tax Conference: Reassuring answers bejegyzés először WTS Klient Hungary | tax | accounting | payroll | advisory | HR services | digital solutions | state aid-én jelent meg.

Consequences of incomplete VAT refund application 

If the Hungarian tax authority is unable to make a well-founded decision based on information available to it regarding a VAT refund application submitted by a taxable person not established in Hungary, it can request additional information or documents to fill in the gaps. The deadline for providing this information is one month.

If the applicant fails to provide any information despite being requested to do so by the tax authority, they fail to meet this obligation. For lack of such information, the VAT refund application cannot be assessed, and the tax authority will terminate the VAT refund procedure.

In this case the applicant can appeal, but in the procedure initiated based on an appeal, the applicant may not refer to new facts or evidence which they were aware of before the first-instance decision – in the case of an inspection, before the expiry of the deadline for submitting comments – but did not present them or refer to them despite being called upon to do so by the tax authority.

Favourable decision regarding deadline for providing missing information

A company established in a Member State of the European Union submitted a VAT refund application to the Hungarian tax authority. The tax authority could not make a meaningful decision based on the information available to it, so it asked the company to provide some more information. The tax authority set a deadline of one month for doing so, as stipulated in the VAT Act.

The company did not send the documents to the tax authority by the deadline as required for the assessment of the application, so the tax authority terminated the procedure. The company appealed against the decision, and in doing so provided the tax authority with the documents it had previously asked for in the request for information.

The appeal was dismissed by the second-instance authority given that the applicant had referred to evidence that was already available to it before the first-instance decision, but which it had not produced when requested to do so by the authority.

The company subsequently filed an action with the Metropolitan High Court because in its view, the requirement that it cannot refer to new facts and evidence already in its possession in the course of an appeal constitutes a substantive restriction of the right of appeal, and in its opinion this does not apply in the VAT refund procedure.  In those circumstances, the Metropolitan High Court decided to stay the proceedings and to refer the certain questions to the Court of Justice for a preliminary ruling.

Court of Justice judgment (C-746/22) 

The Court found that it is contrary to the principles of VAT neutrality and effectiveness if national legislation prohibits a taxable person submitting an application from providing information requested by the first-instance authority for the purposes of assessing the VAT refund application during any appeal to the second-instance authority, since the one-month deadline is not a peremptory time limit. 

Generally speaking, where can a VAT refund application be submitted and until when?

For Member States of the European Union, a VAT refund application may be submitted in the Member State of establishment by 30 September of the year following the refund period.

We recommend that taxpayers established in Hungary and in EU Member States should abide by this deadline, and review the local regulations of each Member State regarding applications and the required documents to ensure that VAT refund procedures receive a positive outcome.

We are happy to help with submitting foreign VAT refund applications and the subsequent procedure for both domestic and foreign applications, and we are happy to provide further information on the detailed rules. Please do not hesitate to contact our VAT experts.

A VAT refund application: one-month deadline is not peremptory bejegyzés először WTS Klient Hungary | tax | accounting | payroll | advisory | HR services | digital solutions | state aid-én jelent meg.

1. Where did the transaction take place?

The deadline for reclaiming foreign VAT applies mainly to VAT charged in European Union countries, because this is essentially what can be reclaimed if the VAT on the service or product is deductible under the laws of that country.

However, Hungary has reciprocity agreements with several non-EU countries, which also allow us to reclaim value-added tax charged in Norway, Liechtenstein, Switzerland, Turkey, Serbia and in the United Kingdom.

2. What conditions must be met?

The main point is that the Hungarian company should not engage in any business transaction in the given foreign country that would result in a permanent establishment in that country. Since in this case, it may be necessary to establish a business presence in the foreign country, even in the form of a tax establishment, a branch or a subsidiary. This always depends on the local tax regime and legal system. This would mean that the given company would have to reclaim the VAT charged in the foreign country in a local VAT return.

3. Most typical transactions

Reclaims can be submitted for all foreign transactions where the Hungarian company received a local VAT invoice, i.e. the place of performance for VAT purposes was the foreign country. This can be the purchase of a product in a given country, if the product was not subsequently sold or transferred to another country, or used in any business transaction in that country. The tax may also be linked to services used abroad by a posted employee (taxi, accommodation, possibly meals, fuel).

4. Deadline for reclaiming foreign VAT and relevant period

The deadline for reclaiming foreign VAT in the case of European Union countries is 30 September (for countries with reciprocity arrangements, the deadlines may differ), and there is no right of redress. Invoices for 2022 can be submitted to the authority in 2023, and the reclaim period cannot be shorter than three months or longer than one year.

5. How and where to submit

Reclaims by Hungarian companies must be sent to the Hungarian tax authority electronically using the ELEKÁFA form (a separate application for each country). For an annual application, the amount requested must be at least 50 euros.

Generally speaking, the Hungarian tax authority will forward the application electronically to the tax authority of the country concerned, which will then assess the merits of the application. If you exercise your right to reclaim based on a reciprocity arrangement, reclaim requests should be sent directly to the tax authority of the foreign country.

The tax authority in the country of the reclaim will issue a decision within four months of the deadline for reclaiming foreign VAT, and communication between the foreign tax authority and the Hungarian company is now entirely electronic. The tax authority may request additional documents and information no more than twice in this procedure (copies of invoices do not usually have to be attached to the original application).

+1: What have I got to lose?

In short: nothing. If the claim is unfounded, the tax is not refunded. There is no penalty for an incorrect application. However, there may be a risk if the Hungarian company is involved in a transaction in which the tax authority determines – based on the invoices and declarations it receives – that the company should register as a taxable entity in the foreign country and file a tax return. In this case though, the tax may also become refundable in the foreign tax return.

If you need help in managing the procedure and meeting the deadline for reclaiming foreign VAT, please do not hesitate to contact us. Our tax department will be happy to help you with submitting your applications.

A If it’s September, then it’s the deadline for reclaiming foreign VAT! bejegyzés először WTS Klient Hungary | tax | accounting | payroll | advisory | HR services | digital solutions | state aid-én jelent meg.

Restructuring of the outstanding tax debts

The new corporate tax law allows taxpayers in Turkey to restructure their outstanding tax debts (also other public receivables like taxes, customs taxes, social security insurance premiums, various administrative fines, and associated interests) and pay in instalments (up to 48 months) only the tax itself without its accrued penalties as the penalties are deleted. The interests on the unpaid taxes are not deleted, however they are restructured with a reduced rate (Producer Price Index) which is in the favour of the taxpayers. If the full amount of the restructured debts is paid at once (without any instalments), then only 10% of the restructured interest is paid since 90% of the interest is deleted in such a case. Taxpayers can make their applications for restructuring their tax debts which have already been accrued as of 12 March 2023.

Finalising tax disputes under tax audit and tax litigation phase

According to the provisions of the new corporate tax law, taxpayers in Turkey can finalise their tax disputes with the tax authority which are in tax audit or tax litigation phases by paying the reduced amount of the taxes claimed by the tax authority, together with the cancellation of the penalties and restructured interests.

In order to finalise tax litigation process, the stage of the lawsuit is important since there are different provisions of the law that regulates how to finalise the lawsuits depending on their stages. Taxpayers who benefit from these provisions must withdraw their court appeals latest by 31 May 2023, and waive the right to sue the tax assessments.

In addition, if the taxpayer settles with the tax authority for their tax liabilities – which might come out from the ongoing tax audits as of 12 March 2023 – by paying 50% of the taxes which are claimed in the tax audit process, the taxpayer does not pay any penalty or interest as the penalties are renounced and the interests will be applied with a reduced rate (according to the Producer Price Index).

Voluntary tax base increase according to the new corporate tax law

According to the new corporate tax law, taxpayers in Turkey can close their past fiscal years 2018, 2019, 2020, 2021 and 2022 to any possible tax audit by increasing their past years’ tax bases. When the taxpayers increase their tax bases, they will not be subject to any tax audit in the future for the related years and for the type of the tax that they voluntarily increase their tax bases provided that the taxpayers pay the related additional taxes on their increased tax bases. Taxpayers can increase their corporate income tax, VAT and some withholding tax (withholding taxes on salary income, self-employment income, rent income, dividend income, long term construction works etc.) bases and can close these tax types and related periods into a possible tax audit in the future. The voluntary tax base increase is a Turkish tax institution that can be considered as a type of tax insurance for taxpayers for eliminating their tax risks. However, it is also worth to state that corporate taxpayers, who increase their corporate income tax bases voluntarily for the past years, will not be able to carry forward 50% of their tax losses. It is important that for fiscal year 2022, 100% of the losses cannot be carried forward, and taxpayers will not be able to be refunded for the excess amount of prepaid corporate income tax which they have paid via their preliminary corporate income tax returns during fiscal year 2022.

Correction of some accounting records

With the Law No. 7440, it is possible for taxpayers in Turkey to correct some of the accounting records given below by paying the advantageous amounts mentioned in the new corporate tax law. Taxpayers can correct their below records by:

• Booking the fair market value records of the commodities, machinery, equipment, and fixtures which are not included in the books, although they actually and physically exist. (The VAT rate that is reduced by the half of the normal rate will be applied)
• Removing from the records the commodities, machinery, equipment, and fixtures that are present in the book records although they do not actually exist (This process can be managed by issuing invoices)
• Correcting the petit cash account(3% tax is paid on the petit cash balance)
• Correcting the shareholder’s receivable account(3% tax is paid on the shareholder’s receivable balance)

Additional tax on deductions and exemptions

The new corporate tax law levies a new tax for corporate taxpayers which is calculated by applying 10% to the deductions and exemptions on the corporate income tax return of fiscal year 2022, and on the tax bases which are subject to reduced corporate income tax rate. This additional tax, the so-called earthquake tax has to be paid in two instalments: the deadline of the first instalment was 30 April 2023, the second has to be paid by 31 August 2023.

If you would like to know more about the new corporate tax law or other tax regulations in Turkey, please visit the homepage of WTS Taurus, the new member firm of WTS Global for Turkey.

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Reverse hybrid discharges

Hybrid inconsistencies were already part of the previous CITA in Slovenia. A hybrid discrepancy arises in the case of a double deduction of the same income, or a deduction without being included in two different countries, which means the income is not included in the tax base in any country. Hybrid mismatches occur often between related persons.

According to the Anti-Tax Avoidance EU Directive II (ATAD II), the amendments to the Slovenian CITA also include reverse hybrid inconsistencies, which now cover a larger circle of participants. The new provisions are a must-read for international groups of cross-border operating companies.

Extension of national list of low-tax-countries

Companies from countries classified on the so called “blacklist” are treated less favourably from a tax point of view. These companies are not eligible for the exemption of dividends and dividend-like income, as well as up to 50% of the exemption from profit from share sales, donation allowances and other tax benefits.

There are two blacklists in Slovenia:

• Slovenian national list, includes countries in which the general or average nominal corporate income tax rate is lower than 12.5%, and

• EU list, countries on the list of non-cooperative tax jurisdictions, published in the Official Journal of the European Union.

Tax base assessment from January 2022

The amendment to the Slovenian CITA stipulates several changes that affect the assessment of the tax base. The changes that apply in 2022 for the first time cover the following areas:

Accruals 

In determining the tax base or in recognising the taxpayer’s income, accruals are recognised as an expense in the total amount charged. However, for the following groups of accruals, only a 50% expense is recognised for tax purposes in the amount charged:

• guarantees given when selling products or providing services,
• accruals for expected losses from dubious contracts,
• pension accruals and
• accruals for anniversary awards and retirement severance payments (exception 2022-2026).

It is important to know that the latest amendments to the Slovenian CITA introduce a transition period for the accruals of pensions, anniversary awards and retirement severance payments from 1 January 2022 to 31 December 2026. In this period these accruals are recognised in the total 100% amount for tax purposes too.

Writing off of receivables

According to the amendments to the Slovenian CITA, writing off receivables is now recognised as a tax expense for all reported and confirmed receivables that were reported by the taxpayer in a timely manner in the compulsory settlement procedure or bankruptcy proceedings. The receivables must be confirmed by the liquidator. This means that the taxpayer will no longer have to wait for the issuance of a final court decision on the completed bankruptcy proceedings or a decision on confirmation of the compulsory settlement to write these off.

Expenses for hospitability and payments to Supervisory Board members

Expenses for business hospitability costs and payments to members of the Supervisory Board are deductible for tax purposes in the 2022 calendar year up to 60%, but from 2023 onwards the deductibility will again be only 50%.

Depreciation of leased assets

For the right to use a leased fixed asset, the highest annual depreciation rate corresponding to the term of the contractual lease of the fixed asset is used for tax purposes.

Employment allowance

In accordance with the latest amendments to the Slovenian CITA, in addition to tax-deductible salary costs, an additional employment allowance of 55% of the employee’s salary in the first 24 months of employment is possible if the employee is under 25 years of age and employed for the first time.

An employment allowance of 45% of the salary is possible for an employee in the first 24 months of employment, who:

• is under 29 years of age, or
• over 55 years of age, or
• performs a job for which there is a shortage of job applicants on the labour market (list from Slovenian Labour Ministry).

The main condition for the employment allowance is an increase in the number of employees in a year.

Please note that to claim the benefit, future employees no longer have to be registered with the Employment Service before employment.

Facilitating investment in digital and green transition

Taxpayers in Slovenia can claim a tax base reduction of 40% of digital transformation and green transition investments in the tax period, in particular for:

• cloud computing, artificial intelligence and big data,
• environmentally friendly technologies,
• cleaner, cheaper and healthier public and private transport,
• decarbonisation of the energy sector, energy efficiency of buildings and
• introduction of other standards for climate neutrality.

Facilitating obligatory internships

The tax allowance for practical work in the professional education of an apprentice or student is increased to 80% of the average monthly salary of employees in Slovenia, and can be claimed for each month of practical work in an obligatory internship.

Donation allowance

• Basis allowance 1%: From 2022, corporate taxpayers can claim the allowance for donations of 1% of taxable income (so far only 0.3%) as an allowance for donations for humanitarian, disability, social welfare, charitable, scientific, educational, health, sports, cultural, ecological, religious and generally useful purposes, which are performed not only by such organisations in Slovenia but also in the EU.

• Additional allowance of 0.2% and 3.8%: In addition, 0.2% of the corporate taxpayer’s taxable income in the tax period may be claimed for payments in cash and in kind for cultural and sports purposes and for payments to voluntary associations established to protect against natural and other disasters and acting for those purposes in the public interest. The donation of 8% of the taxpayer’s taxable income for payments in cash and in kind also goes to providers of top sports programmes for investments in top sports.

• Donation beneficiaries: All described donations can be given to an organisation based in Slovenia or in the EU.

Higher deduction for expense reimbursements for employees

The amendments to the Slovenian CITA introduce the following maximum daily allowances for business trips within Slovenia from 1 January 2023:

• over 12 and up to 24 hours: EUR 27.81
• over 8 and up to 12 hours: EUR 13.88
• over 6 and up to 8 hours: EUR 9.69

The mileage allowance for transport costs incurred on a business trip is EUR 0.43 per kilometre.

The business trip surcharge for an employee who works and spends the night away from his usual place of dwelling and the employer’s registered office for at least two consecutive days is set at EUR 5.84 per day.

From 1 January 2023, the anniversary bonus will be determined as a percentage of the last known average annual salary of employees in Slovenia, broken down to one month, and for January 2023 will be as follows:

Compensation for retirement is 300% of the last known average annual salary in Slovenia, calculated per month (January 2023 set at EUR 5,908.77).

Solidarity assistance in the case of death of an employee or their family member is tax-exempt up to the amount of EUR 5,000.

Solidarity allowance in the case of a severe disability or long-term illness of the employee as well as natural disasters or fire incidents affecting the employee are tax-exempt up to the amount of EUR 2,000.

Remuneration for students for obligatory internships is not included in the tax base up to an amount of 15% of the last known average annual salary of employees in Slovenia, broken down into months (for January 2023 set at EUR 295.44).

The meal allowance for employees is tax-exempt in the amount of EUR 7.96/working day (valid from 1 September 2022).

The employee’s commuting costs to and from work are tax-exempt at the rate of EUR 0.21/kilometre (valid from 1 July 2022).

If you need more information on amendments to the Slovenian CITA or other tax news in Slovenia, please visit the website of WTS Slovenia and contact the local experts of WTS Global for Slovenia.

A Amendments to the Slovenian CITA bejegyzés először WTS Klient Hungary | tax | accounting | payroll | advisory | HR services | digital solutions | state aid-én jelent meg.

Abolition of mandatory VAT registration for selected groups

In order to reduce administrative burden, effective from 1 January 2023, the VAT Act of Slovakia defines selected groups of taxable persons who have the possibility to decide whether or not to register for VAT after the turnover exceeds EUR 49,790. These are primarily taxable persons who exclusively provide financial and insurance services or rent out real estate with exemption. These taxable persons also have the option to request cancellation of tax registration or withdraw their registration request. In defined cases, these taxable persons are not required to submit a separate tax return in case of not fulfilling the registration obligation.

Furthermore, the cases of assessment of late payment interest, which is related to the amount of tax on the importation of goods, have been harmonised with the cases of assessment of late payment interest related to customs debt.

New obligation for customers

In accordance with the rule of tax deduction on the customer´s side, a new provision is added to the VAT Act of Slovakia. It introduces the customer’s obligation to correct the deducted tax to the extent of the unpaid liability in the tax period, in which 100 days have passed since its due date.

The amendment to the VAT Act of Slovakia also includes the possibility of correcting the tax base on the side of the supplier in the event that the customer does not pay him the whole or in part for the supply of goods or services, and his receivable becomes unenforceable for the purposes of the VAT Act. The amendment further regulates and specifies the definition of unenforceable receivable. According to the new definition, this is such a receivable that has been due for 150 days.

New exemptions from VAT

In connection with the COVID-19 pandemic, the supply of goods or services to the European Commission, agencies and similar bodies that will be transported to another Member State for the purpose of providing them free of charge is exempt from tax. Also the acquisition of goods from another Member State for the same purpose by the European Commission, agency and similar body is exempt from tax.

From 2023, the method of determining the amount of the correction of deducted tax in the case of theft of small tangible property purchased for a purpose other than resale is established. In such a case, the legal fiction of assessing this property as if it were mandatorily depreciated property, is applied.

Furthermore, the amendment to the VAT Act of Slovakia introduces the obligation for the legal successor to continue adjusting the deducted tax even for movable investment property.

New deadlines and procedures

The amendment to the VAT Act of Slovakia also provides a united time period for the registration of a taxable person, together with the time period during which a taxable person who has not fulfilled the registration obligation or has submitted an application for registration late, is considered to be a taxpayer. This period is framed to 21 days.

The amendment also relieves the foreign taxpayer from the need to submit a nil tax return if he only carried out a supply of goods within the triangulation simplification under VAT ID assigned within the territory of the country.

At the same time, a special deadline has been introduced for paying the tax in the event that the person does not have a personal account number of the taxpayer at the time of acquiring a new means of transport from another Member State. The new deadline for paying the tax is 7 days from the date of delivery of the notification on the assignment of such an account.

The last significant innovation is the adjusted procedure of the Financial Administration in case of not submitting an application for tax registration, or its late filing. In the event that the result of a special tax return is an excessive deduction, the Financial Administration will not automatically check its eligibility through a tax audit, but may choose a different procedure, such as e.g. preliminary tax inspection.

If you want to know more about the latest amendment to the VAT Act of Slovakia or other tax issues in the country, we recommend you visit the website of Mandat Consulting, k.s. and contact the local WTS experts in Slovakia.

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