What changes await us?
In the following article, we bring you the most significant changes in the proposed amendment to the Income Tax Act, which is submitted to the National Council of the Slovak Republic and which should enter into force on 1.1. 2021, respectively 1.1. 2022.
The aim of the proposed amendment to the Act is to introduce rules against tax escaping and also to unify and clarify certain provisions of the Income Tax Act.
1. Clarification of the tax residence of legal entities
The term "place of effective management", which is considered to be the place where most business and management decisions are made or taken, is defined as the legal entity as a whole.
In addition, the term "registered office" is clarified, which is referred to in the new Commercial Code.
2. Reverse hybrid subject
In particular, the main aim is to tax the income of partners in general commercial partnership and general partners of limited partnership, with its registered office in the territory of the Slovak Republic (registered office means the registered office according to the Commercial Code), if there is a risk that there will be a double non-taxation of income. Additional registration and notification obligations will also apply to these partners.
This provision shall apply for the first time in the tax period beginning on 1.1.2022.
3. CFC rules
In practice, there are often situations where individuals try to avoid tax duty in the Slovak Republic by operating in the Slovak Republic by establishing a company in countries with a low tax burden approaching zero.
In order to be taxed at least at the minimum effective rate, the shares in the profits of a foreign controlled company are taxed at the moment of their potential claim of the taxpayer, natural person, and not at the time of their payment.
About the so-called CFC rules, we have already published an article about this topic, which will introduce you to the mentioned issue in more detail. You can find it under button below.
