Tax Newsletter including: 1. Summary of the most important changes in tax laws valid from 1 January 2016 1 2. Tax return as at 31.12.2015 – changes against the year 2014 3. Tax penalties from 1 January 2016 4. Changes in the Slovak VATAct from 1 January 2016 5. Whistleblowing

1. IB Service
Grant Thornton Newsletter
December 2015
Topic
1. Summary of the most important changes in tax laws valid from 1 January 2016
1
1. Summary of the most important changes in tax laws valid from 1 January 2016
2. Tax return as at 31.12.2015 – changes against the year 2014
3. Tax penalties from 1 January 2016
4. Changes in the Slovak VAT Act from 1 January 2016
5. Whistleblowing

2. • It is specified in more detail that costs of advisory and legal services
classified in codes 69.1 and 69.2, i.e. legal services, legal advisory
services, services of notaries public, accounting services, keeping of
books of accounts, audit services, tax consulting and audit services,
will be tax deductible once they have been paid.
Transfer pricing
Amendments of the Income Tax
The process of approval of the used valuation method by the tax
administrator is specified.
Measures against tax evasion
Dividend at the Slovak parent company will be taxed if such
dividend is treated as tax cost at the subsidiary. Furthermore, a
Summary of the most important changes in tax laws valid
from 1 January 2016
2
Transfer pricing
It is specified that the tax administrator may invite the taxable person
to submit transfer pricing documentation for the respective year not
sooner than after expiration of the time-limit for submission of the
income tax return for the respective year, i.e. it may request for
transfer pricing documentation for the year 2015 not sooner than on 1
April 2016 (or 1 July 2016 in case of prolongation of the time-limit
for submission of the tax return).
The process of approval of the used valuation method by the tax
administrator is specified.
dividend is treated as tax cost at the subsidiary. Furthermore, a
new rule is introduced, according to which dividend will be
subject to tax if the taxable person receiving dividend undertakes
steps leading to an abuse of the Income Tax Act.
Changes in determination of the tax base
Several changes relating to determination of the tax base will
already be applied upon submission of the income tax return for
the year 2015, for example:
• If a taxable person sells assets, the loss on sale of which is not a
tax expense, such person may apply monthly tax depreciation;
• In case of fulfilment of determined conditions the creation of a
value adjustment to receivable attribution will be a tax expense;
under the same conditions the write-off of receivable
attribution will be a tax expense;

3. • Supplier who applies the special regime will pay VAT from issued
invoice after reception of payment from the customer;
• Customer will claim a VAT deduction only after the payment of
the invoice to the supplier who applies the special regime.
Introduction of local reverse-charge rules for construction
works
From 1 January 2016 the reverse-charge regime will be applied to
construction works, supply of a building or parts of buildings under
the contract for work, as well as to some supplies of goods with
installation or assembly.
The supplier of these services will issue an invoice without VAT and
Taxation of capital income
Capital income of physical persons, irrespective of its amount,
will be taxed through a special tax base at the rate of 19%.
Income of physical persons from the transfer of securities traded
on a regulated market (e.g. on stock exchange), which are not part
of business of the physical person, will be exempt from tax if
period between their acquisition and sale does not exceed one
year. Furthermore, income of physical persons from long-term
investment savings will be exempt from tax after 15 years of
establishment of the savings account.
Changes in the VAT Act
3
The supplier of these services will issue an invoice without VAT and
the obligation to pay VAT (as well as the claim for VAT deduction
on the basis of invoice) will arise to the recipient of the services.
Introduction of the reverse-charge rules for supplies of goods
by a foreign person
The reverse charge regime is also introduced for domestic supplies
of goods by a foreign person. Until the end of year 2015 this regime
was applied only when a foreign person had supplied goods with
installation or assembly to a domestic person.
Tightening of requirements for reporting of simplified
invoices in the VAT control statement
Until the end of year 2015, for received simplified invoices the
taxable person only reports in the VAT control statement summary
information on the tax bases, VAT and deducted VAT from all
simplified invoices.
Changes in the VAT Act
Application of a special VAT rate – 10% to selected types of
foods
While foods are subject to the VAT rate of 20% until the end of
year 2015, the VAT rate of 10% will be levied on selected types
of meat, milk, dairy products and bread from 1 January 2016.
Payment of VAT upon the receipt of payment for supplied
goods or service
Taxable persons whose turnover does not exceed EUR 100 000
per calendar year and who are not subject to bankruptcy
proceedings or have not entered into liquidation, will have the
option to apply a special regime upon supply of goods and
services in the home country, where:

4. After 1 January 2016, the taxable person will be obliged to report
in the VAT control statement received simplified invoices
separately for individual suppliers if the total amount of tax
deducted from simplified invoices is EUR 3.000 or more.
Electronic communication of the tax administrator with
a taxable person
While persons determined by law are obliged to use electronic
means for their communication with the tax administrator already
from 1 January 2014, electronic communication in the opposite
direction, i.e. from the tax administrator to the taxable person,
will only become a reality only in 2016. In this year the financial
directorate will gradually publish on its website information about
4
directorate will gradually publish on its website information about
taxes, for which this electronic communication in the opposite
direction will be used.
Ing. Vladimír Kovár
Križkova 9
81103 Bratislava
T +421 2 593 004-61
F +421 2 590 004-10
E vladimir.kovar@sk.gt.com

5. total useful area in m2 (or per cent) of all parts of the building
classified to DC 5 with total useful area in m2 (or per cent) of all
parts of the building classified to DC 6;
• Technical improvements of a building used for several purposes will
be classified to a depreciation group on the basis of the purpose, for
which the lessee uses the leased premises. The declining-balance
depreciation method may only be used for tangible assets classified
to depreciation groups 2 and 3. All other types of assets have to be
depreciated using the straight-line method from 1 January 2015.
As of 1 January 2015 an amendment of the income tax act
entered into force, which will significantly influence the
quantification of the tax base and calculation of the tax as at
31.12.2015. Taxable persons with fiscal year starting before 1
January 2015 will be affected by this amendment only in the fiscal
year ending during the year 2016.
Here are the most important changes.
Tax return as at 31.12.2015 – changes against the year 2014
5
depreciated using the straight-line method from 1 January 2015.
Depreciation charges for the previous years will not be
adjusted;
• The new amendment applies to assets acquired in the form of
financial leasing and used under financial lease contracts concluded
after 1 January 2004. From 1 January 2015 they are depreciated
during the period of depreciation determined for individual
depreciation groups, which means a prolongation of the period of
depreciation of assets acquired in this form against the past;
• In case of operating lease depreciation charges for leased equipment
may be recognised as tax expenses of the lessor in the individual tax
periods, up to the amount of income from lease;
• Losses on the sale of passenger vehicles, motorcycles, ships and
sports and holiday boats are not a tax expense. Monthly tax
depreciation for these assets may also be applied in the year of their
sale.
Reclassification of non-current assets between depreciation
groups, change in the period and method of depreciation
• The number of depreciation groups increased from 4 to 6
(period of depreciation: 4, 6, 8, 12, 20 and 40 years);
• For some types of assets, in particular those of technological
character, e.g. generators, transformers, power distribution
equipment, furnaces and ventilation systems, the period of
depreciation was reduced (from 12 to 8 years);
• For administrative buildings and buildings for cultural and
entertainment purposes, hotels and residential buildings the
period of depreciation was prolonged from 20 to 40 years;
• If a building is used for several purposes, the main use will be
decisive for determination to which depreciation group it
belongs. It will be determined on the basis of comparison of the

6. advertising gift are tax deductible in the total amount up to 5% of
the tax base of the taxpayer. These limitations do not apply to
alcoholic beverage producers;
• Penalties and contracted default interest or late charges are not
recognised as tax expenses, regardless of their payment.
Cost items deductible after their payment
• Costs of marketing and other studies, market surveys, certification
and standardisation are included in the tax base evenly over the
period of their validity, but not longer than during 36 months of
their payment (the accruals concept will only be applied to
standards and certificates with acquisition cost higher than
Deduction of receivables
• Tax deduction of the write off of irrecoverable receivables (e.g.
in case of termination of bankruptcy proceeding, restructuring
or execution proceedings , issue of the court´s ruling or death
of the debtor) will be possible only for receivables that were
initially included in taxable income. It means that for
example receivables from loans which, unlike receivables from
supplies, did not increase the taxable profit at the time of
recording, may not be deducted from tax if they become
irrecoverable;
• This limitation does not apply e.g. to banks.
6
standards and certificates with acquisition cost higher than
EUR 2.400);
• Agency commissions, including those paid under mandate and
similar contracts (e.g. commercial agency agreements) will be tax
deductible up to 20% of the value of mediated transaction. Again,
this provision does not apply to certain financial institutions (e.g.
banks, insurance companies and their branches, etc.);
• Costs of advisory and legal services (classification codes 69.1
and 69.2, i.e. legal services, legal advisory services, services of
notaries public, accounting services, keeping of books of accounts,
audit services, tax consulting and audit services) paid by taxable
person in the countries, with which the Slovak Republic has not
concluded the international double taxation treaty, will be tax
deductible only after reporting, retention and payment of the
withholding tax or tax security for these payments.
Provisions
• Provisions for unbilled supplies and services, provisions for
preparation, audit and publication of financial statements and
annual report, and provisions for preparation of the tax return
are not recognised as a tax expense.
Non-deductible costs
• Tax deductible advertising items, the value of which must not
exceed EUR 17 per unit, do not include tobacco products and
alcoholic beverages. These advertising gifts may only be
deducted from tax by producers of tobacco products and
alcoholic beverages. Wine is an exception. Wine bottles as

7. Limitation of deductibility of interest costs (so-called “thin
capitalization rule”)
• Costs of credits and loans provided by dependent persons may
be claimed as tax expenses up to 25% of EBITDA (earnings
before interest, tax, depreciation and amortization). Activated
interest in fixed assets remains unaffected by this prohibition of
deduction. This provision does not apply to leasing companies,
banks and insurance companies.
Tax changes concerning passenger vehicles
• The “luxury“ limit in amount of EUR 48.000 for passenger
vehicles only applies to taxable persons whose taxable profit
achieved with use of a passenger vehicle as a company asset is
lower than EUR 12.000;
• This limit of profit will be increased in case of the use of several
passenger vehicles, depending on the number of these vehicles.
For instance, if a taxpayer uses 2 passenger vehicles, the limit of
profit will be EUR 24.000;
7
Transfer pricing
• From 1 January 2015 transactions between domestic related
companies must be included in transfer pricing documentation,
too.
profit will be EUR 24.000;
• Taxable persons who do not achieve the respective limit of profit
may depreciate the passenger vehicles in a limited amount, while
taxable persons with higher taxable profits may depreciate them in
the full amount.

8. Example No. 1:
In January 2015 the company purchases a passenger vehicle for the price of EUR 70.000. The calculation of impact on the tax base during
the period of depreciation will be as follows:
In tax periods, where taxable profit is lower than EUR 12.000, the tax base will be increased by the difference between depreciation charges
Year
Depreciation charges
from acquisition cost of
EUR 70,000
Depreciation charges from
limited acquisition cost of
EUR 48,000 Tax base
Increase of the tax base of
EUR 5,500 (= 17,500 – 12,000) at
tax base ≥EUR 12,000
2015 17.500 12.000 10.000 5.500
2016 17.500 12.000 12.000 -
2017 17.500 12.000 11.000 5.500
2018 17.500 12.000 22.000 -
8
In tax periods, where taxable profit is lower than EUR 12.000, the tax base will be increased by the difference between depreciation charges
from acquisition cost of EUR 70.000 (depreciation charge in amount of EUR 17.500) and depreciation charges from limited acquisition cost
of EUR 48.000 (depreciation charges in amount of EUR 12.000).
In case of lease of “luxury vehicles” depreciation costs at the lessor are tax deductible in the full amount. At the lessee the cost of lease may
be deducted up to the amount of EUR 14.400 per year, if taxable profit of the lessee is below EUR 14.400. If the tax base is equal or higher
than EUR 14.400 the cost of lease is recognised as a tax expense in the full amount.
Ing. Martina Runčáková
Križkova 9
81103 Bratislava
T +421 2 593 004-00
F +421 2 590 004-10
E martina.runcakova@sk.gt.com

9. Example 1:
A penalty assessed four years after the date for payment of the tax will
be four-times higher after tax audit.
On the basis of tax audit for the year 2015 the tax authority will assess
additional tax in amount of EUR 50.000. The tax was payable in 2015
and the tax audit will be conducted in 2019.
Payment of penalty according to the old rules: EUR 5.000
(The penalty is calculated as a lump-sum using a triple of the ECB
From 1 January 2006 much higher penalties, but not exceeding the
amount of additional assessed tax, may be imposed for a tax
return indicating an incorrect amount of tax (hereinafter
“incorrect return”). While incorrect tax returns are now
sanctioned by a lump-sum penalty irrespective of the period of
delay, in the future the amount of panalty will depend on the
number of days of delay and a high interest rate.
1. If additional tax is assessed as a result of tax audit an interest
rate p.a. representing a triple of the base interest rate of the
Tax penalties from 1 January 2016
9
(The penalty is calculated as a lump-sum using a triple of the ECB
rate, at least 10 per cent, the number of years between the date for
payment of tax and the tax audit does not play any role.)
Payment of penalty according to the new rules: EUR 20.000
(The penalty is calculated with use of a triple of the ECB rate, at least
10 per cent p.a. Four years elapsed between the date for payment of
tax and the tax audit. The additional tax liability will bear interest of 10
per cent p.a. In this specific case the penalty is four times higher than
before.)
rate p.a. representing a triple of the base interest rate of the
European Central Bank (at least 10 per cent) will be used for
calculation of the penalty.
2. If a supplementary tax return is filed within 15 days of the
start of tax audit an interest rate p.a. representing a double of
the base interest rate of the European Central Bank (at least 7
per cent) will be used for calculation of the penalty.
3. If a taxable person files a supplementary tax return before the
start of tax audit its tax honesty will be “rewarded” by use of
the interest rate corresponding to the base interest rate of the
European Central Bank (at least 3 per cent) for calculation of
the penalty.

10. Example 2:
If a company files a supplementary tax return four years after the date
for payment of tax and before the tax audit, the penalty will be 140
percent higher.
On the basis of tax audit for the year 2015 the tax authority will assess
additional tax in amount of EUR 50.000. The tax was payable 2015
and the tax audit will be conducted in 2019. The supplementary tax
return will be filed before the start of tax audit.
Payment of penalty according to the old rules: EUR 2,500
(The penalty is calculated with use of 1.5-times of the ECB rate, at
least 5 per cent p.a. the number of years between the date for payment
10
least 5 per cent p.a. the number of years between the date for payment
of tax and the tax audit does not play any role.)
Payment of penalty according to the new rules: EUR 6,000
(The penalty is calculated with use of the ECB rate, at least 3 per cent
p.a. Four years elapsed between the date for payment of tax and the
tax audit. The additional tax liability will bear interest of 3 per cent p.a.
In this case the penalty is 140% higher than the penalty imposed
according to the old rules.)
Ing. Vladimír Kovár
Križkova 9
81103 Bratislava
T +421 2 593 004-61
F +421 2 590 004-10
E vladimir.kovar@sk.gt.com

11. Changes in the Slovak VAT Act from 1 January 2016
In case of supplies of goods to a domestic taxable party with
place of supply in the Slovak Republic (domestic supplies of
goods) the foreign person will issue an invoice without VAT,
containing information on the application of reverse charge. The
foreign person will not claim deducted VAT from goods
purchased with Slovak VAT through a VAT return filed in
Slovakia, but it will do so by submitting the application for VAT
refund to a foreign person in the state of establishment of the
foreign person. In this way the foreign person will obtain VAT
from purchased goods with significant delay.
Introduction of the application of reverse charge to
supplies of goods by a foreign person
Situation before 31.12.2015
In case of a supply of goods by a foreign person from other
member state or by a foreign person from a third country
(hereinafter „foreign person“) reverse charge was only applied to
supplies of goods with installation or assembly with the place of
supply in the Slovak Republic.
In case of other supplies of goods with place of supply in the
11
from purchased goods with significant delay.
For foreign persons it will mean the following:
• They will not be obliged to pay VAT in Slovakia, and
• They will only be allowed to deduct VAT through the
application for VAT refund, on the other hand.
The foreign persons will continue reporting of acquisitions of
goods from other member state within the territory of SR in the
VAT return (both the tax liability and deductions of VAT from
acquired goods). The VAT deduction may also be applied via a tax
return e.g. in situations where the foreign person executes a supply
of goods in SR with VAT (e.g. to a private person) or a supply of
goods to other member state, in addition to a supply of goods in
SR with Reverse Charge.
In case of other supplies of goods with place of supply in the
Slovak Republic (domestic supplies of goods) the obligation to pay
the value added tax was imposed on a foreign person, who was
liable to apply for registration and submit the VAT returns in
Slovakia. In this case the foreign person deducted VAT from goods
purchased with Slovak VAT through the VAT return.
Situation after 01.01.2016
The reverse charge will be applied to each supply of goods by
a foreign person (including goods supplied with installation or
assembly) to a domestic taxable party with place of supply in the
Slovak Republic. The only exception remains goods supplied in the
form of sale by distance selling, in which case reverse charge will
not be applied.

12. Introduction of the Reverse charge for construction
works between two domestic persons – VAT payers
Situation before 31.12.2015
In case of supplies of construction works or goods with installation
or assembly between two domestic persons the supplier was obliged
to pay VAT.
Situation after 01.01.2016
In case of supplies of construction works between two domestic
persons the reverse charge to the customer will be applied in the
following situations:
F CONSTRUCTIONS AND CONSTRUCTION WORKS
41 Buildings and building construction works
42 Constructions and construction works for civil engineering
42.1 Roads and railways; construction works for roads and railways
42.2 Constructions and construction works for utility projects
Constructions and construction works for other civil engineering
12
following situations:
• In case of supply of construction works, including supply of a
construction or its part, classified to Section F of the Commission
Regulation (EU) No 1209/2014 of 29 October 2014, and
• In case of supply of goods with installation or assembly, providing
their installation or assembly is classified to Section F of the
regulation
Constructions and construction works classified to Section F of the
Commission Regulation (EU) No 1209/2014 of 29 October 2014:
JUDr. Ing. Peter Schmidt
Križkova 9
81103 Bratislava
T +421 2 593 004-63
F +421 2 590 004-10
E peter.schmidt@sk.gt.com
42.9
Constructions and construction works for other civil engineering
projects
43 Specialised construction works
43.1 Demolition and site preparation works
43.2 Electrical, plumbing and other construction installation works
43.3 Building completion and finishing works
43.9 Other specialised construction works

13. may be imposed (including violations of the Labour Code, e.g.
illegal employment, and many other violations).
The Act allows the employees, who file an action or make a report to
an administrative body (e.g. Labour Inspectorate), to apply the court or
the administrative body for the protection against sanctions on the
part of the employer. The protection which may be provided to an
employee, consists in making the legal act taken or decision made by
the employer against the employee conditional on the prior approval
A new Act on certain measures related to reporting of anti-
social behaviour and on amendment of some acts, referred to as
“Whistleblowing Act” (hereinafter “Act”), was passed with the
entry into force from 2015.
In connection with adoption of this Act, a new obligation for
employers was introduced. This obligation consists in the
introduction of an internal regulation similar to the OHS regulation,
and of new rules for the protection of “whistleblowers“, which also
Whistleblowing
the employer against the employee conditional on the prior approval
of the Labour Inspectorate. Any legal act taken without approval
of the Labour Inspectorate is declared invalid.
If an employee makes a report directly to the employer and later is
subject to a labour-law related act (e.g. termination of employment)
not approved by him, he may apply the Labour Inspectorate for
suspension of effects of such labour-law related act in 7 days of the
day when he became aware of it.
The Act encourages the employees to report breaches also by
remuneration, which will be paid if the report proves to be true and
the offender is condemned in the criminal or administrative
proceedings. The remuneration may paid up to 50-times the minimum
wage (i.e. EUR 19 000 from January 2015), but its granting and amount
depend on the decision of the Ministry of Justice of SR (it is not
enforceable).
and of new rules for the protection of “whistleblowers“, which also
applies to the employees.
(i.) General information on the Act
The purpose of the Act is detection of “serious anti-social
behaviour”, such as:
• Corruption;
• Deceitful practices in public procurement and in the use of EU
funds;
• Other crimes, for which the law imposes the sentence of
imprisonment with the upper limit exceeding three years (e.g. theft
causing a substantial damage – min. EUR 26 600; fraud or
misappropriation of funds or non-payment of wage and severance
pay, causing a major damage, i.e. min. EUR 2 660, etc.);
• Administrative offences, for which a fine of at least EUR 50.000

14. (iii.) Time-limits
The Act entered into force on 1 January 2015 and the individual
obligations of the employers must have been complied with by
1 July 2015 at the latest.
(ii.) New obligations of the employer
An employer who has more than 50 employees (including
persons working under agreements on work performed outside
employment relationship) is obliged to establish an internal
mechanism for making and handling of reports. This
mechanism must have the form of an internal regulation, like
OHS.
For this purpose the employer is obliged :
• to designate a responsible person, which may be a special
organizational unit or an employee reporting directly to theorganizational unit or an employee reporting directly to the
statutory body;
• to issue an internal regulation, specifying the details on making
and handling of reports on breaches, keeping of records and
protection of the reporter,
• to keep records on all reports made and the manner of their
handling, for a period of three years .
If the employer breaches the obligation to introduce an internal
mechanism the Labour Inspectorate may impose a fine on the
employer up to the amount of EUR 20.000.
Furthermore, the Act allows imposition of a lump-sum penalty
up to EUR 500 for a breach of the obligation in performance of
labour inspection.
Bratislava
Panenská 6
SK-81103 Bratislava
T +421 2 5263 2804
F +421 2 5263 2677
E bratislava@taylorwessing.com
JUDr. Radovan Pala

15. SLOVAKIA
(Bratislava | Prešov)
Martina Runčáková
T +421 2 593 004-41
Wilfried Serles
T+421 2 593 004-00
Grant Thornton
15
IB Grant Thornton
Križkova 9
SK-811 04 Bratislava
T +421 2 593 004-00
F +421 2 593 004-10
E office@sk.gt.com
IB Grant Thornton
Floriánova 2
SK-080 01 Prešov
T +421 51 7710 328