European Union: Central Europe Tax & Legal Highlights

Last Updated: 3 August 2017
Article by Deloitte Albania Sh.p.k

Welcome to the Tax & Legal Highlights newsletter. This page will provide you with the latest information on tax and legal related issues from around Central European region. For more specific information – choose your country and find out more about local tax practices and news around the region.


Bulgaria signed the MLI
On 7 June 2017, under the framework of the OECD BEPS project, 68 jurisdictions, including Bulgaria, signed the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent BEPS (MLI).

Draft law proposed for CbC reporting
A draft law presented to the parliament on 5 June 2017 would implement EU Council Directive 2016/881 on country-by-country (CbC) reporting into Bulgarian law. The draft law generally follows the provisions of the EU directive.

Amendments to the Regulation for the Implementation of the VAT Act came into force on 21 March 2017
The most important changes are regarding rules on the mixed business and private use of goods, adjustments of VAT deduction, calculation of the quotient for proportional VAT credit deductions, and zero-rated supplies related to international transport.

Reminder: Possibility for filing a correction annual corporate income tax return
As part of the number of new tax rules applicable in Bulgaria as from 1 January 2017, the tax payers will be able to file a one-off correcting corporate income tax return in case of mistakes identified after 31 March of the following year and the submission of the regular corporate income tax return.

Mandatory electronic submission of returns as of 1 January 2018
As of 1 January 2018, tax payers will be obliged to submit all returns under the CITA electronically.

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Advance Pricing Agreement Procedure Regulations
The Croatian Tax Authorities have published Advance Pricing Agreement Procedure Regulations, which provide the taxpayers with an option for tax risk minimisation.

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Czech Republic

Interest in Trust Funds on the Rise
The legal institute of trust funds has recently become more attractive, namely owing to the media hype surrounding the former minister Andrej Babia. However, it should be noted that Andrej Babia was neither the first nor the only one who made use of the option of organizing his asset portfolio via a trust fund. The number of trust funds created between 2014 and 2016 exceeds six hundred and the interest in the institute keeps rising.

Upcoming Changes in Income Taxation
The Ministry of Finance has published further material regarding the new Income Taxes Act. The Legislative Department of the Ministry of Finance has published a draft version of the material entitled "Outline of the Innovative Solution Regarding the Regulation of Income Taxation and Income-Related Insurance Payments" for public consultation. The material provides a theoretical background to the concept of the new Income Taxes Act.

Everybody May Be Held Liable for VAT Fraud! Do Not Pay Taxes for Others!
Fight against tax evasion is one of the issues handled by the tax administration in the Czech Republic and across European Union. A large portion of ongoing tax audits is initiated due to suspected involvement in a VAT fraud. The tax administration uses data provided by the businesses themselves to identify any involvement, although unconscious, in a VAT fraud.

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The planning schemes in EU focus
The European Commission is expected to publish its draft on 21 June 2017, which stipulates that tax advisors are required to inform the competent tax authorities of the tax planning schemes that they designed.

Multilateral Treaty against tax planning
The multilateral treaty signed on 7 June 2017 by 68 countries, including Hungary is a spectacular result of the fight against BEPS (Base Erosion and Profit Shifting), and brings significant changes to the interpretation of international transactions by modifying several thousands of bilateral tax treaties through one single legal act.

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The taxpayer is obliged to indicate all objections against the circumstances determined by the State Revenue Service already at the initial stage of dispute
On 28 February 2017, the Supreme Court of the Republic of Latvia delivered a judgment regarding obligations of the taxpayer during the appeal of a decision of the State Revenue Service (hereinafter - SRS).

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Amendments to order "Regarding the rules on electronic reporting of trade with European Union Member States performed by VAT payer of the Republic of Lithuania"
On 7 June 2017 Customs Department under the Ministry of Finance of the Republic of Lithuania issued Order No 1B-432 Regarding the rules on electronic reporting of trade with European Union Member States performed by VAT payer of the Republic of Lithuania". The order lays down the grounds for an updated Intrastat system as well as terminates the previous agreements on online Intrastat data submission.

New functionalities of e-invoicing subsystem presented
As of 8 June 2017 users of e-invoicing services subsystem (i.SAF) of smart tax administration system (i.MAS) enjoy a possibility not only to submit VAT invoice registers, issue and receive electronic VAT invoices (service provided to small business only), but also to order preliminary VAT return service.

New Labour Code adopted
On 6 June 2017 the Parliament adopted new wording of the Labour Code.

The Article 61 of the Lithuanian Law on Tax Administration was amended
On 23 May 2017, the amendment of the Article 61 of the Lithuanian Law on Tax Administration setting an obligation for taxpayers that meet certain requirements to provide information concerning the participants of multinational enterprise groups to the STI was adopted.

Amendments to the Law on Legal Status of Foreigner adopted
On 25 May 2017 the Lithuanian Parliament adopted amendments to the Law on Legal Status of Foreigners and thus replaced former regulation on temporary residence permit issue for intra-group secondment cases.

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Effective June 11, 2017 simplification of visa application process for Ukrainian citizens entering Poland and the European Union
The Ukrainians have been waiting a long time for abolition of entry visas to the EU territory. Negotiations between the European Commission and the Government of Ukraine in respect of the abolition of EU entry visas for Ukrainian citizens began in 2008. At the end of May 2015, the European Commission concluded that Ukraine meets the criteria for abolishing the visa regime, and formally recommended in May 2016, that the EU states abolish the visa requirement for Ukrainian citizens.

Freight package: the monitoring obligation extended to vegetable oils and animal fats
On 12 June 2017 the Ordinance on goods whose freight is subject to the monitoring obligation (henceforth: the "Ordinance") was submitted to the Minister of Development and Finance for sign-off.

Budget 2018: Improving the effectiveness of the tax system instead of increasing VAT rates. The Ministry of Finance wants to extend the scope of automated tax inspection
On 6 June 2017, the Government approved 2018 budget assumptions. VAT rates will remain unchanged, while income from taxes is to grow thanks to improved effectiveness of inspection and preventing of VAT-related fraud.\

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Romania becomes associate member of Plan BEPS – Base Erosion and Profit Shifting
Romania becomes associate member of Plan BEPS – Base Erosion and Profit Shifting on the 9th of June when Law no 124/2017 comes into force. The main objective of BEPS is to prevent the use by companies of legislative mismatches from national tax systems in order to transfer profits to lower tax jurisdictions.

Conventions for avoidance of double taxation concluded by Romania will be amended
Romania and other 67 countries signed the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent BEPS (MLI) on the 7th of June. Romania has 91 conventions for avoidance of double taxation.

Multinational enterprises have new reporting obligations regarding automatic exchange of information on fiscal area
Any parent company or any other reporting entity resident in Romania and part of a multinational group of companies with a consolidated income in amount of minimum EUR 750 million has the obligation to submit a country-by-country report for each reporting year that includes information on the amount of revenue, profit/losses, stated capital, accumulated earnings, number of employees and tangible assets. The provisions were introduced by a Government Emergency Ordinance amending the Fiscal Procedure Code.

Posting of employees in the framework of transnational provision of services on the territory of Romania, clarifications
Some aspects regarding the posting of employees in the framework of transnational provision of services on the territory of Romania were clarified by methodological norms (Decision no 337/2017). For example, the norms present some factual elements to be taken into account by the Labor Inspection in order to identify the existence of actual transnational postings.

A new Regulation regarding the reception of construction works and corresponding installations shall enter into force on 29 July 2017
The Regulation dated 18 May 2017 regarding the reception of construction works fully replaces the Regulation for reception of construction works and installations dated 14 June 1994. The Regulation brings some welcome changes related to constructions, as well as some clarifications regarding aspects previously regulated.

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New Ministry of Finance Rulings – Value Added Tax
Obligation to obtain a single administrative document as a condition for tax exemption for services regarding transport of import – related goods

New Ministry of Finance Rulings – Value Added Tax
The right to deduct input VAT for transport services related to import of goods

New Ministry of Finance Rulings – Value Added Tax
The place of supply of warehousing services where the entire immovable property is not intended for the exclusive storage of goods

New Ministry of Finance Rulings – Value Added Tax
The place of supply of services involving rental of vehicles for the period longer than 30 days

Ministry of Finance Rulings – Value Added Tax
The right to deduct input VAT paid on import of goods

New Ministry of Finance Rulings – Value Added Tax
Determining the tax debtor for the supply of geodetic services

New Ministry of Finance Rulings – Value Added Tax
Determining the place of supply of services involving clinical examination of medicines that a VAT payer provides to a foreign entity

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Interdepartmental Circulation of Comments on the Amendment to Act No. 222/2004 Coll. on VAT, as amended (hereinafter the "VAT Act")
In connection with the 2017 Plan of Legislative Tasks of the Government of the Slovak Republic, an interdepartmental circulation of comments was undertaken from 15 May 2017 to 2 June 2017 on the draft amendment to the VAT Act, which is to enter into effect on 1 January 2018.

OECD Multilateral Convention and BEPS Initiative
Ministers from 76 countries signed a multilateral convention to reduce tax avoidance and update the existing network of bilateral tax treaties.

2017 – 2018 Action Plan to Tackle Tax Fraud
The Government of the Slovak Republic approved the 2017 – 2018 Action Plan to Tackle Tax Fraud on 26 April 2017. The document contains 21 new measures aimed at eliminating new forms of tax fraud.

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