Last month’s tax and legal news in a few sentences.
6 November 2019 In brief
DOMESTIC NEWS IN BRIEF
- The Supreme Court dealt with an employer’s option to unilaterally offset a receivable arising from damage compensation against an employee’s wage (or salary, remuneration under an agreement, or wage compensation). In its decision (21 Cdo 238/2019), the court expressed the opinion that the unilateral offsetting against employee’s wages is not admissible. The employer may offset receivables arising from damage compensation against employee wages and withhold the amount to settle the claim from wages solely based on an agreement on the assignment of a portion of the wages concluded with the employee.
- An electronic lawmaking system is to be fully implemented from 2022, two years later than originally planned. Starting next year, the system should be operating in a testing regime only. This change will be brought by an amendment changing some laws in connection with the adoption of the Act on the Collection of Laws and International Treaties, published in the Collection of Laws under no. 277/2019. The amendment also assumes that for better clarity, new legal regulations will always enter into effect from the beginning of January or June, except for laws adopted in the urgent public interest. Each legislative proposal will be accompanied by a list of obligations it would bring if passed. The list in form of a table should also contain an overview of sanctions for breaches, and an overview of obligations being cancelled.
- The financial administration has informed potential acquirers of the ownership titles to units in family houses that an amendment to the Senate’s Statutory Measure (No. 340/2013 Coll.) on Immovable Property Acquisition Tax entered into effect on 1 November 2019. Apart from the first-time acquisition of the ownership title to a completed or used unit in an apartment house, the exemption from tax will now also apply to completed or used units in family houses.
- Information about the average wage for 2020 was published in the Collection of Laws under No. 260/2019 Coll. Based on this data, the amounts of reduction limits for adjusting the daily assessment base for the purpose of sickness benefit insurance applicable in 2020 were published under No. 270/2019 Coll. Average wage data serves as a basis for other important limits, such as the threshold income for the solidarity tax surcharge, minimum advances for insurance premiums to be paid by the self-employed, etc.
- An amendment to the Act on Local Fees has been published in the Collection of Laws (278/2019 Coll.), in effect from 1 January 2020. The present fee for spa or recreational stays and the fee for accommodation capacities will be unified into a single fee for temporary stays that will apply to all short-term stays up to 60 days, regardless of their location and purpose. The range of accommodation facilities subject to the collection of local fees will thus be extended to also include premises such as apartments, cottages, country houses or studios/ateliers.
- The new Act on Experts will enter into effect on 1 January 2021. Regulations to implement the new law will be prepared by the Ministry of Justice in the spring of 2020. Further information and methodology instructions on frequents questions will be published on the ministry’s website in the course of 2020.
FOREIGN NEWS IN BRIEF
- In September, Denmark and Iceland deposited their instruments of ratification for the Multilateral Convention (2016) (MLI) with the OECD depositary. The MLI will enter into force in respect of these countries on 1 January 2020. The MLI was also ratified by Uruguay. In addition, the MLI entered into force in respect of India, Belgium and Russia on 1 October 2019.
- The Platform for Collaboration on Tax, a joint initiative of the OECD, the International Monetary Fund, the United Nations and the World Bank launched assistance with the implementation of effective transfer pricing documentation measures to developing countries.
- The lower house of the Austrian parliament approved a tax reform bill. Key measures include the transposition of the hybrid mismatch provisions of ATAD and ATAD 2 into national law, the introduction of a digital services tax (applicable to certain companies) at a rate of 5% from 1 January 2020, and the implementation of EU rules on mandatory disclosure and automated exchange of information on certain cross-border arrangements (DAC 6).
- The Cypriot tax authorities announced that legislation to implement EU Directive 2018/822, on mandatory disclosure rules (DAC 6), will be introduced before the end of 2019. For arrangements made between 25 June 2018 and 30 June 2020, the first reports should be submitted in Cyprus prior to 1 August 2020.
- Germany published an official bill transposing EU Directive 2018/822 on mandatory disclosure rules (DAC 6) into German national law. The terms of the directive are closely adhered to by the draft law although there are some notable exceptions.
- The Slovakian parliament passed a bill transposing EU Directive 2018/822 on mandatory disclosure rules (DAC 6) into Slovak national law.
- Following the October meeting of the OECD Task Force on the Digital Economy (TFDE), the OECD Secretariat published a public consultation document presenting an approach to the nexus and profit allocation challenges arising from digitalisation. The OECD has invited comments from the public, with a view to discuss the results during public consultations on 21 and 22 November 2019. Interested parties are invited to send their comments by email to the OECD no later than 12pm on Tuesday, 12 November 2019, using the email address TFDE@oecd.org. A progress report on Pillar Two of the Programme of Work agreed by the OECD in May 2019 will be published shortly, with a consultation process expected in November 2019.
- The Italian government issued a decree which will result in the introduction of a digital services tax at a rate of 3% with effect from 1 January 2020. The law shall apply to companies with an annual turnover of EUR 750 million and digital services supplied in Italy in excess of EUR 5.5 million; this amount concerns gross revenue derived from (i) advertising on a digital interface, (ii) a multilateral digital interface that allows users to buy or sell goods and services and (iii) the transmission of user data generated from using a digital interface.