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Romania: fiscal code amendments and corporate income tax

The amendments to the Fiscal Code introduced by an Emergency Ordinance published in November will be applicable starting from 1 January 2014. The main amendments to the Fiscal Code include the following:

Taxpayers which have opted for a financial year different from the calendar year may opt for the fiscal year to correspond to the financial year. The first modified fiscal year includes also the period of the calendar year between 1 January and the day before the first day of the modified fiscal year. The tax authorities have to be notified with this regard at least 30 days before the beginning of the modified fiscal year.

The following types of income are included in the non-taxable income category: – dividends received from foreign legal entities subject to corporate income tax or a similar tax, located in countries which are not members of the European Union and with which Romania has concluded a double tax treaty; – capital gains derived from the sale/assignment of shares held in Romanian legal entities or in legal entities from countries with which Romania has concluded a double tax treaty; – income derived from the liquidation of another Romanian legal entity or of foreign legal entities located in countries with which Romania has concluded a double tax treaty.

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Lithuania: corporate income tax

The rules for determining a tax period of taxable entities considering the peculiarities of their activities were reworded. Pursuant to these changes, a request to determine a different taxable period may be filed electronically via the authorised electronic services system Mano VMI or delivered directly or sent by mail to a respective tax authorities’ office.
The beginning of the taxable period will start from the 1st day of a calendar month. A request will not be considered if the tax period has already been changed during the last 5 years, unless the period has been changed not to the calendar year and it is requested again to determine the tax period that matches with the calendar year.

Value added tax (VAT).
The order regarding the requests of foreign taxable entities to refund VAT paid in the Republic of Lithuania was amended. The request of a taxable person established outside the territory of the EU to refund VAT may be filed electronically via Mano VMI along with other requested documents (VAT invoices etc.).

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Lithuania: company law

Amendments to the Law on Companies will come into force on 1 January 2014. The following changes have been established:
Private limited liability companies held by a single shareholder are not required to form and submit the list of shareholders to the Commercial Register. Information on shareholders has to be provided to the Commercial Register by electronic means. Data should be provided within 5 days from the receipt of documents, based on which entries in personal securities accounts or shareholders register are made. In case of the incorporation of a new company, the list of shareholders should be submitted within 5 days from the registration of the company with the Commercial Register.

All private limited liability companies incorporated until 1 January 2014 having more than one shareholder should provide the list of shareholders under the new procedure until 10 July 2014 unless any changes in shareholding occur during the period from January to July of 2014.

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Hungary: Miscellaneous

In addition to the taxpayer, its related company may also deduct the direct costs of the taxpayer’s own research and development efforts from its pre-tax profit, in the proportion agreed between them. The tax base decreasing item may be applied, if the R&D activities carried out by the related company are related to both the taxpayer’s and the related company’s business activity, and the related company declares the direct costs of the research and development activities and the amount that may be used by the taxpayer. The parties will be jointly liable for the contents of the declaration, and both parties will have to provide information concerning the event in the corporate income tax returns.

The rules of loss carry-forward relating to transformations have been supplemented. In the case of a transformation, the legal successor may deduct the legal predecessor’s negative tax base from its profit before tax for the first time in the tax year that includes the day of the merger.
From 1 January 2014, when determining whether a company qualifies as an owner of real estate, the proportion of the assets/real estate shown in the financial statements must be calculated on the basis of the book values, instead of the market values.

To have a consultation by Alessandro Pasut on international economy click here.Alessandro Pasut

 

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Bulgaria: Miscellaneous

Amendments to the VAT Act were published in the State Gazette which will enter into force on 1 January 2014. Some of the important changes are:
The amendments to the VAT Act implement the option granted by the European legislation to apply a cash accounting scheme. In accordance with the new provisions of the VAT Act, eligible taxable persons will have the opportunity to delay payment of output tax to the state budget until they have received payment from their customers. To apply the cash accounting scheme, the taxable persons should obtain a formal permission from the revenue authorities.

Taxpayers with an annual taxable turnover up to EUR 500,000 can apply for this regime. The cash accounting scheme is not applicable for certain types of transactions such as import, export, intra-Community acquisitions and supplies and other supplies explicitly listed in the VAT Act.

The right to VAT credit of companies receiving invoices from persons applying the cash accounting scheme will arise when they have paid for the goods/services received. Thus, there may be a mismatch between the month in which the invoice is received and the month when the input VAT on the invoice may be claimed for deduction, which is when the invoice is paid. In addition, in order to deduct input VAT on such invoices, the recipient should have, apart from the invoice, also a payment document and a special protocol issued by the supplier.

To have a consultation by Alessandro Pasut, expert in establishing economic relations between Italy and Central Europe click here.Alessandro Pasut

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Belgium: Constitutional Court on the New General Anti-Abuse Rule

In relation to the constitutional legality principle the Constitutional Court confirms that the proof of abuse of a tax law is only possible when the objectives of the tax law can be clearly identified from the text of the law or, if this text is not clear, from the parliamentary documents. It also adds that the tax authorities must take into consideration the general context of the relevant tax provision, the general practices at the time of its entry into application and the existence of potentially relevant specific anti-abuse provisions. The Constitutional Court concludes that the GAAR is not incompatible with the legality principle.

Finally, the GAAR is also compatible with the constitutional principle of non-discrimination since it applies equally to all taxpayers. The Constitutional Court does not deem the possibility that the GAAR would be applied differently in specific cases a result of the provision in general and, thus, does not rule on its concrete application.

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Belgium: general anti-abuse rule redefined

The new general anti-abuse rule (GAAR) was redefined in 2012 in order to provide the tax authorities with a more effective tool to combat tax avoidance. For registration duties purposes and inheritance taxes, the redrafted version of the GAAR applies as of 1 June 2012. For income tax purposes, it applies as from tax year 2013 in general and, in some cases, to legal acts relating to tax year 2012.

Several taxpayers submitted requests to the Constitutional Court to have these provisions annulled based on their presumed incompatibility with some constitutional rules relating to the allocation of competencies between the federal level and the regions, the constitutional legality principle and the principle of non-discrimination.

The Constitutional Court now rejected the request and, as far as the allocation of competencies between the different state levels is concerned, stated that the GAAR does not deal with the determination of the tax base but rather constitutes a method of proof. Thus the federal legislator was indeed competent to modify the GAAR, not only for income tax purposes, but also for registration duties and inheritance taxes.

To have a consultation by Alessandro Pasut, expert in establishing economic relations between Italy and Central Europe click here.Alessandro Pasut

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Austria: dividend distributions

Dividend distributions received by an Austrian corporation are tax-free. Capital gains from the alienation of Austrian shares are taxable. If profits are not distributed but instead are retained by the Austrian entity, the fair value of the corporation increases, resulting in higher capital gains upon disposal of the shares.
Up to now, dividends paid out to the (previous) shareholder after a share sale have been regarded as tax-free dividends by the Austrian tax authorities.

According to the revised Corporate Income Tax-Guidelines 2013 recently published by the Ministry of Finance, dividends are only tax-free if the recipient of the dividend is still the owner of the shares as of the date when the respective resolution for the dividend distribution is passed. If, however, the recipient of the dividend has sold the shares before the dividend distribution resolution date, the dividend payment is considered a part of the sales price and, therefore, increases taxable capital gains.

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Austria: issues relating to dividends paid out by Austrian corporations

The Austrian Ministry of Finance published opinions regarding two issues concerning mergers and acquisitions relating to dividends paid out by Austrian corporations. Subject of the opinions are dividend payments after cross-border side-stream mergers and the distribution of retained earnings in the course of share sales.

The merger of a foreign corporation into its Austrian sister-corporation results in a tax-neutral step-up in basis of all assets and liabilities transferred. In the past, it was questioned whether such a step-up also resulted in an increase in the equity-capital recognized for tax purposes of the absorbing corporation that can be repaid as a “dividend” to the shareholder tax-neutrally and therefore without any withholding tax levied under Austrian law—regardless of the rules and regulations of any applicable income tax treaty.

A ruling of the Austrian Ministry of Finance provides that the equity-capital recognized for tax purposes of the Austrian absorbing entity in a cross-border side-stream merger is increased by the fair market value of the transferred entity. As a result, the “high amount” of equity-capital for tax purposes can be distributed to the shareholders of the Austrian corporation without triggering dividend withholding tax in the future.

To have a consultation by Alessandro Pasut, expert in establishing economic relations between Italy and Central Europe click here.Alessandro Pasut

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Czech Republic: VAT changes from 2013

Unreliable VAT payers. As a new way of fighting tax evasion, the amendment introduces the concept of a so called “unreliable VAT payer”. Unreliable VAT payers will be considered those who do not comply with their VAT obligations. The database of unreliable VAT payers should be publicly accessible. In this respect, the amendment also extends the liability of the recipient of the supply for any VAT unpaid by the supplier to those cases, where the supplier is known to be an unreliable VAT payer.

Reverse charge in construction. In connection with difficulties in determining which construction work is subject to reverse charge and which is not, the amendment introduces a fiction for cases where both supplier and recipient acting in mutual agreement apply the reverse charge. In such a case, the tax authority will not question the legitimacy of the application of the reverse charge mechanism.

To have a consultation by Alessandro Pasut on international economy click here.Alessandro Pasut

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