Along with the state budget for 2017 amendments to several tax laws, including the Law "On Corporate Income Tax" (the Law) has been adopted recently. We would like to inform about the most important changes in the Law.

Representation passenger car (RC). The amendments of the Law extend RC definition in order to avoid that cars (M1 category), which are considered to be representative cars and are not used for freight forwarding are classified as commercial vehicles (N1 category) allowing costs of these vehicles to attribute to taxpayer’s tax- deductible costs for Corporation income tax (CIT) purposes.

Please see RC definitions in accordance with relevant versions of the Law in the table below.

            2016

                    2017

 RC is a passenger car:

 1)in which the number of seats not counting the driver’s seat does not exceed eight seats, and 

2) the value of which without the VAT exceeds 50 000 euro and which is not an operational means of transport or a special passenger car (ambulance, caravan or hearse), or a passenger car, which is specially equipped in order to transport disabled persons in wheelchairs, or a new passenger car, which is used as a demonstration car for an authorised car dealer. 

 

 RC is a car, the value of which without VAT is  more than 50 000 euro, and

1) in which the number of seats not counting the driver’s seat does not exceed eight seats, and which is not an operational means of transport or a special passenger car (ambulance, caravan or hearse), or a passenger car, which is specially equipped in order to transport disabled persons in wheelchairs, or a new passenger car, which is used as a demonstration car for an authorised car dealer), or

2) who is a lorry with a total mass up to 3,000 kilograms, which is registered as a cargo van and having more than three seats (including the driver's seat), if it is classified as commercial vehicles (N1 category), but in fact is a passenger car (category M1). 

 

Covering losses of previous years.  Starting from the tax period beginning in 2017 and subsequent tax periods losses of the previous fiscal years (from the losses incurred during the tax period, which began in 2008 and subsequent tax periods) taxpayers have the right to cover an amount not exceeding 75% of the CIT taxable income of the taxation period. 

Procedure for calculation of advance payments. The amendments of the Law provide that the consumer price index of Central Statistical Bureau will no longer be applied to the calculation of advance payments. In addition, the taxpayer will not pay CIT advance payments, starting from the month when the commercial register make an entry about suspension of the entrepreneurial activities, currently - after the submission of the application to the State Revenue Service. 

Additional explanations in connection with support of start-up companies. A start - up is a corporation with high growth potential, whose core business is associated with scalable business models and innovative product creation, production or development[1]. In accordance with the law[2] start- ups have rights to apply for state support in order to attract highly skilled employees and for a support program of a fixed payment. The start- up is entitled to apply a 100% income tax relief during the support period.  

If the taxpayer has received support under the Law on support of start- ups, it is not entitled to cover losses incurred during the tax period, when it received the support and the losses incurred in the pre-taxation periods before receiving that support.

During the support period the start-ups can pay CIT advance payments voluntarily.

[1] Law on support of start- ups, Article 1

[2] Law on support of start- ups, Article 8