The National Council of the Slovak Republic approved the Amended Act no. 442/2012 Coll. effective from 1 March 2017
Feb 02, 2017
Tax and Legal Alert, February 2017, Issue 1
In our current newsletter we inform you about the Amended Act no. 442/2012 Coll. On 1 February 2017, the National Council of the Slovak Republic approved a bill amending and supplementing the Act no. 442/2012 Coll. on International Assistance and Cooperation in Tax Administration (“Amended Act”). The Amended Act, effective from 1 March 2017, implements into Slovak law the Country-by-country reporting (“CbCR“) requirements. We would like to draw your attention to the obligations which the Amended Act imposes on certain Slovak taxpayers in relation to the tax period of 2016. Many taxpayers will need to take action from 31 March 2017.
- Multinational enterprises (“MNEs") are required to file the CbCR if their consolidated revenues for the fiscal year preceding the reporting year equal or exceed EUR 750 mil (“MNE for CbCR purposes”).
- The CbCR reporting period is the fiscal year for which the ultimate parent entity prepares the financial statements.
- Amended Act defines the ultimate parent company, surrogate parent company and constituent entity. An ultimate parent company is primarily responsible for filing the CbCR in the country of its tax residence. However, the Amended Act introduces the concept of secondary mechanism that transmits the obligation to file the CbCR to a surrogate parent company or to another constituent entity. Therefore, in some cases the Slovak taxpayers will have the CbCR filing obligation.
- CbCR should be filed with the Financial Directorate of the Slovak Republic (“FRSR”) electronically. The template of the CbCR is included in the Amended Act and will also be published at the FRSR website.
- CbCR contains general information on the global distribution of income and taxes between the various members of the MNE as well as other indicators of their economic activity.
- The tax administrator cannot make tax base adjustments solely on the basis of information from the CbCR.
- Within the deadline for filing their tax return, Slovak taxpayers which are members of a MNE for CbCR purposes must notify the FRSR of whether they have an obligation to file the CbCR (i.e. if they are the ultimate parent entity, a surrogate parent entity or constituent entity being a reporting entity).
- If they do not have the obligation to file the CbCR, they still have to provide requested information on the entity which will file the CbCR on behalf of their MNE. This Notification obligation applies to the tax period started on or after 1 January 2016. This means that many Slovak taxpayers should comply with this requirement by 31 March 2017. The template of the Notification "Oznámenie DAC4/CbCR“, through which the taxpayer will fulfill its notification obligation, is published at the Financial administration website.
- CbCR should be filed within 12 months from the last day of a reporting period and the following applies:
The Slovak tax resident that is ultimate parent entity or surrogate parent entity filing the CbCR, is obliged to file CbCR for the reporting period starting from January 2016.
All other Slovak tax residents being themselves the reporting entities are required to file CbCR for the reporting period starting from January 2017.
- FRSR will exchange 2016 CbCR with the competent foreign authorities within 18 months from the last day of the reporting year starting in 2016. For the reporting years starting in 2017 or later, the FRSR will exchange the CbCRs within 15 months from the last day of the reporting period.
- For failure to file the CbCR, a penalty of up to EUR 10,000 may be imposed. A penalty of up to EUR 3,000 may be imposed for failure to fulfill the CbCR Notification obligation.
- Both penalties can be imposed repeatedly.
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