AMENDMENTS TO LAW OF CORPORATE INCOME TAX

Starting from 1st of January 2014, several amendments to tax laws will come in force. We provide you an overview about the main changes in laws regarding Personal income tax, Mandatory state social insurance payments, Corporate income tax and Microenterprise tax law.

•     Starting from 1st of January 2014, the Mandatory state social insurance payment rate for employees will be 10.5% while it will be 23.59% for employers.
•     The minimum wage for the next year is set at EUR 320 from which personal income tax exemption will be applied to EUR 75. In addition, tax exemption for each dependant person will be EUR 165. We remind that the personal income tax rate will stay the same at 24% and will be gradually decreased to 23% in the year 2015 and 22% in the year 2016.
•     Minimum wage per hour for the year 2014 will be set to EUR 1.933. Average earnings calculations starting from the next year will have to include also money prizes that will be perceived as a payment for good work.
•     It will no longer be possible to pay fixed personal income tax for performing economic activity. Current fixed personal income tax payers will be able to continue operating in this system for the next two years but new fixed tax regime applications will not be accepted.
•     A luxury car will be any car that excluding value added tax will be valued at least EUR 50 000.
•     It will no longer be possible for enterprises to practice paying employee salaries through loans without paying income tax and social insurance payments. Majority of the loans that exceed EUR 1500 and are issued by an enterprise will be subject to personal income tax.
•     In the year 2014, tax rate for microenterprises will be 9% from turnover as previously. However starting from the year 2015, the 9% rate will be only applied to microenterprises which turnover will not exceed EUR 7000. If the turnover will exceed the threshold, a higher rate of 11% will be applied and it will be gradually increased to 13% in the year 2016 and 15% in the year 2017.
•     If a microenterprise does not have annual turnover or the turnover does not exceed EUR 50, microenterprise tax payer will have to pay an annual fee of EUR 50.
•     Starting from the next year a part of members of the boards will have to cover MSSIP amounting equally as MSSIP from minimum wage. This rule will be applied to enterprises that have turnover but don’t have any employees or employees receive salary smaller than the minimum wage, and enterprise members of the board are fulfilling their duties without any remuneration.
•     Starting from the ear 2014, enterprises in groups will no longer be allowed to carry-over losses among group’s members.
•     All enterprises that have equal or less corporate income tax before covering losses to EUR 50 will have to pay a fixed minimum corporate income tax payment of EUR 50.

This newsletter only contains information on anticipated legislation. It does not reflect views of Grant Thornton Rimess and shall not be treated as advice from Grant Thornton.