We are pleased to share that the winter edition of Privatbanka Magazine features an interview with us. In the conversation, we spoke about what quality tax advisory means to us and why it pays to think about taxes in advance when doing business or investing.

We touched on topics such as:
✔️ structuring holdings, acquisitions, and reorganisations,
✔️ representing clients in tax audits and proceedings,
✔️ reducing tax burdens and designing effective remuneration for managers,
✔️ VAT risks and the importance of thorough due diligence of business partners,
✔️ the reform of capital income taxation for individuals.

We also emphasised that “change is the only constant in the world of taxes” – and that is precisely why our goal is to bring clients timely solutions that protect them and help them grow.

👉 You can read the full interview in Privatbanka Magazine – Autumn/Winter 2024.

Privatbanka Magazine - jeseň-zima 2024

The modern financial sector is undergoing rapid digital transformation – from electronic wallets and payment gateways to processing platforms. This dynamic development also brings new challenges in the area of value added tax (VAT).

In the Bulletin of the Slovak Chamber of Tax Advisors (December 2024), we therefore focused on the topic of VAT application in the payment services sector.

Key questions addressed in the article:

• Which services are exempt from VAT?
  – for example, if an acquirer performs financial transactions, as well as clearing and card schemes (Visa, Mastercard).
• Which services are subject to VAT?
  – technical and support services provided by service partners, payment gateways, or intermediaries who do not directly execute money transfers.

Why is this important?

Correct VAT treatment of payment services is crucial both for businesses and for the tax authorities. Ambiguities in the legal framework can lead to divergent interpretations, issues during audits, or even significant tax risks.

In the article, we emphasise that:

• VAT exemption can only be applied to services that directly cause legal and financial changes,
• each case must be assessed individually,
• thorough analysis and professional advice help minimise risks in this complex area.

👉 You can find the full article in the SKDP Bulletin – Autumn/Winter 2024 at this link.

At the Methodical Days of the Slovak Chamber of Tax Advisors, held on 9–10 December 2024 in Zvolen, we had the opportunity to give a presentation on the topic of non-cash contributions and transfer pricing.

The discussion focused mainly on the question of whether non-cash contributions fall under the transfer pricing rules pursuant to the Slovak Income Tax Act.

A panel discussion with representatives of the Ministry of Finance of the Slovak Republic, the Financial Administration, lawyers, and tax advisors created space for professional arguments and the exchange of experience. It also highlighted the need for methodological guidance that would bring more legal certainty for companies in reorganisations and asset contributions to corporations.

The issue of non-cash contributions thus remains one of the key challenges of tax legislation in practice.

Under the recent opinions issued by the Slovak tax authorities, interest on acquisition loans are considered to be tax non-deductible. This treatment applies not only to the acquisition SPV itself but also to the situation when the merger of the Acquisition SPV and the Target is completed.

Obviously, the above opinions have a significant impact on all LBO (leveraged buyout) transactions and debt-push down strategies.

However, is the conclusion of Slovak tax authorities correct? We do not think so!

We will discuss this topic in more detail within our presentation on the 3. Conference on International Taxation that is organised by the Slovak Chamber of Tax Advisors on 7 November 2019.

Jozef Danis

In case of definitive non-recovery of receivables, it is possible to get back up to a third of the value from the State using the tax system

In addition to the possibility of tax deductible provisions and tax deductible write-off of receivables under the rules defined in the Income Tax Act, there is also a potential possibility in the value added tax (VAT) area. The Court of Justice of European Union (CJEU) has repeatedly ruled that in the case of unenforceable receivables EU member states are obliged to allow the correction of the tax base. This means the supplier should be returned the VAT paid to the state budget when supplying the goods or services. This ensures the VAT neutrality and adherence to the principle that no VAT is levied when the supplier has received no consideration for the delivery.

Rules for the correction of VAT on unrecoverable receivables still absent in the Slovak law, however, we believe that in this case it is possible to rely on the direct effect of the VAT Directive and the CJEU case law.

Vladimíra Mačuhová

This all-day seminar was devoted to the case studies on Corporate Income Tax. We have covered the following agenda:

• Definition of income for income tax purposes
• Financial investments
• Various - tax deductible costs, tax base determination
• Exit tax and M&A transactions
• Transparent entities
• Practical application of Double Tax Treaties

The Google search of “Cyprus company“ gives the outcome such as “Cyprus: Tax Heaven”, “tax benefits of Cyprus”, etc. Cyprus but also other traditional holding jurisdictions like the Netherlands or Luxemburg are deemed to be tax heavens and are automatically connected with the aggressive tax planning or the tax avoidance. 

However, on certain conditions holding companies in these jurisdictions are fully legitimate. We covered this topic on the Conference on international taxes organised by the Slovak Chamber of Tax Advisors in cooperation with AmCham Slovakia and IFA.

Issues covered:
- Tax residence of the company as defined in the Slovak Income Tax Act
- Definition of the place of effective management under the Slovak ITA
- Definition of the beneficial owner in Slovak law
- Interpretation of these terms under the Double Tax Treaties
- Case law of the Court of Justice of the EU
- Case studies
Panelists: Jozef Danis, SKDP, Renáta Blahova, IFA

On the Conference on "Taxation of various items of income derived by individuals from securities and shares in companies" we covered the following areas:

• Introduction to the taxation of income from securities - legal basis
• Dividends and shares on profit
• Interest income
• Income from the sale of securities and shares in companies
• Tax deductible costs
• Preparation of the income tax return - practical tips
• Income flowing to husband and wife - joint ownership
• In-kind contributions of securities and shares to the share capital and other reserves
• Distributions from the share capital and other reserves
• Income from other counties and Double Tax Treaties application

We appreciated the levely discussion of all participant - tax advisors, investors and traders.

Starting from January 2018, important tax changes in M&A transactions become effective. The domestic, Slovak M&A transactions will have to be performed at fair value for income tax purposes. As a result, they will require thorough tax planning. In addition to this, the concept of exit tax will be introduced.

We covered these topics in detail on the Conference on International Taxation "Does the tax optimisation still exist?/ Most significant changes in international taxes in the last 60 years" that was organised by the Slovak Chamber of Tax Advisors.