The Ministry of Finance of the Slovak Republic, together with the Financial Administration of the Slovak Republic, is implementing several measures designed to prevent the spread of COVID-19 and mitigate the impact of the emergency on the business environment. To this end, the Ministry is holding discussions with representatives of business associations and companies. The Ministry has also established a working group for this purpose, whose goal is to analyze all financial issues affecting businesses and their liquidity. One such issue concerns the taxpayer’s obligation to file tax returns, pay taxes, and remit them to the state. The primary goal of the measures being prepared is, in particular, to ensure that taxpayers are not penalized in any way for failing to meet their tax obligations due to the current situation. Evidence of the Ministry’s and the Financial Administration’s activity is also the fact that the Financial Administration is currently guiding tax administrators on how to respond to this changing situation. You can learn more about the deferral of tax return filing and tax obligations in this article, which also reflects the current situation regarding the formation of the new Slovak government.
On March 18, 2020, the Slovak government approved a draft regulation on the cancellation of tax arrears corresponding to unpaid penalties associated with paid income tax. Under the regulation, citizens and businesses that were required to file a tax return and pay taxes by the deadlines of March 31, April 30, and May 31 will be exempt from penalties, which consist of fines and late payment interest for late filing of tax returns and late payment of taxes, provided they do so by June 30, 2020. These penalties are also waived for taxpayers who file their tax returns within the statutory deadline but pay the tax no later than June 30, 2020 (e.g., due to a lack of funds).
The above-mentioned regulation also applies to non-business entities, for whom the first measures were adopted as early as March 13, 2020. For taxpayers who are not required to communicate with the tax administration electronically (i.e., who file paper tax returns), the deadline for filing a tax return and paying the tax without penalties is thus extended from May 31, 2020, to June 30, 2020.
This regulation also applies to healthcare providers to whom holders have provided services (monetary and non-monetary services) and who are required under Act No. 595/2003 Coll. on Income Tax to withhold and remit tax via withholding (specifically, to submit a notification of withholding and remittance of income tax by March 31, 2020). The deadline for filing the notification of withholding and remittance of income tax, as well as the obligation to pay the tax, is also extended in this case to June 30, 2020, without the threat of penalties.
In practice, these measures also mean that it is not necessary for the taxpayer to file a notice of extension of the deadline for filing a tax return, or a request for an extension of the deadline for filing a tax return (in the case of taxpayers who are in bankruptcy, liquidation, or are heirs of a deceased taxpayer).
It follows from the above that even if a taxpayer who is in bankruptcy, in liquidation, or is an heir of a deceased taxpayer and failed to file a request for an extension of the deadline for filing a tax return no later than 15 days before the expiration of the deadline for filing a tax return (i.e., by March 17, 2020), they are a taxpayer to whom the regulation applies, as they are a taxpayer who was required to file a tax return by March 31, 2020.
The situation is different if a taxpayer who received taxable income from foreign sources during the tax period wishes to extend the deadline for filing a tax return by six calendar months. In such a case, the taxpayer is still required to file the extension no later than March 31 2020 (if the tax period is the calendar year).
Six-month extension of the tax return filing deadline for 2019
A taxpayer who is not a taxpayer in bankruptcy, in liquidation, or an heir of a deceased taxpayer, and who also received taxable income from foreign sources during the tax period, may extend the deadline for filing an income tax return, by submitting a notice of extension of the deadline for filing the tax return by up to six calendar months—the new extended deadline for filing the tax return for this taxpayer will be July 31, 2020, August 31, 2020, or September 30, 2020.
Individuals who wish to extend the deadline for filing their 2019 tax return are required to use the prescribed notification form – form ,, Taxpayer’s Notice of Extension of the Deadline for Filing a Tax Return pursuant to Section 49(3)(a) or (b) of Act No. 595/2003 Coll. on Income Tax, as amended” is also available in electronic form on the website of the Financial Directorate of the Slovak Republic.
A natural person who is an entrepreneur pursuant to Section 2(2) of the Commercial Code and is registered for income tax pursuant to Section 49a of the Income Tax Act is required to file the notification on the prescribed form electronically.
For the purposes of extending the deadline for filing a tax return, income within the meaning of Section 16(1) of Act No. 595/2003 Coll. is analogously considered taxable income from sources. This refers to so-called reciprocal income.
Active income includes, for example, income from employment performed abroad, from services including business, technical, and other consulting, from the activities of an artist, athlete, or performer, and income from activities performed abroad through a permanent establishment. Passive income includes, for example, income from the disposal of real estate located abroad, and license fees paid by a payer of such income who is a resident of another contracting state.
If a taxpayer extends the deadline for filing a tax return due to the receipt of taxable income from foreign sources and the tax administrator determines that the taxpayer did not report any income from foreign sources in their total taxable income, the tax authority will adjust the deadline for filing the tax return and the tax due date to June 30, 2020. If the taxpayer fails to file a tax return by June 30, 2020, and fails to pay the calculated tax within this period, the tax authority will impose a penalty and charge late payment interest on the amount owed. An individual is required to submit a notice of extension of the deadline for filing a tax return by no more than six full calendar months to the relevant tax administrator (i.e., based on the place of permanent residence), and must do so no later than March 31, 2020. In the notice, they must specify the new deadline, which may only be the end of a calendar month, by which they will file the tax return.
If a taxpayer discovers that they provided incorrect or incomplete information in the submitted notice, they must file a new notice containing the correct information. If the taxpayer decides to file the tax return by a different (extended) deadline, they must submit a new notice by March 31, 2020, specifying the new (extended) deadline. This means that the deadline for filing the tax return may be extended again (but no later than September 30, 2020), provided that the new notification regarding the extension of the deadline for filing the tax return is submitted no later than March 31, 2020. The taxpayer must mark this fact with a checkmark on the first page of the notice and indicate the date of filing the previous notice.
The tax liability is due by the deadline specified in the notice, even if the taxpayer files the tax return before that date. A taxpayer may file a notice requesting an extension of the deadline for filing a tax return even if they have already filed a tax return but the deadline for filing has not yet expired (i.e., by March 31, 2020).
By submitting this notice, the deadline for paying the tax is extended, even if the taxpayer does not file an amended tax return.
If an individual sends a notice to the relevant tax administrator requesting an extension of the deadline for filing a tax return and subsequently discovers that they were not required to file a tax return for that tax period, the taxpayer should notify the tax administrator of this fact. The taxpayer is required to file a tax return (including a zero return) if the tax administrator requests it.
Potential measures to mitigate economic impacts in the context of the new Slovak government’s negotiations
The new government and parliament of the Slovak Republic will also discuss the adoption of further measures intended to mitigate the economic impacts of the state of emergency in the Slovak Republic on business entities. SaS MP and head of the Finance Committee Marián Viskupič describes the proposed measures as “a working version of measures to support the economy”. The measures are expected to be adopted through an expedited legislative process, and we will inform you of their specific details once they are implemented. Among the proposed measures under consideration, we consider the following potential measures to be the most important
1. Measures related to taxes and customs duties
- waiver of motor vehicle tax for the second quarter (for advance payments, or a refund exceeding €100 for annual prepayments),
- abolition of all limits on tax loss carryforwards,
- extension of the deadline for payment of customs debt from 10 days to 40 days for importers from third countries.
2. Measures for self-employed individuals
- waiver of the obligation to pay minimum contributions for self-employed individuals for March, April, and May 2020,
- option to suspend business operations for at least 1 month (currently 6 months), but for a maximum of 3 years
3. Measures for retail establishments and service providers (as defined by Measure No. 2595 of the Public Health Authority of the Slovak Republic) and justified cases (companies that supply exclusively to retail, etc.) and establishments affected by school closures (e.g., private kindergartens)
- Deferral of the obligation to pay health and social security contributions for February, March, and April 2020 without being recorded in the register of defaulters. Contributions for May 2020 should be due on the regular deadline (in June 2020). The amount of temporarily unpaid contributions will subsequently be spread out into 18 interest-free monthly installments, due from July 2020 through December 2021,
- deferral of the obligation to pay VAT for February, March, and April 2020.
- VAT for May 2020 should be due on the regular deadline (June 25, 2020). The amount of temporarily unpaid VAT will subsequently be spread out interest-free over 18 monthly installments, which will be due from July 2020 to December 2021,
- Introduction of the “Quarantine Sick Leave and Care Leave” scheme. The benefit for sick leave and care leave (55% of gross salary, approx. 70% of net salary) would be paid by the Social Insurance Agency from the first day (at the earliest from March 9, 2020). Sick leave due to quarantine applies if an employee must go into quarantine or if the employer decides to place them in quarantine in the event that the employer had to close or restrict operations,
- reimbursement of interest on loans and leases for the months of March, April, and May 2020,
- reimbursement of rent for business premises that were closed pursuant to Public Health Authority of the Slovak Republic Measure No. 2595 of March 15, 2020,
- reimbursement of losses incurred by the closure of retail establishments for perishable goods (e.g., fresh flowers, plant stock, seasonal goods, etc.),
- a three-month deferral of bank loan payments without being listed as a debtor, and without the possibility of banks demanding early repayment of loans.
4. Other planned measures
- conditional permission to open businesses with a lower risk of disease transmission that meet hygiene requirements (rubber or plastic gloves, disinfectants, face masks for sales staff, as well as entry for customers only with face masks) – restaurants, pastry shops, cafes, wine bars, bars, clubs, water parks, massage parlors, sports facilities, and other establishments where there is increased human contact,
- opening of several border crossings for freight transport (e.g., Hosťovce, Šahy, Komárno, Kráľ, Štúrovo, Mníšek nad Dunajcom),
- no penalties for companies that cannot properly and timely fulfill a public contract
- limiting inspection activities of businesses and entrepreneurs, etc.
