Article

On April 25, 2020, the amendment to Act No. 67/2020 Coll. on Certain Extraordinary Measures in the Financial Sector in Connection with the Spread of the Dangerous Contagious Human Disease COVID-19 (hereinafter referred to as the “Act”), which introduced several changes in the areas of taxation, customs, and accounting for the duration of the state of emergency. We address the individual changes in the area of taxation in the following article

The measures under this Act shall apply during the state of emergency declared in the territory of the Slovak Republic, specifically from March 12, 2020, until the end of the calendar month in which the government revokes the state of emergency (hereinafter referred to as the “pandemic period”), and until the expiration of the latest deadline under this Act. The Act also authorizes the government to extend the application of these measures beyond the end of the pandemic period by decree, provided that the economic, social, or health situation so requires.

Method of Submission

The measure under Section 3 of the Act applies:

- to a taxpayer who is not required to submit documents to the tax administration by electronic means and at the same time

- the submission in question does not have a prescribed structured format

̶̶ therefore, it is not possible to submit, for example, a tax return in this manner.

A submission that meets the above conditions may also be submitted by other electronic means, such as email. In such a case, the taxpayer prints the submission, signs it, and then scans or photographs it, sending it as an attachment to the tax authority via email. Such a submission does not need to be delivered in paper form within 5 days.

If the filing contains deficiencies that render it ineligible for consideration, the tax administrator shall, using the same electronic means as those used by the taxpayer, request the relevant taxpayer to remedy the deficiencies in the filing in accordance with the tax administrator’s instructions and within the deadline specified by the tax administrator, while simultaneously informing the taxpayer of the consequences associated with failing to remedy these deficiencies.

Adjustment of Time Limits

Time Limit for Performing a Legal Act

Pursuant to Section 4 of the Act, a missed deadline that expired during the pandemic period shall be excused if the taxpayer performs the missed act no later than the end of the calendar month following the end of the pandemic period. The taxpayer is not required to file a request for waiver of the missed deadline; it is sufficient if the missed act is performed within this extended deadline.

Measure pursuant to Section 4 of the Act:

Measure pursuant to Section 4 of the Act:

~ applies, for example, to the filing of an appeal, the submission of documents to the tax administrator, etc.

× does not apply to the filing of a tax return, a control statement, a summary statement, and the payment of taxes and tax advances

Delivery

If, during the pandemic, a document is delivered by hand through a postal service and a natural person or legal entity fails to collect the document by the end of the period during which the item was held by the postal service, the last day of the period during which the item was held at the post office

 

as the date of delivery, even if the addressee was not notified of the item’s storage.

The postal service shall notify the relevant natural person or legal entity of the item’s storage in an appropriate manner (i.e., via a yellow notice slipped into the mailbox).

Tax Audit

A. A tax audit is suspended at the request of the taxpayer from the day following the date of submission of the request until the end of the pandemic period. If the taxpayer does not request a suspension of the tax audit, the waiver of the deadline for performing a legal act does not apply to actions taken during the tax audit. The deadlines for performing actions shall begin to run again as of April 25, 2020 (i.e., as of the effective date of Amendment No. 67/2020 Coll.).

B. In the case of a tax audit that was suspended for legal reasons prior to March 12, 2020, unless it was suspended at the request of the taxpayer or unless the reasons for which the tax audit was suspended have ceased to exist, the tax audit shall continue. The legal effects of acts performed during the tax audit that has been suspended to date remain in force.

Tax Proceedings

Similar to the suspension of tax audits, the suspension of tax proceedings is also regulated under the amendment to Act No. 67/2020 Coll.

A. Tax proceedings are suspended at the request of the taxpayer from the day following the date of submission of the request until the end of the pandemic period. If the taxpayer does not request a suspension of tax proceedings, the provision on the waiver of the deadline shall not apply; however, as of April 25, 2020, the deadlines for performing actions shall begin to run anew.

B. Tax proceedings that were suspended, unless suspended at the taxpayer’s request or unless the reasons for their suspension have ceased to exist, shall resume as of April 25, 2020.

Tax Enforcement

During the pandemic period, tax enforcement is postponed. All tax enforcement proceedings that have been initiated are suspended by law until the end of the pandemic period. The legal effects of actions already taken in tax enforcement during the pandemic period up to April 4, 2020, remain in effect. The Act thus expanded the measures introduced by Act No. 62/2020 Coll. that prevent the conduct of auctions and other competitive processes aimed at liquidating the debtor’s assets.

We discuss the issue of the suspension of time limits under Act No. 62/2020 Coll. in more detail in our earlier article.

During the pandemic period, the following time limits are further suspended:

• the time limit for the expiration of the right to assess tax
• the time limit for the statute of limitations on the right to collect tax arrears
• the time limit for the expiration of the right to collect tax arrears

TAX ARREARS AND PENALTIES

Tax arrears

A tax liability whose due date falls during the pandemic period is not considered a tax arrears if the taxpayer pays or remits the amount due by the end of the calendar month following the end of the pandemic period. This means that a taxpayer who incurred a tax arrears during the pandemic will be treated as if they had no such arrears if they subsequently pay it within the aforementioned period.

If the taxpayer fails to pay the tax by the end of the calendar month following the month in which the pandemic ended, the tax in question becomes a tax arrears on the day following the expiration of this deadline.

Tax Overpayments

Pursuant to Section 10a of Act No. 67/2020 Coll., an income tax overpayment claimed by a taxpayer in an income tax return filed during the pandemic period shall be refunded by the tax administrator to the taxpayer within 40 days from the end of the calendar month in which the taxpayer filed the tax return.

An income tax overpayment claimed by a taxpayer in an income tax return for the tax period of the 2019 calendar year, filed between January 1, 2020, and the start of the pandemic period (i.e., by March 12, 2020), will be refunded by the tax administrator to the taxpayer within 40 days of March 31, 2020.

Publication in the Financial Administration’s List

During the pandemic period, the Financial Directorate of the Slovak Republic will not update the list of tax debtors, the list of value-added tax payers for whom grounds for deregistration have arisen, and the list of deleted value-added tax payers.

The measure is intended to prevent the negative effects that would be associated with the publication of taxpayers in the relevant lists (e.g., a taxpayer would be denied a loan).

Administrative Offenses and Penalties

The measure pursuant to Section 12 of the Act:

~ applies exclusively to income tax

× does not apply, for example, to value-added tax

 

A taxpayer will not be penalized if, during the pandemic period, they fail to meet the obligation to file an amended income tax return within the statutory deadline that expires during the pandemic period, provided they fulfill this obligation by the end of the calendar month following the end of the pandemic period.

If a taxpayer, in an additional income tax return filed during the pandemic period or within the aforementioned extended deadline, specifies an amount that, compared to the amount stated in the income tax return, results in an increase in income tax, the penalty for this administrative offense will be calculated only up to the start of the pandemic period. This means that no penalty will be calculated for days during the pandemic period or for days within the grace period for filing the amended tax return.

The tax administrator will not assess late payment interest if the taxpayer pays the income tax that became due during the pandemic period, in the prescribed amount or in the amount determined by the administrator’s decision, by the end of the calendar month following the end of the pandemic period

The tax authority will impose a penalty equal to 100% of the difference on a taxpayer who reports an income tax overpayment in their tax return that is higher than the overpayment they should have reported in their income tax return. The taxpayer is required to return the difference. However, no penalty will be imposed if the taxpayer files an income tax return that reduces the income tax overpayment prior to its refund.

TAX RETURN

Pursuant to Section 21 of the Act, in the case of an income tax return for a tax period whose deadline for filing expires during the pandemic period, in such a case:

• the deadline for filing the income tax return
• the deadline by which income tax must be paid
• the deadline by which a taxpayer whose tax period is the fiscal year is required to file a tax return and pay the tax
• the deadline for filing a withholding notice and remitting the tax (Section 43(17) of Act No. 595/2003 Coll. on Income Tax) by healthcare providers

​is extended until the end of the calendar month following the month in which the pandemic ended (hereinafter referred to as the “extended deadline”).

Income Tax Return

The aforementioned extension of the deadline shall not apply if any of the following situations occurs:

A. A taxpayer, whose deadline for filing an income tax return expires during the pandemic period (i.e., from March 12, 2020), may, based on a notification submitted to the competent tax administrator before the expiration of the extended deadline for filing the tax return, extend the deadline for filing the tax return by up to three calendar months.

• In the notification, the taxpayer shall specify the new deadline, which may only be the end of a calendar month, by which the tax return will be filed. The notification must be submitted to the tax administrator based on the taxpayer’s place of permanent residence, no later than the expiration of the extended deadline.
• This means that such a taxpayer may file a tax return no later than three calendar months after the end of the month following the month in which the pandemic ended (e.g., the pandemic ends on June 5, 2020, the grace period for filing the tax return is until July 31, 2020; if the taxpayer submits a notice of extension of the deadline for filing the tax return by July 31, 2020, the deadline for filing the tax return will be extended to the date specified in this notice; up to October 31, 2020).
• A taxpayer in bankruptcy or liquidation cannot extend the extended deadline for filing a tax return by submitting such a notice.

B. A taxpayer, whose deadline for filing an income tax return expires during the pandemic period (i.e., from March 12, 2020), may, based on a notification submitted to the competent tax administrator before the expiration of the extended deadline for filing the tax return, extend the deadline for filing the tax return by a maximum of six calendar months,provided that their income includes taxable income from foreign sources.

• In the notification, the taxpayer shall specify the new deadline, which may only be the end of a calendar month, by which the tax return will be filed. The notification shall be submitted to the tax administrator according to the place of permanent residence, no later than the expiration of the grace period.
• Income within the meaning of Section 16(1) of Act No. 595/2003 Coll. is analogously considered taxable income from foreign 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.
• 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 the total taxable income, the tax administrator shall adjust the deadline for filing the tax return and the tax due date to three months after the month in which the pandemic ended. If the taxpayer fails to file a tax return and pay the tax within this deadline adjusted by the tax administrator, the tax administrator shall impose a penalty and assess late payment interest on the amount owed.
• A taxpayer in bankruptcy or liquidation may not extend the grace period for filing a tax return by submitting such a notification.

C. A taxpayer, who is in bankruptcy or liquidation and whose deadline for filing an income tax return expires during the pandemic period (i.e., on or after March 12, 2020), may file a request with the competent tax administrator for an extension of the deadline for filing the tax return by a maximum of three calendar months.

• The request must be filed no later than 15 days before the expiration of the extended deadline for filing the tax return (i.e., if the pandemic were to end on, for example, June 5, 2020, the request must be filed no later than July 17, 2020). The tax administrator decides on the request, and no appeal is permitted against the decision.

The tax liability is due by the deadline specified in the notice or in the request (if the request was granted), even if the taxpayer files the tax return before this deadline.

The taxpayer may file a notice/request for an extension of the deadline for filing a tax return even if they have already filed a tax return, but the grace period for filing the tax return has not yet expired (i.e., by the end of the month following the month in which the pandemic ends). By filing the relevant notice/request, the deadline for paying the tax is extended, even if the taxpayer does not file an amended tax return.

The situation of taxpayers who have already filed a notice or request is regulated separately:

A taxpayer who submits a notification or request to the tax administrator for an extension of the deadline for filing a tax return until the end of the pandemic period, and the deadline for filing the income tax return specified in the notification or request expires during the pandemic period, the income tax return must be filed by the end of the calendar month following the month in which the pandemic ended; the legal provisions under points A through C above do not apply.

• This applies to a situation where a taxpayer filed a notice/request for an extension of the deadline for filing a tax return by March 31, 2020, and if the deadline for filing the tax return specified in the notice/request expires during the pandemic period, such a taxpayer is required to file a tax return and pay the tax by the end of the calendar month following the month in which the pandemic ends. In other words, if a taxpayer submitted a notice, for example, on March 27, 2020, stating that they were required to file a tax return and pay the tax by May 31, 2020 (i.e., they extended the deadline by two months), but the pandemic does not end until June 5, 2020, such a taxpayer cannot file another notification/request for an extension of the deadline, but is required to file a tax return and pay the tax no later than July 31, 2020.
• Please note that the opposite situation may also arise. In a situation where the taxpayer submitted a notification/request for an extension of the deadline by, for example, three months by March 31, 2020, as a result of which they would be required to file a tax return by June 30, 2020, if the pandemic ends, for example, April 30, 2020, such a taxpayer is not required to file a tax return by May 31, 2020

• (i.e., within the extended deadline like other taxpayers), but may file the tax return and pay the tax until June 30, 2020, because the deadline extended based on the notification/request did not expire during the pandemic period, and therefore the procedure under Section 21(4) of the Act does not apply.

Death of a Taxpayer

In the event of a taxpayer’s death, the heir or a person under Section 35 of the Labor Code (note: spouse, children, or parents, if they lived with the taxpayer in the same household at the time of death) is obligated to file a tax return or report within a deadline that expires during the pandemic period; in such a case, they shall file this tax return or report by the end of the calendar month following the month in which the pandemic ends. Such a person is entitled to submit a request for an extension of the deadline by up to three calendar months to the relevant tax administrator no later than 15 days before the expiration of the extended deadline.

Finally, it should be noted that in all of the above casesthe condition for applying the relevant procedure is that the last day of the deadline for filing the tax return fell during the pandemic period. This means, for example, that for a taxpayer whose tax period is the fiscal year from December 1, 2020, to November 30, 2019:

• if they did not extend the deadline for filing the tax return under the Income Tax Act until May 31, 2020, the deadline for filing the corporate income tax return expired on February 29, 2020, i.e., before the start of the pandemic period, and the extended deadline does not apply to such a taxpayer
• if they extended the deadline for filing a tax return under the Income Tax Act to May 31, 2020, and the last day of this deadline for filing the tax return falls during the pandemic period, the taxpayer may file the tax return within the extended deadline.

How to resolve the DISCREPANCY between the deadline for filing a tax return under Act No. 67/2020 Coll. and Government Regulation No. 48/2020 Coll.?

Extension of the deadline for filing an income tax return pursuant to the provisions of Section 21 of Act No. 67/2020 Coll. in connection with the earlier adopted Government Regulation No. 48/2020 Coll. on the extinguishment of tax arrears corresponding to unpaid penalties associated with paid income tax,

pursuant to which, on March 19, 2020, the deadline for filing tax returns and paying taxes was effectively extended to June 30, 2020, doubts have arisen on several websites regarding the final deadline by which taxpayers are ultimately required to file their tax returns and pay their taxes.

In this regard, it should be noted that since the aforementioned regulation has not been repealed by the government, the inconsistency between legal provisions will be resolved at the level of legal application by applying one of the fundamental rules of interpretation. Pursuant to the rule lex superior derogat legi inferiori (a superior law supersedes an inferior law), the application of the law, as a legal provision of higher legal force, takes precedence over the application of the regulation, as a legal provision of lower legal force; this results in the effective repeal of such a regulation. The superior legal force of a law in relation to a government regulation is derived directly from Article 125(3) of the Constitution of the Slovak Republic, according to which government regulations must, among other things, be in accordance with laws.

This conclusion is also supported by the hierarchical system of norms, according to which a permissive norm guarantees a certain freedom, since conduct permitted by a hierarchically superior legal norm may not be subject to a prohibition established by a hierarchically inferior legal norm. Similarly, under the rules of legal theory, permission can also be inferred from a command, since commanded conduct must also be permitted; otherwise, it could not be carried out without violating another legal norm.

This means that taxpayers, regardless of whether they filed a notification or request for an extension of the deadline for filing an income tax return by March 31, 2020, are required to file their tax return and pay the tax by the end of the calendar month following the month in which the pandemic ended; this date need not necessarily be June 30, 2020, as required by the aforementioned regulation, but depending on the duration of the pandemic, it may also be a later date. Taxpayers who have not yet filed a notification or a request for an extension of the deadline for filing a tax return may do so no later than the end of the grace period, thereby extending this deadline (provided the above conditions are met) by up to three, or six calendar months, during which they are subsequently required to file their tax return and pay the tax.

The situation in the field of tax law regarding newly adopted measures may continue to be subject to amendments and additions; therefore, we will continuously update the article on the website www.legalfirm.sk and inform you of any changes.

If you have any issues or questions regarding tax law, our law firm is ready to assist you and provide legal services.