On the January 1, 2015 the Income Tax Act changes took effect and it states that the circumstances about income tax exceptions and reduction must be declared in tax return on an ongoing basis. If until recently the company had to declare unused rights for income tax benefits only when making the disbursement and pay-out, then from now on the declaration about possible income tax reduction must be submitted to the Tax and Customs Board on the month following the date the circumstances took place. This rule applies also to the mergers and divisions of the companies and therefore rights aquired or received during the reorganization should be reflected in tax return for the month when the merger or division enters into force.

Additionally all monetary or non-monetary contributions and investments to the company must be declared in order to receive income tax benefits from the distribution payment in the future. The income tax exemptions can be applied in case of distribution of profit and other payments from the capital, for example in case of ordinary liquidation or alternative merger of company and natural person, and decrease of share capital.

Declarations regarding before mentioned circumstances should be submitted at latest on February 10, 2015. Otherwise payments to the company in the past can not be legal ground for income tax benefits in the future.

It would be good to know that documentation to receive income tax benefits must be in writing and already submitted declarations can be amended and changed until 3 years.

If you have any questions or you need assistance, please do not hesitate to contact us.

Starting 01.01.2015 there will be new tax rates.

– The rate for withholding income tax is 20%.
– Income exempt from tax is 154 euro.
– Additional income exempt from tax in the case of pensions is 220 euros per month.
– Additional income exempt from tax in the case of occupational accident or occupational disease compensation is 64 euros per month (for the implementation of which an application from the person receiving the payment is required).
– The social tax rate is 33%.
– The monthly rate on which the minimum social tax obligation is based is 355 euros (instead of the 320 euros valid in 2014) i.e. the minimum obligation of social tax is 117.15 euros per month.
– The unemployment insurance premium tax is 1.6% for the employee (2% in 2014) and 0.8% for the employer (1% in 2014). The funded pension tax rate is either 2% or 3%.