A stop to paying advance payments
One of the measures that will come into force in the coming days is also a deferral of income-tax advance payments. This benefit, however, will apply only to those companies whose income, turnover or revenue has fallen by more than 40%.
But how will you find out whether your revenue has fallen by more than 40%? The calculation by which you verify whether you meet the condition for deferring advance payments consists in comparing the monthly revenue, turnover or income with the same month of the previous calendar year.
So if your revenue in April 2019 was EUR 100,000 and in April 2020 your revenue amounts to EUR 60,000 or less, you have the opportunity to defer your obligation to pay income-tax advance payments. You then only have to meet the final condition, which is to notify the Financial Administration of this fact by means of a sworn statement.
You submit the sworn statement electronically via the Financial Administration portal, and you must submit it for every calendar month for which you want the obligation to pay the advance payment deferred. The sworn statement will consist of a notification that for the given month/quarter you will not pay the tax advance payment because your revenue, income or turnover has fallen by 40% or more.
In the end, however, no one avoids the payment obligation altogether; it is only postponed. The items you did not pay as advance payments you will be obliged to settle in your tax return for 2020, i.e. in March 2021.
This measure applies to all companies as well as to the self-employed (SZČO), such as tradespeople. A disadvantage may arise, for example, if you started your business only recently. If you started your business, say, in April 2019 and your revenue was initially EUR 5,000, by the end of the year your business grew and revenue in December reached as much as EUR 20,000, and today you are back to revenue of EUR 5,000, then this measure will not help you with the deferral of advance payments.
Offsetting losses
Under the applicable rules, Slovak entrepreneurs are entitled to deduct their tax loss from the tax base.
If your accounts show an economic result that is a loss, this means that your revenues were lower than your costs. When determining whether your costs really exceed your revenues, it is necessary to take into account the statutory rules that determine what can and cannot be regarded as a cost. Only when you deduct your taxable costs from your taxable income and the result is a negative number (i.e. less than zero) are you regarded as an entrepreneur who is making a loss.
Not every entrepreneur, however, is entitled to report a tax loss. A tax loss cannot be reported, for example, by a natural person who claims lump-sum expenses. Your accountant, who keeps your accounts and knows the exceptions to this rule, will best advise you on whether you in particular may report a loss and whether you really are making a loss.
When offsetting a tax loss, the rule is that you may deduct it evenly over the four immediately following tax periods. For example, if your tax loss in 2015 was EUR 8,000, you may deduct it from your taxable income in the years 2016 to 2019 at EUR 2,000 per year.
Under the new measure, entrepreneurs will be able to offset a tax loss dating back to 2014. So if you reported losses in the years 2014 to 2019, in this time of crisis you have the opportunity to claim the part of the loss that you could not claim given the level of your income.
The losses that you could not claim for those years you can now claim on a one-off basis. The measure will also not bypass those entrepreneurs who filed their tax return in January or February. You have the opportunity to file a supplementary tax return in which you make use of this mechanism.
Anti-corona loans
Entrepreneurs should also be helped by a project of the Ministry of Finance of the Slovak Republic with Slovak Investment Holding (SIH). The essence of the project will be to give entrepreneurs the opportunity to draw loans from commercial banks, which will, under this project, be guaranteed by SIH, for which EUR 38 million has been earmarked. This assistance will apply to small and medium-sized Slovak enterprises as well as to tradespeople.
What does this mean for you? Since the current crisis has affected us all, entrepreneurs will need funds to get going again. If you are a tradesperson or a small or medium-sized enterprise, at selected banks you will be able to apply for a preferential loan guaranteed for you by SIH. The loan should be granted to you for a maximum period of 4 years, including the possibility of a 12-month deferral of repayments of both principal and interest.
What must you use it for? This project is primarily aimed at supporting entrepreneurs in maintaining employment. You should therefore use the money for your investment and operating costs. If you meet the condition of maintaining employment, you may obtain a loan with a low, or even zero, interest rate.
Authors: JUDr. Ondrej Steiniger and Magdaléna Karvaiová
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