In addition, Highgate Law & Tax is also celebrating its win in the “Capital Markets” category, proving itself to be a comprehensive law firm with an extensive portfolio of expertise and the ability to successfully navigate diverse legal challenges.

The awards gala evening, which was organized by the media and educational group EPRAVO Group and the weekly TREND, was held at the Double Tree by Hilton hotel in Bratislava. For Highgate Law & Tax it was not only an opportunity to celebrate its success, but also to thank its clients and partners for their trust and support, without which this milestone would not have been possible.

This double triumph confirms Highgate Law & Tax’s excellent reputation for legal and tax services and reinforces its position as a leading player in the legal services market in Slovakia.

Článok Highgate Law & Tax and its double triumph in the prestigious Law Firm of the Year competition je zobrazený ako prvý na Highgate.

“Crypto Novel” 2023

In the summer of 2023, a law amending the Income Tax Act (the “Amendment“) was enacted providing that, beginning in 2024, individuals would be able to tax long-held virtual currencies (note only virtual currencies, not all crypto-assets) at a rate of 7% and without health levies. Overall, however, this Amendment contained more attractive changes for investors. However, since it has been repealed, I will not go into it in detail in this article. Who would be interested in it, however, I attach:

• my Linkedin blog, where I discussed the issue of exchanging virtual currency for other currency and justified why it should be taxed anyway (poorly written Amendment);
• my professional publication with my colleague for the Ministry of Finance of the Slovak Republic, in which we address why the taxation of staking should be postponed (it is also partly applicable in today’s situation)
• video podcast on taxation of crypto assets:

Taxation of Bitcoins and other cryptocurrencies from 2024

Something changes from 2024 onwards. Whereas the health levy was 14%, from 2024 it will be 15%. So the profaned “25 + 14” has become “25 + 15”. On the other hand, the increase in the level at which the progressive 25% tax rate applies can be considered positive news with a marginal effect. Whereas in 2023 it was EUR 41,445.46 for every EUR above the tax base, from 2024 it is EUR 47,537.98.

This threshold is 176.8 times the applicable minimum subsistence level (the socially recognised minimum threshold of income of a natural person below which a state of material deprivation arises). Thus, as the minimum subsistence level increases, the threshold for the progressive tax rate also increases. The amount of the minimum subsistence level is determined by a measure of the Ministry of Labour, Social Affairs and Family of the Slovak Republic.

Note that it is not enough to cross this threshold with income from the sale of cryptocurrencies (I use the term cryptocurrencies in this article because this taxation does not apply to all crypto assets). For example, income from employment, income from the sale of securities (if not exempt), real estate (if not exempt), or miscellaneous passive income (such as rental income earned without doing any active management) are also included in the same tax base.

Changes in taxation of cryptocurrencies in Slovakia in 2024

Planned changes in the taxation of cryptocurrencies in Slovakia, which were to come into force on 1. 530/2023 Coll. (consolidation package).

This means that in 2024 cryptocurrencies in Slovakia will be taxed according to the current rules:

• Income from the sale of a cryptocurrency made after one year of its acquisition is taxed at 19% or 25% income tax rate + 15% health insurance premium.
• Income from the sale of a cryptocurrency earned within one year of its acquisition is taxed at19% or 25% income tax rate + 15% health insurance premium.
• A tax expenditure on cryptocurrency can only be claimed if it was used to acquire the cryptocurrency.
• Profits from cryptocurrency mining are taxed the same as “other income” at 19% or 25% income tax rate + 15% health insurance premium.

Beware, the law still only talks about virtual currencies. It does not talk about crypto assets. Thus, there may be crypto assets whose underlying asset is an asset that is not taxable in Slovakia once certain conditions are met. However, with the advent of the MiCA Regulation, this diversity is likely to be removed and all crypto assets will be subject to the same tax regime (and accounting regime) irrespective of the underlying asset.

Taxation of Bitcoins and other cryptocurrencies in legal, tax and accounting contexts

While cryptocurrency by default includes only those crypto-assets that are equivalent to standard FIAT currencies (i.e., cash), the term crypto-asset is a broader term, encompassing a variety of other types of assets that serve purposes other than standard payment transactions.

Proper classification has significant relevance not only in the regulation of crypto assets, but also from a tax perspective. Therefore, for example, it is not valid to claim that the sale of any crypto asset is exempt from VAT, or even within the scope of VAT. Indeed, there are several types of crypto-assets (e.g. some NFTs or utility tokens) that are subject to VAT regulation.

Nor is the claim that every sale of a crypto asset is taxed at the “25+15” rate valid, as some types of crypto assets may even be exempt from income tax under current law.

In terms of financial regulation, there are crypto assets that are subject to MICA regulation or crypto assets that are not subject to MICA and are subject to, for example, MIFID II regulation or, in some cases, even no regulation at all. Be that as it may, legal classification is in some respects important in finding opportunities for tax optimization in more complex contexts.

Who would be interested in this topic in general, we have covered it more here:

• our articles on this topic;
• footage from a talk at our November 2022 IT and Digital Conference, where we also covered topics around tax optimisation for IT and digital companies;
• a crypto asset accounting manual for entities dealing in crypto assets; or
• the issue of double taxation on the purchase of goods and services through crypto assets (by the way, this should finally be regulated in the amendment to the Income Tax Act 2024, even after our pressure).

The crime of not paying taxes on the sale of cryptocurrencies?

It is very bold to believe that the taxation of cryptocurrency sales set up in this way (i.e. 25+15) will bring more revenue to public budgets than the taxation envisaged by the Amendment. One reason for this is the apathy of individuals to declare cryptocurrency income, for example because of the high tax burden and/or aversion to the current political representation. However, such conduct is considered to cross the Rubicon in the notional classification of tax offences and thus fall within the criminal law.

Thus, the failure to declare income or fabricating tax expenses for individuals constitutes a standard course of conduct fulfilling the elements of the offence of tax and insurance evasion. As part of this procedure, the natural person will have to pay income tax and possibly also health insurance premiums, but at the same time he or she may also face imprisonment or other punishment provided for in the Criminal Code. In some cases, however, it is possible to avoid a prison sentence, even though the tax offence in question is classified by the law enforcement authorities as so socially dangerous that it fulfils the objective aspect of the relevant criminal offence.

Recognising the line between aggressive tax optimisation(a fine and additional tax payment) and tax fraud(a criminal offence – potentially a custodial sentence) is more difficult in many situations. Therefore, it is important to have the expertise of an attorney who practices tax law in connection with various optimization structures (some of which are discussed below). By default, such an opinion should protect the taxpayer from criminal liability. However, it is standard practice to obtain such an opinion from reputable law firms that have a proven track record of dealing with the subject matter.

So how to reduce the tax burden on the sale of Bitcoins and other cryptocurrencies?

Not only in practice, but also in the theory of taxation, a number of structures and settings emerge where it is not entirely clear whether or not they are statutory mechanisms. In general, not all tax optimisation is illegal and immoral. For example, deciding whether to operate as an SRO or a sole proprietorship can only be a fully informed decision based on a tax-tax comparison of the two regimes. Although the subjective motive is clear (i.e. to optimise tax and levy), such action does not contradict the purpose of the legislation. Therefore, the tax authorities cannot, after some time, ask you to change your legal form of business to one that is, from your point of view, less favourable.

A similar logic applies to the taxation of cryptocurrencies. However, in finding legitimate structures to reduce/eliminate taxation, in practice we find that proposals from clients are often contrary to the purpose of the legislation. Thus, this is not entirely parallel to SROs and the self-employed. As an example, I will give taxation at the level of the individual and the legal entity respectively.

Taxation of sales of Bitcoins and other cryptocurrencies through a natural person or a legal entity?

If you are deciding whether to buy cryptocurrency in the name of an individual or a corporation, making such a decision even on the basis of a purely tax-deductive motive does not defeat the purpose of the legislation. However, if you own the cryptocurrency as an individual and transfer it at face value to a legal entity before selling it to avoid the “25+15”, it is already more problematic. In that case, you need to tinker with the subjective side of the transaction to make it meet the requirements for a genuine transaction.

By comparison, on a Slovak legal entity, an individual will normally achieve an effective taxation rate of 28.9% (21% corporate tax rate + 10% dividend tax). Of course, this is the case if dividend tax is also paid, but this can be avoided in some cases and structures. In terms of social and health contributions, this is a relatively neutral situation. Such a structure generally does not require the payment of levies, except for marginal obligations in relation to:

• minimum health levies (see my Linkedin status on this topic); and
• obligations for minimum executive remuneration and invoicing to your own firm (see my online training).

Non-recognition of cryptocurrency income

Failure to declare cryptocurrency income may be considered a criminal offence. In contrast, aggressive tax optimization (acting in accordance with the text of the law but contrary to its purpose) is in theory punishable outside the criminal law. The tax authorities have gradually, albeit relatively slowly so far, made some tools available to detect tax evasion. Also in the context of the gradual adoption of legislative initiatives by the EU and the OECD, it is reasonable to assume that these tools will gradually become more invasive. Naturally, however, the state has to learn how to work with them.

What will the state gain by repealing the amendment on cryptocurrency taxation?

Only time will tell. In the context of the adoption of the consolidation package, I had the opportunity to take part in the deliberations of the relevant committee of the National Assembly. It was in the communication with the State Secretary of the Ministry of Finance that the phenomenon of the so-called “consolidation” was highlighted. The Laffer curve was highlighted.

The latter, simplistically, presents that a higher tax rate does not automatically mean higher tax revenues for the state. This is precisely because taxpayers have a greater incentive to avoid tax. Either by some legitimate tax optimization (if they know the way and have the resources), aggressive tax optimization or flagrant tax violations by not declaring income.

Moreover, it was the better rate for taxation of cryptos that gave Slovakia an easy prestige and in autumn 2023 we even had as Highgate several inquiries from abroad asking to transfer tax residency to Slovakia.

Tax optimisation via offshore company or tax haven?

Relatively similarly to a Slovak legal entity, it also works on a philosophical level with a foreign company. Nevertheless, there are a number of important differences. Namely, when setting up, as well as when the foreign company itself exists in a jurisdiction with lower taxation, it is necessary to keep in mind the rationale for its establishment and continued existence. This requirement stems from Slovak law, as EU law is not harmonised in this respect (at the end of the day, any EU directives are implemented into Slovak law anyway and such wording is primarily followed in application). Nevertheless, EU law is a kind of guarantor that the will of the Slovak tax authorities is not absolutely arbitrary and, for example, when it is necessary to tax your company in Hungary, Cyprus or Malta, for example, such intervention of the Slovak tax authorities must be in accordance with the fundamental EU law – the right of establishment.

In general, from the perspective of the defensibility of such a foreign structure, where a Slovak individual wishes to achieve minimal taxation through the sale of cryptocurrencies through a foreign company, the following circumstances should be borne in mind:

• výber jurisdikcie s ohľadom nielen na výšku sadzby dane, ale aj:
  • the overall tax system (as the tax rate itself may not be the final tax burden);
  • set-up and maintenance costs;
  • the ability to build so-called substance for local as well as Slovak purposes;
  • the extent of the administration required;
  • the predictability of the jurisdiction in terms of changing conditions; or
  • perception from the perspective of Slovak legislation and practice;
• the issue of the so-called. place of effective management from the point of view of the Slovak tax authorities;
• the issue of the emergence of the so-called. permanent establishment from the point of view of the Slovak tax authorities;
• application of the 35% tax rate;
• general rules against illegitimate tax optimisation;
• CFC rules for legal entities;
• the possibility of opening and operating a bank account; and
• forthcoming European legislation (in particular the so-called Unshelling or DAC 6 Directive).

The use of so-called. offshore companies can , in certain circumstances, be a relevant and also a defensible tool to reduce the tax burden. However, the set-up must be of a high quality, in order to reduce not only the risk of losing a potential tax dispute, but also the practical risk for any tax dispute. Fictitious invoices from abroad are a criminal offence.

In which countries is it worth selling cryptocurrencies to avoid paying taxes?

There is no universal answer. The tax rules for cryptocurrencies vary considerably from country to country and are constantly evolving.

Some factors to consider when choosing a country to sell cryptocurrencies:

• Tax rates: some countries tax cryptocurrencies as capital gains income, others as business income. Tax rates can vary considerably.
• Tax exemptions: some countries offer tax exemptions for cryptocurrencies held for more than a certain period of time.
• Tax relief: for investors in cryptocurrencies.
• Regulation of the cryptocurrency market: varying levels of regulatory requirements for cryptocurrency trading.

There are countries that are known in the media for their favourable tax conditions for cryptocurrencies:

• Portugal: offers a 10-year income tax exemption for cryptocurrencies held for more than one year.
• Malta: taxes cryptocurrencies as capital gains at a 5% tax rate.
• Germany: taxes cryptocurrencies as capital gains income, but offers a tax exemption for cryptocurrencies held for more than one year.
• Switzerland: taxes cryptocurrencies as capital gains income, but the tax rate varies by canton.

It is important to emphasise that the choice of a country to sell cryptocurrencies should not be made on the basis of tax breaks alone. Other factors should also be considered, such as the regulation of the cryptocurrency market, the availability of cryptocurrencies, the possibility of establishing a banking infrastructure, the defensibility from the point of view of the Slovak tax authorities, as well as the stability of the political and economic environment.

Known forms of tax optimisation in the taxation of sales of Bitcoin and other cryptocurrencies

Other forms of tax optimisation can be divided into those that are already illegal on the face of it and those that, if set up correctly, can be legal and even legitimate from a moral and ethical point of view (although this dimension is entirely subjective). At the same time, tax optimisation techniques can also be divided into those that are generally known and those that are not.

Various forms of practical obfuscation and opacity are clearly illegal. While the practical risk is low in today’s reality, the burden of proof remains problematic. This is borne by the taxpayer. In principle, the state could be a little more intelligent and consistent in its application of the law and could also address such practices in a relatively punitive manner (e.g. through the so-called aids in the Tax Code).

Among the commonly known techniques I include, for example, the change of tax residency. Although this has its technical specifics, the public is aware of this possibility in principle. However, this instrument is often simplified (for example, various unilateral authorisations in countries such as Panama or Paraguay) and taxpayers are presented with various miracle solutions. Boris Becker, the former successful German tennis player, also simplified the complexity of changing tax residency (he claimed to be resident in Monaco but stayed in Germany relatively frequently). He was eventually prosecuted for this conduct.

I also consider various donations to friends “to the Czech Republic”, payment cards for secured cryptocurrencies or various forms of borrowing to be common knowledge.

Unknown forms of tax optimisation in the taxation of sales of Bitcoin and other cryptocurrencies

However, there are also techniques unknown to the public. For some, there is no need to use complicated foreign structures at all. Their existence is due to the diversity of Slovak tax regulations, which due to their growth (in terms of number of words) automatically create various inconsistencies and thus create opportunities for tax optimization. And as long as the structure in question is authentic in terms of “business” rationalisation, not only can it not be a criminal offence, but the tax authority does not even have a legal mandate to sanction you for using the “loophole” in the law in question.

The basis for this assertion is provided by relatively extensive Slovak (but also Czech) case law. It is a matter and responsibility of the state (legislator), if it wants to introduce and collect a certain tax, to determine the conditions for setting and collecting this tax in a clear and definite manner. If it fails to do so, it must take into account the fact that, when interpreting the relevant provision of the tax law, the court will prefer the alternative which does not interfere, or, in the alternative, will not interfere. least interferes with the property right of the taxpayer (i.e. the individual selling the cryptocurrency), even if such an interpretation would be contrary to the fundamental (structural or other) principles of the relevant tax (i.e. i.e. a tax advantage will be obtained which the tax authority will consider illegitimate – it will be contrary to the principle of fair tax collection).

If you want to learn more about tax optimization options for crypto assets, you have the option to arrange a paid personal consultation (more about consultations with me by clicking below) or a more comprehensive consultation (by individual agreement).

If you are interested in the taxation of cryptocurrencies, please do not hesitate to contact us.

Článok Taxation of Bitcoins and other cryptocurrencies (virtual currencies) after the repeal of the crypto amendment – tax optimisation options je zobrazený ako prvý na Highgate.

The full recording of the conference can be found here:

If you are interested in this topic, please do not hesitate to contact us.

Článok Peter Varga at the NBS conference on the digitalisation of the capital market je zobrazený ako prvý na Highgate.

The full recording of the conference can be found here:

If you are interested in this topic, please do not hesitate to contact us.

Článok Peter Varga at the NBS conference on MICA regulation and overall regulation of crypto assets je zobrazený ako prvý na Highgate.

Peter Varga talked more about this in his podcast: https://hg.amcef.com/zdanovanie-krypta-na-slovensku-po-novele/

However, the amended law has brought about some major changes that are sure to have a significant (and positive) impact on the use of and investment in cryptocurrencies in the country. The tax regime for cryptocurrencies has been changed, which has the potential to impact cryptocurrency investment and also improve the fair administration of taxes in this area. However, these changes only affect virtual currencies. They do not apply to other forms of crypto assets.

In this article, we take a closer look at the main tax changes and their potential implications for public finances. For more on this topic, follow Peter Varga ‘s Linkedin or watch the podcast mentioned above.

Existing burden on sales revenue

To date, the tax burden on income from the sale of cryptocurrencies to FBOs has been one of the highest in the EU. It has also been less favourable compared to most other financial assets, including shares. Profits from the sale of virtual currencies by individuals (non-business persons) were taxed at a rate of 19% or 25%, depending on the amount of annual income. In addition, health insurance premiums were also payable.

Extremely high tax and levy obligations have not only led to an outflow of cryptocurrency owners to countries with lower tax burdens, but also a higher risk of non-payment of taxes. Conversely, countries such as Malta, Germany and Portugal offer zero tax on cryptocurrency income, which has attracted many investors. It can therefore be argued that there was no direct proportionality: the higher the tax rate, the higher the revenue to public budgets.

The new situation with lower tax rates, at 7 per cent, brought about by the amendment is undoubtedly much more favourable. The lower tax burden could even have a positive impact on public budget revenues. It could motivate investors to stay in Slovakia and fulfil their tax obligations more properly. Moreover, based on our experience, it may encourage young people from abroad to move to Slovakia.

Changes in basic concepts

In addition to modifying certain processes, the amendment also introduced new definitions and concepts. These are key to understanding the new cryptocurrency tax regime and its application in practice. Here are some of the key changes to the amended law:

Virtual currency

According to the amendment to the Income Tax Act, virtual currency is defined as a digital medium of value that meets the following criteria:

• is neither issued nor guaranteed by a central bank nor a public authority,
• is not necessarily tied to legal tender,
• does not have the legal status of currency or money,
• is accepted by certain natural or legal persons as a means of payment,
• can be transferred, stored or traded electronically.

This definition clearly distinguishes virtual currencies from traditional legal tender and allows their identification and classification for tax purposes. However, it also clearly distinguishes them from other types of crypto-assets, thereby subjecting them to different tax treatment.

Stablecoin

Stablecoin means any virtual currency whose price is relatively stable because of its peg to a particular commodity, currency or because its supply is regulated by a specified algorithm.

Staking

Staking refers to the increment of virtual currency obtained by verifying transactions in a virtual network. This means that virtual currency holders can earn a reward for their participation in maintaining and securing the network. Staking has become an important part of cryptocurrency ecosystems and is one of the mechanisms by which the security and trustworthiness of these networks is achieved.

There has also been a definitional change in the concept of “sale of virtual currency“. Previously, the sale of virtual currency was considered to be the exchange of virtual currency for property, other virtual currency, the provision of a service or the transfer of a service for consideration. Today, the sale of a virtual currency is no longer the exchange of a virtual currency for another virtual currency. However, the exchange for stablecoin is already a sale.

Acquisition price

In the previous regulation, there was a lack of a clear rule for determining the acquisition of virtual currency in some cases, frequently occurring in the economy. Such vague/insufficient regulation posed a risk of double taxation. With the amendment, this technical uncertainty has become a thing of the past, at least for the purchase of goods and services. The legislation now explicitly sets out how the purchase price of a virtual currency is to be determined when trading or providing services. This measure marks an important step towards clearer and more precise taxation of cryptocurrencies, which should make life easier for crypto holders and increase legal certainty in this respect.

A time test to encourage long-term investment?

One of the main points of this amendment is the introduction of the so-called. A time test. Investors who hold cryptocurrency for more than one year prior to the sale (and it was not part of the business assets) will be able to include this income in the special tax base at a favourable rate of 7 per cent. The move is intended to incentivise long-term investment, stabilise the market and move closer to countries that are described as crypto havens. If an individual sells their cryptocurrencies after one year of their acquisition (and they were not part of business assets), they will include this income in the special tax base, which will be subject to a reduced tax rate of 7 percent.

Should a person decide to sell the cryptocurrency before the end of the year, such income will be included in the tax base (sub-base) together with other income and the same tax treatment as today, i.e. 19% or 25%, will apply, depending on the amount of the total taxable income.

The fact how long the cryptocurrency has been in the taxpayer’s possession is called. The burden of proof is on the taxpayer. i.e. it is the taxpayer’s burden to prove this fact. In a particular situation, it then depends on the manner in which he acquired and held the cryptocurrency. For example. if he uses custody services, then a statement from the service provider may serve as proof. For a self-hosted address, identification of the wallet and an entry on the blockchain should be sufficient. A receipt for payment for cryptocurrency can also be proof, although it will only be sufficient on its own in some situations.

Health levies for cryptocurrencies

Another pleasant change is that health insurance premiums will no longer be paid. This applies to all income from the sale of cryptocurrency, unless the cryptocurrency was part of a business asset, regardless of the time test. This exemption applies to all income from the sale of cryptocurrencies after 1. January 2024, but does not apply to other types of crypto assets. This change will have a major impact on short-term investors and cryptocurrency traders who will no longer be burdened by the health levies. This exemption will also not apply to legal entities and natural persons conducting business who hold virtual currencies in their business assets.

Further changes to the law

Under the new legislation, income from the sale of cryptocurrencies acquired by a person through mining or staking will be included in the tax base (partial tax base) only in the taxable period when the sale of the virtual currency was made. This will allow for the positive results to be set off against any losses from other operations.

However, when exchanging virtual currency for another, there is an apparent contradiction with what was announced as the purpose of the amendment. The amendment was intended to make the exchange tax-free, but in the context of a non-standard legislative process, a vague provision has been created that leaves somewhat of a status quo.

The amendment also added the method of valuation if the virtual currency was acquired by selling goods or services. The entry price from 1. January 2024 will be the real value of the virtual currency. Income from the sale of a virtual currency is part of the tax base in the tax period in which the sale takes place (e.g. exchange of virtual currency for property, etc.) using the valuation of the exchanged currency at its fair value on the date of the exchange.

Cryptocurrency payments up to EUR 2,400 per year

The amended law comes with a tax exemption that applies to cryptocurrency payments. Under the new legislation, cryptocurrency payments of up to €2,400 per year will not be taxed. This is a positive signal for those who use cryptocurrencies for current payments and small transactions. This removes the need to track and record these smaller payments on tax returns. Should a taxpayer receive income in excess of €2,400 in a tax year from the exchange of virtual currency for property or services, only the difference between the income and expenses above this amount will be taxed. This means that tax will only be payable on the net income above this limit, which will facilitate small-scale cryptocurrency payments and increase their use in current transactions.

Standardisation and technical challenges

There is some standardisation through the adoption of various legislative measures, especially at EU level, but each country sets its own policy on direct taxes. With this amendment to the Income Tax Act, we can see that Slovakia has decided to take its first step and move taxation to a higher level. Overall, the adoption of new legislative measures in the area of cryptocurrency taxation in Slovakia is an important step towards standardisation and improvement of the legal framework. While the amendment to the Income Tax Act has brought positive changes and shows a willingness to adapt, it should be borne in mind that there are also risks associated with the weak legislative process and long-standing shortcomings in the taxation of cryptocurrencies.

Going forward, it is essential to continue with the technical adjustments that have now been overlooked, in particular, to take into account the needs of cryptocurrencies and to ensure fair and efficient taxation. Making crypto-enthusiasts more attractive and attracting new crypto-enthusiasts is a first step, but the long-term goal should be to create clear and uniform rules that ensure effective taxation and minimise legal uncertainty.

A video podcast on the topic “Taxation of cryptos in Slovakia after the amendment” can be viewed below the article.

If you are interested in this topic, please do not hesitate to contact us.

Článok A new era in the taxation of cryptocurrencies in Slovakia: amendment to the Income Tax Act je zobrazený ako prvý na Highgate.

The awards gala was organised by the EPRAVO Group and the weekly TREND, and its eleventh edition took place on Wednesday 26. April. The event took place at the Double Tree by Hilton Hotel in Bratislava, where the winners of the individual categories received their awards for their year-long work.

We would like to thank our clients and partners for their cooperation, thanks to which we have achieved this success.

If you are interested in a consultation, please do not hesitate to contact us.

Článok Highgate Law & Tax named Tax Law Firm of the Year 2023 je zobrazený ako prvý na Highgate.

If you are interested in this topic, please do not hesitate to contact us.

Článok Expert article by Vladimíra Mačuhová and Petr Varga in the Bulletin of the Slovak Chamber of Tax Advisors on the topic of crypto assets je zobrazený ako prvý na Highgate.

The problem of double taxation on payments for goods and services to cryptos is a real issue. The solution cannot simply be sought in the Income Tax Act, nor can it be automatically expected from the application of some ad hoc fairness in taxation (i.e. there is no double taxation because it is unfair). Simply, if a taxpayer receives a crypto asset as consideration for the supply of goods or services, there is a risk that the tax authorities will not be able to attribute an input price tothat crypto asset.

In practice, we encounter a number of options available to some advisers to avoid this phenomenon. However, even more advisers do not even know that such a problem exists. It is therefore with this lecture that we have sought to publicise this problem at a highly professional level to a relevant audience. We are very pleased that the lecture was also attended by relevant representatives of the Ministry of Finance, with whom we were able to discuss the extent of the problem and potential remedies.

If you are interested in this topic, please do not hesitate to contact us.

Článok Double taxation on crypto payments.
Peter Varga and Vladimíra Mačuhová lectured at the methodological days of the Slovak Chamber of Tax Advisors je zobrazený ako prvý na Highgate.

We are thus relatively intimately familiar with the related realities of this segment. Whether it is the topic of tax optimization, “employing sole traders”, investor entry, setting up a holding company, automated accounting, ESOPs, the legal, practical and tax pitfalls of scaling a business abroad, or operating with cryptos, these are all topics that we encounter in practice.

For this reason, we perceived that this conference can help many entrepreneurs to navigate through the complex tangle of more complex Slovak and foreign tax and legal issues. It was also intended to help to better understand the perspective of an investor or potential buyer in a company exit.

Sale of the company or entry of an investor :

• What are the basic situations and types of investor entry into companies?
• What are the key motivations and areas of interest for the investor and the company owner?
• What should an IT firm focus on to maximize the benefits of the investment for the firm and the business owner?
• Structured transactions and relevant tax implications from an income tax perspective (e.g. tax burden through a Slovak vs. a foreign holding company);
• Transaction Experience;

Relevant financial ratios when a company is sold or an investor enters :

• What is of interest to the investor or the buyer in accounting?
• Risks associated with incorrect accounting;
• Capitalization of the company;
• Transaction Experience;

Foreign IT contractors and work “from Bali” :

• Withholding taxes on payments to foreign contractors;
• Working from “Bali” – tax and levy implications;
• Setting up contract documentation;

ESOP – Best practice :

• What forms of shares and options can Slovak companies offer to their employees?
• Legal and practical context;
• Tax and levy context;
• Cross-border structure and practical experience;

Functioning in the crypt :

• Receiving retribution and paying contractors in the crypt;
• Types of crypto projects (token issuance, management, consulting, community token,…) and regulatory and tax aspects;
• Accounting and tax pitfalls in Slovakia and best practice when leaving Slovakia;
• Experience;

Scaling the IT business abroad :

• Do I need to have a company abroad in different business situations?
• Establishment of a permanent establishment, VAT regimes, withholding taxes;
• A company in an offshore jurisdiction from a legal, tax and practical perspective;
• Holding abroad – advantages and disadvantages;
• Investor requirements for foreign structure;
• Protection of the owner’s private property in the context of the political situation in Slovakia;
• Transfer pricing;

Software contracts :

• Framework or one-off contracts;
• Waterfall vs. agile SW development;
• Licensing Terms;
• Warranties and liability for defects in the SW;
• Problematic provisions – experience from practice;

Structuring business to the US :

• How best to enter the US market;
• Where can I get some help/information/grants?
• What is the tax and administrative burden?
• How to choose the right lawyer and accountant?
• How to get into the investors/funds horizon?
• In which state are the best conditions to enter the US market?

Tax optimization for digital and IT companies :

• Holding structure – owner protection;
• Patent Box and Supercomputing – how some IT companies do not have to pay income tax in Slovakia;
• Other tax and levy types and practical experience;
• When is tax optimisation already a criminal offence;

Schwarz system :

• Tax-tax implications and calculations;
• Impact on employees’ social insurance benefits (maternity, pension, sick leave,…);
• What impact does the change to a sole trader’s trade have on a sole trader’s pension?
• Analysis of court decisions that have dealt with the topic;
• Practice of tax administrations and labour inspectorates;
• Criminal liability;
• Setting up contracts with contractors;

Relevant financial ratios when a company is sold or an investor enters :

• What is of interest to the investor or the buyer in accounting?
• Risks associated with incorrect accounting;
• Capitalization of the company;
• Transaction Experience;

Many topics and many questions from conference participants. Companies were particularly interested in topics around ESOPs, tax optimizations or company sales. However, many attendees stayed until the end to hear the current practice in connection with the so-called In the meantime, there was a lot of interest in the practice of the shvarc system (i.e. the employment of freelancers).

We received a lot of positive feedback on the content and organisation of the conference. We are therefore very pleased that after the conference on setting up investment funds, this conference was also a success.

If you are interested in this topic, please do not hesitate to contact us.

Článok Conference on legal and tax optimization for technology companies je zobrazený ako prvý na Highgate.

Staking means holding cryptocurrency in a cryptocurrency wallet or on some exchanges, with the holder receiving a reward for doing so. Those who do so should, in theory, currently pay tax on that profit, even if in reality there is not necessarily an increase in the taxpayer’s wealth. If they do not do so, they may pay for it in tax audits in a few years’ time on the basis of loopholes in the law.

The aim of the Highgate Group’s proposal is that staking income should only be taxed when the staking profit is real. If Slovakia were to legislate staking, it would be one of the first countries in the world and perhaps a model for other countries. At the same time, this will prevent unnecessary lawsuits and litigation, which could arise in the future because of the ambiguous regulation today.

Full article here : https://touchit.sk/nova-legislativa-ohladne-kryptomien-pravnici-z-pracovneho-timu-ministerstva-financii-vypracovali-navrh-ako-zdanovat-staking/426541

If you are interested in this topic, please do not hesitate to contact us.

Článok The taxation of cryptoassets raises a number of question marks.
Interview for TouchIT je zobrazený ako prvý na Highgate.