Main changes in personal taxation applicable as of 1 January 2018 are presented below.
As of 1 January 2018, the tax-exempt amount applicable for employment income is calculated according to a new formula: 380 – 0.5 x (gross monthly income – 400), meaning that if gross income is EUR 1,160 per month or higher – no tax exempt amount applies. Accordingly, the maximum monthly non-taxable amount is increased from EUR 310 to EUR 380.
Non-taxable tax amounts for disable people are increased as well.
As of January 2018, no additional tax-exempt amount for children is applicable. It is replaced by direct allowances for parents to be paid by the Government.
Monthly minimum salary is increased from EUR 380 to EUR 400 as of 1 January 2018 as well. The minimum hourly rate is increased from EUR 2.32 to 2.45 accordingly.
As of 1 January 2018, new monthly PIT return form GPM313 applies instead of previously applicable form FR0572. This form must be filed with the tax authorities by the 15th day of the following month when declaring income paid out during the taxable periods starting from January 2018.
Moreover, starting from 2018, annual income tax returns for A class income (FR0573) and B class income (forma FR0471) will no longer be applicable and is replaced with a new single return (form GPM312).
As of 1 January 2018, taxation of individual activities has changed. All individuals carrying out individual activities shall be equally subject to a 15% PIT rate. Tax Credit (TC) for the PIT payable shall be available depending on the annual income from the individual activities (AI) and shall be calculated according to the formula:
— TC = AI x 0.1, if AI does not exceed EUR 20,000;
— TC = AI x (0.1 - 2/300 000 x (AI – 20 000)), if AI exceeds EUR 20 000.
Individuals receiving income from individual agricultural activities will be subject to transition period in 2018 taxable period. AI shall be subject to a 10% PIT rate. TC shall be calculated according to the formula:
— TC = AI x 0.05, if AI does not exceed EUR 20,000;
— TC = AI x (0.05 - 1/300 000 x (AI – 20 000)), if AI exceeds EUR 20 000.
PIT for subsequent periods shall be calculated in the same manner as for other individuals carrying out individual activities.
Other changes to the Law on PIT that came into force as of 1 January 2018:
— Interest up to EUR 500 on consumer credits granted through the inter-lending platforms and interest on funds provided through a pooling platform is non-taxable.
— Income received from the sales of scrap is non-taxable if the gains do not exceed EUR 2,500. Income exceeding the threshold is subject to a 5% PIT rate.
— Prizes and gifts (previously, only prizes) received from employer, the total value of which does not exceed EUR 200 over the year, are non-taxable.
— Public transport and railway tickets provided to an employee to commute to/ from work, are non-taxable.
— Income received for assistance to the intelligence institutions is non-taxable.
As of 1 January 2018, the rate of employer’s sickness contributions is increased from 1.2% to 1.4%. Unemployment contributions’ rate for permanent employment contracts has been reduced from 1.6% to 1.4%, for temporary employment contracts – from 3.2% to 2.8% accordingly. Thus, overall employer’s social security contributions rate for permanent employment contracts has not changed and remains 31.18%. Employer’s social security contributions’ rate for temporary employment contracts has been reduced by 0.2 percentage points and currently is 32.58% (instead of previously applicable 32.78%).
As of 1 January 2018, social security contributions (employer’s part) shall be calculated from no less than a minimum monthly salary applicable that month (currently – EUR 400). Exceptions are applicable if an employee:
— has been insured by another employer that month;
— has received a state pension or a lost work capacity pension that month;
— is younger than 24 years old;
— has received sickness, maternity/ parental or child care allowance.
The employee’s part remains to be calculated from the actual gross amount.
As of 1 January 2018, obligatory health insurance contributions have to be calculated from the remuneration paid for the activities of the supervisory, management board or board of directors in the loan committee. 3% of insurer’s (i.e. company’s) and 6% of the individual’s contributions shall be paid along with the currently payable pension insurance contributions.
“Vacation“ from social insurance contributions that allows not to pay social insurance for the first year of activities for the individuals who are:
— owners of sole proprietor enterprises;
— members of small partnerships;
— members of real partnerships;
— farmers or their partners;
— individuals performing individual activity.
As of 2018 taxable period, real estate that was subject 0.5% RET rate (generally, real estate owned by individuals not for business needs) shall be subject to a progressive RET rate as follows:
— Real estate the total taxable value of which is from EUR 220,000 to EUR 300,000 - 0.5% RET rate (same as previously).
— Real estate the total taxable value of which is from EUR 300,000 to EUR 500,000 – 1% RET rate.
— Real estate the total taxable value of which exceeds EUR 500,000 – 2% RET rate.
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