25 April, 2019

2019 tax reform and updates

Ending February, the Ministry of Finance released a package of nine measures aimed at optimizing taxes and the taxation of income from employment, whilst replacing the budget deficit with an increase in taxation of capital and a more effective fight against grey economy, tax evasion and social fraud.

Measures aimed to reduce the tax burden of income from employment are the increase in marginal tax brackets and lowering of marginal tax rates, an increase of tax reliefs, lowering the tax burden on holiday pay and lastly lowering the tax burden on the reward for performance. On the other hand, capital gains tax shall be increased from 25% up to 30% and the corporate income tax rate shall also rise by 1% annually, up to a maximum of 22% in 2022. Lastly, a limited carry-foward of tax loss is to be enforced.

As for the latest news regarding above mentioned measures, today the Parliament is about to adopt the amendment to the Personal Income Tax Act. This means that annual holiday allowance up to 100% of the average monthly salary (currently grossing EUR 1,729.15) will not be included in the tax base for assessing personal income tax.

Still, the holiday allowance must be paid until June 30th.

 

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