Micro-enterprise taxpayer as a leased personnel service provider

On the 1st of July 2015 a new amendment to law On Individual Income tax will be in force. In addition to existing conditions, where services provided by a micro-enterprise taxpayer should be treated as a leased personnel service, the new amendment gives more specific explanation on the indicators of such services.

If the aim of the service provided by a micro-enterprise taxpayer is to replace the existing labour relationship with seemingly business relations in order to reduce the personal income tax and social contributions (payroll taxes), it should be treated as a leased personnel service. As a proof of such hidden employment will be regarded the fact that the employee of the micro-enterprise taxpayer before starting the business cooperation (within previous 12 months’ period) has been employed or represented the service recipient. 

In respect of contracts concluded till 30th of June 2015, the amendment will be in force from 1st of July 2016.

Loans to individuals

We would like to remind you that till the 1st of June 2015 it is required to inform the State Revenue Service (SRS) about the loans issued to private individuals in 2014 if the loans exceed 15 000 euros.

Besides, the information also has to be submitted in case the previously issued loan did not exceed the threshold, but, together with the 2014 loan, it does.

If the information was already submitted in 2014, but a new loan has been issued to a person and on the day of the issue the person’s total debt is more than 15 000 euros, you have to submit the information about the new loan to SRS.

Please note, that the repayment term of the loan starts from the day the debt exceeds 1500 euros. In order to avoid the situation when a loan can be assessed as a personal income – the term of a loan must not exceed 60 months (60 + 6), the loan agreement must be written, the transactions should be performed via bank accounts, and the loan should be proportionate to the company’s financial condition.

Who has to inform the SRS?

The lender – if it is an enterprise, permanent establishment of a non-resident entity, association etc.

The borrower or private individual himself – if the lender is a private individual or a non-resident. 

It is not necessary to submit the information if the loan is issued:

• to a spouse or relatives up to the third-degree;
• by any credit institution.