REGIONAL LEGAL NEWS – Q4 2019

Albania

The Government proposes amendments to the expropriation law

Establishment of the Albanian Investment Corporation

The Albania Parliament passes law on international sanctions

Bosnia & Herzegovina

Draft Law on Amendments to the Law on Concessions of Republic of Srpska

The Government of Republic of Srpska adopted a Draft Law on Amendments to the Law on Concessions.

The reasons for the adoption of this draft law result from the need to define more precisely certain solutions and to eliminate certain deficiencies that are recognized during its application in the applicable Law on Concessions.

In that sense, the previous activities of the competent authorities (ministries) and all other bodies, public companies and institutions competent for issuing the licenses, permits and approvals necessary for realization of the subject of concession are more precisely defined, including the opinion of the local self-government unit in whose territory the concession activity will be performed, for concessions awarded by the Government.

Also, certain provisions are specified in order to improve the process of concession award and quality fulfillment of concession contracts.

Draft Law on Amendments to the Law on Public-Private Partnership in Republic of Srpska

The Government of Republic of Srpska adopted a Draft Law on Amendments to the Law on Public-Private Partnership in Republic of Srpska.

The primary objective of the proposed amendments of the Law on Public-Private Partnership in Republic of Srpska is to remove administrative and technical barriers and create a more favorable business environment in attracting foreign and domestic investors in the implementation of capital projects to meet public needs.

With these amendments, the procedure for project realization with the model of public-private partnership would be simplified, primarily through the procedures of project approval and contracting.

These amendments introduce that in the process of choosing a private partner, natural persons could participate as well, unlike the previous solution according to which only legal entities were able to do so. It is also stipulated that domestic and foreign, natural and legal persons may participate in the selection process of a private partner.

The subject of the public-private partnership has also been modified so that, in accordance with the proposed solution, it is the construction or reconstruction, with the use, maintenance or management of public infrastructure for the purpose of providing public services. Public-private partnerships can be implemented in all areas where the public partner provides services or are within the competence of the public partner. In this way, the public partner is enabled through public-private partnerships to be able to carry out projects in all those areas for which he is interested.

Bulgaria

New rules regarding automatic exchange of information and mandatory disclosure of cross-border arrangements

Draft amendments to the Tax and Social-Insurance Procedure Code (TSIPC) provide for adding a new Section VII named Specific Rules on the Mandatory Exchange of Information on Cross-Border Tax Arrangements.

The purpose of the bill is to align the Bulgarian legislation with the requirements of the Council of the European Union Directive 2018/822 of 25 May 2018 amending Directive 2011/16/EU regarding mandatory automatic exchange of information in the field of taxation in relation to reportable cross-border arrangements (the Directive).

The bill introduces an obligation for certain groups of persons (collectively referred to as consultants or intermediaries) to report to the respective revenue authority on “cross-border tax arrangements” which have been developed and implemented by such persons. On the other hand, the EU revenue administrations will have to exchange information on such arrangements every quarter. A central European register of the disclosed cross-border tax arrangements will be compiled where each arrangement will be assigned a unique identification number.

The scope of the new legislation explicitly excludes the following:

• value added tax, customs duties and excise duties;
• compulsory social security contributions;
• fees for issuing certificates and other documents issued by state and local authorities;
• receivables under contracts, including remuneration under contracts for services of public interest.

Thus, the focus is on cross-border tax arrangements related to corporate taxation.

The definition of a tax arrangement is quite broad, but in general terms, for a tax arrangement to fall within the scope of the new rules, it must contain certain features (hallmarks), as well as a cross-border element (i.e. the participants in the arrangement are taxable persons in two or more jurisdictions).

The arrangements are divided into 2 large groups:

• tax arrangements designed to reduce the tax burden for a person through transfer of assets and profits to other jurisdictions with lower or zero tax rates – in this case the reporting obligation applies if established that the main benefit or one of the main benefits is the taxable person to obtain a tax advantage;
• tax arrangements designed to circumvent automatic exchange of information rules, disclosure of the beneficial owner or involving the use of unilateral safe harbour rules – in these cases the reporting obligation applies on general grounds.

It is important to note that the arrangement is not necessarily an illegal act, nor does it constitute a crime. In case it contains one of the listed features, it will be subject to reporting pursuant to TSIPC. In this sense, the concept differs from tax evasion, which is a crime and is prosecuted under the general penal rules.

The person obliged to provide information is mainly the consultant, and in certain cases – the taxable persons participating in the respective arrangements.

Consultant as defined in the bill means any person that designs, markets, organizes or manages the implementation of a cross-border arrangement. The definition also covers any person assisting such activities (i.e. have partial participation) if it could be assumed that such person possesses the necessary knowledge and competence. In this case the person shall have the opportunity to submit evidence that he/she was not aware of and did not have the necessary knowledge to participate in the tax arrangement.

The bill provides for the option to exempt certain consultants from the obligation to report where the reporting obligation would breach professional privilege (e.g. lawyers). In such a case, however, the taxable person is the one who is obliged to report to the tax administration. The consultant, on the other hand, is obliged to remind the person concerned of this obligation, as well as to provide information on the identity of the person to the National Revenue Agency (NRA).

Information regarding the respective arrangement is to be provided within 30 days from the date of designing the arrangement, the date of making it available or the first stage of its implementation, whichever occurs first.

Even though the bill provides for entry into force as of July 1, 2020, the aforementioned reporting obligations are assumed to have retrospectively entered into force – reports will cover arrangements where the first step is implemented after June 25, 2018.

Easier access to the services provided by the Bulgarian Geodesy, Cartography and Cadastre Agency

Amendment to Ordinance No. RD-02-20-4 of 2016 on the provision of services from the cadastral map and cadastral registers (the “Ordinance”), introduced changes aimed at improving the quality of administrative services provided by the Geodesy, Cartography and Cadastre Agency (GCCA). The amendments provide for a simplified and expedited administrative procedure and a broadened range of both the persons who can provide services and those who can benefit from such services.

The most significant change is that it is no longer necessary to prove legal interest in obtaining a wide range of cadastral services. Each user will now be able to request sketches, schemes, excerpts and certificates, identifying themselves only with an identity document. This means that any citizen can receive various documents from the GCCA and it is not necessary to provide property ownership documents, a power of attorney from the owner, or otherwise proving that the person requesting the service has legal interest.

Providing free access to these documents is justified by the public nature of the data contained in the GCCA and the Property Registry. By analogy with the access to the Commercial Register, one only needs to know the exact address of the property and/or its identifier in order to receive data from GCCA.

Following the changes, traders or freelance practitioners holding a license issued by the GCCA will also be able to provide the services.

The Agency keeps a register[i] of qualified persons available on its website where inquiries can be made by both person’s name and a particular location.

Such persons will be able to accept and process applications and provide the following official documents: a sketch of a land plot or building, a scheme of individual units of property, certificates of presence or absence of data, and will also accept applications for amendments to the cadastral register.

The introduction of this amendment is expected to ease the heavy workload of the Agency and minimize delays in servicing citizens.

The use and application of Qualified Electronic Signatures (QES) has been expanded, making it now possible to submit official electronic documents, including amendments to the cadastral map and cadastral registers. Using a QES, it will also be possible to sign projects for amendment to the cadastral map and cadastral registers and other documents and materials made in digital form.

Applicants will have the opportunity to provide an email address in order to be notified of both the entry of the application and the status of the case file until the completion of the service.

With regard to the obligation of the administrative authorities to publish and provide complete information about the services they offer, the amendments to the Ordinance introduce a clear and comprehensive list of the documents required upon requesting any service, while categorizing them into documents obtained internally, on the one hand and information and documents provided by the applicant, on the other. These amendments are expected to significantly facilitate citizens’ access to the GCCA services and eliminate the unnecessary requirement to provide documents which may be obtained ex officio by the administrative authorities.

Fifth Anti-Money Laundering Directive

The constant combat of EU against money-laundering has resulted in the Fifth Anti-Money Laundering Directive EU 2018/843 (the Directive). All Member states are obliged to implement the Directive no later than 10 January 2020.

Among the main achievements of the Directive are: broadening the list of obliged entities; covering more activities exposed to money-laundering risks; introducing measures allowing transparency and access to information needed for customer due diligence; facilitating cooperation and coordination between Member States and competent authorities.

Most of the rules found in the new Directive are implemented in the Bulgarian Anti-money Laundering Measures Act (AMLMA). In addition, the Bulgarian legislation poses some regulations even stricter than their analogies in the EU Directive – the same approach was followed through the adoption of AMLMA in 2018.

The following more significant amendments of AMLMA are in force as of the beginning of December 2019.

In addition to the already existing 35 categories of obliged entities, Bulgarian legislator has now encompassed the following persons, in accordance with the Directive:

• persons who provide, either directly, or by means of other persons material aid, assistance or advice on tax matters as principal business or professional activity;
• estate agents acting as intermediaries in the letting of immovable property, including in relation to transactions for which the monthly rent amounts to EUR 10 000 or more. It is worth noting that the Directive provides for estate agents to be obliged entities only in case the monthly rent amounts to EUR 10 000 or more. It appears however that the Bulgarian legislator has not translated the rule at issue precisely enough. This could raise some serious disputes as to the application of the rule;
• providers engaged in exchange services between virtual currencies and fiat currencies must also apply customer due diligence to the customers using their services. Custodian wallet providers are now covered by AMLMA, as well. The term refers to entities providing services to safeguard private cryptographic keys on behalf of their customers, to hold, store and transfer virtual currencies. Both providers are obliged to register in a special registry with the National Revenue Agency. The Ministry of Finance shall issue an ordinance for this purpose;
• persons trading or acting as intermediaries in the trade of works of art, including when this is carried out by free ports, in case the value of the transaction or a series of linked transactions amounts to EUR 10 000 or more. The reason for inclusion of these persons is most probably the huge amount of crimes involving works of art worldwide.

A number of measures are adopted to help the obliged persons and the competent authorities to combat money laundering more efficiently, including, among others:

• a ban on opening and maintaining safe deposit boxes under a fictitious name is now formally introduced.
• the threshold for simplified customer due diligence applied by e-money issuers is lowered.
• all member states are obliged to provide to the European Commission a list of prominent public functions in order to ease the obliged entities in conducting customer due diligence and especially checking whether a customer is a politically exposed person.
• obliged entities are now eased at determining what specific enhanced measures to apply to customers domiciled in high risk third countries (where the level of anti-money laundering measures application is not satisfactory). Such indicative measures are already known to the obliged entities (for instance, collection of additional information, enhanced surveillance, approval by a senior managing official for entering into relations). However, these are now formally consolidated in art. 46 of AMLMA. Of course, additional measures, even if not listed in this text, shall always be applied in case this is needed with regards to the specific circumstances.
• among the amendments of the Directive which do not have direct effect on Bulgarian legislation are some new rules regarding transparency and access to information about ultimate beneficial ownership of trusts and similar legal arrangements. All member states where such entities exist are obliged to ensure that registries on beneficial ownership are maintained. Although trusts are not known to Bulgarian legal system, this new measure would help Bulgarian obliged entities in conducting customer due diligence in case the customer is a trust/similar legal arrangement.

Croatia

Deadline for Registration of Ultimate Beneficial Owners is approaching

Ordinance on Register of Ultimate Beneficial Owners was adopted to further implement EU law trends on anti-money laundering and financing of terrorism.

The purpose of the ordinance is to regulate the process of registration of ultimate beneficial owners (UBO`s) of legal entities and trusts with registered seat in the Republic of Croatia.

The ordinance imposes on entities an obligation to register detailed information on the UBO`s of Croatian companies, and to report existence of the complex ownership structure.

The aim of the new ordinance is improved transparency of companies. The registration process is rather simple and may be performed physically at the dedicated Financial Agency offices or via Financial Agency web application, provided that the user has relevant certificates.

All companies, branch offices, trusts or foundations are under obligation to register their UBO by 31 December 2019, while companies incorporated after that date are under obligation to register within 30 days following incorporation. Failure to register may expose the company and their responsible persons to significant monetary fines.

Verification of registered data shall be performed by Croatian Tax Administration, which has the authority to examine accuracy and completeness of the data.

Personal Income Tax Amendments

On 1 September 2019 amendments to the Ordinance on Personal Income Tax entered into force. The purpose of the amendments is to further stimulate employers by introducing new non-taxable incomes that can be paid to the employees.

Daily travel allowance has been increased from HRK 170 to HRK 200 for a full day spent on business travel, or HRK 100 for half a day. Non-taxable meal allowance was also introduced, either as a one-time flat rate payment of up to HRK 5.000 per employee, or as a total yearly amount capped at HRK 12.000, provided that invoices are issued in the name of employer and are payed as a cashless transaction.

Costs of catering and tourist services for purpose employee`s rest in the amount of up to HRK 2.500 are also included as non-taxable incomes.

Finally, employer may cover employee accommodation costs for the period of duration of employment agreement, as well as remuneration for costs of employee’s children daycare, up to the actual amount of such costs.

These amendments aim to improve both employees’ position, as well as improve competitiveness among employers.

New Enforcement Act to enter into force on 1 January 2020

The Parliament closed the debate on the new Enforcement Act (the Act), which is expected to be enacted into law by the end of the year and to come into force on 1 January 2020.

The Act will substantially alter the previous procedure of enforcement., Central amendment brings the Act in line with recent jurisprudence of the Court of Justice of the European Union (CJEU) – the courts will regain full competence over enforcement procedures, modifying current situation where public notaries represent regular authorities before which the enforcement procedure is initiated and conducted.

Newly regulated enforcement procedure will still be initiated before the notary public, with three possible outcomes – voluntary payment by the debtor which leads to cancellation of enforcement, entering litigation procedure if the debtor objects to the debt, or rendering the writ of execution by the court. Moreover, new Enforcement Act aims to increase the protection of debtors in some aspects, which is highlighted mostly though the newly envisaged prohibition of enforcement over the real estate leading to eviction during winter (November 1st – April 1st).

Enforcement Act also envisions introduction of electronic communication between parties in the enforcement procedure, which measure, among others, aims to decrease costs of enforcement procedure and establish more economically rational and efficient system. Additionally, the Act will broaden the scope of incomes which cannot be seized through enforcement proceedings.

Finally, one of the major amendments to the current regulation of enforcement procedure is that the employers and the Croatian Pension Insurance Institute shall not have the role in performing enforcement. Under the new Act, carrying out enforcement upon decisions rendered in the enforcement proceedings will be entrusted exclusively to the Croatian Financial Agency (FINA), monitored by the court.

Proposal of the new Capital Markets Act debated in the Croatian Parliament

After a complete overhaul of the Capital Markets Act in 2018, its amendments are currently in the stage of parliamentary discussion for the purposes of harmonizing the legislation with Regulation (EU) 2017/1129.

The legislative proposal envisages to increase currently established threshold for obligation to publish offering memorandum for public offerings of the securities from EUR 5 mil. to EUR 8 mil., accompanied by obligation to prepare information document on the offer, for all the securities offers amounting to between EUR 4 mil. and EUR 8 mil.

These amendments aim to ensure administrative relief and decrease costs of the securities issuance. Additional amendment proposed primarily concerns the individual traders, which now, along LLCs and JSCs will be allowed to act as brokers, in accordance with provisions of the Act.

Furthermore, the Act regulates data reporting services providers, with the main purpose of maximizing transparency and decreasing fragmentation of data. In connection to the development of technology and market infrastructure, regulatory demands are being increased, as well as the protection of investors.

Finally, the Act regulates in more detail dematerialized securities as well as obligations of participants on the capitals market, especially in the area concerning prohibition of trade based on inside information, illegal publication of inside information and market manipulation.

Montenegro

New draft Law on Companies

The Montenegrin Government has submitted a draft proposal to the National Assembly for a new Law on Companies. The Law on Companies is to be amended in order to be in line with the relevant EU directives.

Under the new draft law, procuration and two-tier system of corporate governance will be returned in Montenegrin corporate law. Two-tier system of corporate governance will contribute to the easier integration of Montenegro into the internal market of the European Union.

Apart from abovementioned, the new draft regulates position of the directors in a detailed manner. Also, the new draft law specifies who is considered to be related person of the company. In addition to that, duties of the directors and related persons towards company are introduced.

Another important novelty under the new draft law is detailed regulation of the conditions under which lifting the corporate veil of the company is possible.

Finally, the new draft law regulates the derivative action. By including this action in the new draft law, protection of the minority shareholders in Montenegrin law will be significantly improved. Protection of the minority shareholders is especially high since the new draft law does not stipulate minimal capital necessary for raising this action.

New draft Labour Law

New draft Labour Law is currently in the adoption procedure in National Assembly. The purpose of this new draft law is to comply with EU standards, provide greater flexibility in the labour market, as well as mechanisms for better protection of employees and suppression of the illegal labour market.

One of the most important novelties of the new draft law is regulation of work outside the employer’s premises. In addition to that, the new draft law specifies that employment will be established without job vacancies, except where there is a public interest, in cases of state-owned enterprises and institutions.

Further, the new draft law introduces possibility to terminate employment without disciplinary action and in a summary procedure.

Additionally, the new draft law specifies that payment of earnings will be made exclusively through an account, and the calculation of earnings will have the power of an enforceable document.

Lastly, according to the provisions of the new draft law, it will not be possible to terminate employment during pregnancy and maternity leave.

North Macedonia

The Law on Subsidizing Mandatory Social Security Contributions due to Salary Increase

The new Law on Subsidizing Mandatory Social Security Contributions due to Salary Increase entered into force on 19th November 2019 and shall be valid from 01 November 2019 until 31 October 2022.

The purpose of this Law is to encourage employers to pay higher salaries in order to improve the economic standards of the employees and to stimulate economic growth and development in the Republic of Macedonia. To do this, it provides covering of the mandatory social security contributions that arise out of the increased salary amount, by the state Budget.

The Law systematically regulates the manner in which mandatory social contributions are subsidized. By virtue of the Law, the employees enjoy their social security rights without interruption, while the employers are not obliged to pay mandatory social security contributions for the amount of increased salary.

The subsidizing of mandatory social security contributions can be applied by an employer who:

• has the status of an active payer for calculation and payment of contributions, i.e. is not under a bankruptcy or liquidation procedure or procedure for termination according to the Law on Trade Companies;
• has no due liabilities based on gross salary until the day when the subsidizing of contributions is applied for.

The Law also prescribes the types of entities that cannot apply for subsidizing of mandatory social security contributions.

Subsidizing of contributions can be used by an employer for an insured person under the mandatory social insurance with that employer during all months of the period of reference.

The highest approved amount of subsidizing of contributions shall be for the net salary increase of up to 6.000 MKD (ca. EUR 100) monthly per employee and the lowest approved amount of subsidizing of contributions shall be for the net salary increase of up to 600 MKD (ca. EUR 10) monthly per employee.

The subsidizing of contributions for the increase of the salaries started with the payment of the salary for the month of October 2019.

Amendments to the Law on the Minimum Salary in the Republic of North Macedonia

The amendments to the Law on the Minimum Salary in the Republic of North Macedonia entered into force on 19th November 2019, as a result of the legal regulation of the measure for subsidizing mandatory social security contributions due to salary increase, as a financial support from the Budget of Republic of North Macedonia.

These amendments shall encourage the spiral of increase of salaries to other employees within the employers, thus increasing the minimum salary in line with the economic growth tendencies.

The amendments provide that the amount of the minimum salary paid in the gross amount for March each year shall be reconciled with:

• one third of the average salary increase in the Republic of North Macedonia;
• one third of the increase in the CPI index;
• one third of the real GPD growth for the previous year, according to the State Statistical Office data.

The amendments to the Law set the amount of the minimum salary in the amount of 14,500 MKD net (ca. EUR 230), which shall be payable starting with the salary for December 2019, including the salary for March 2020. As an illustration, the minimal salary so far was in the amount of 12,500 MKD net.

Serbia

Amendments to the Serbian IP Laws

On 17 September 2019 the National Assembly of Serbia has adopted amendments to the following IP laws: The Law on Copyright and Related Rights, The Law on Patents and The Law on Protection of Topography of Semiconductors Products.

The main reason behind the adoption of these three Laws is harmonization with the European Union rules.

The Law on Copyright and Related Rights

The newly adopted amendments increase the level of protection of authors of software, database producers and performers. With these amendments, The Law on Copyright and Related Rights is now aligned with eight of the ten EU directives in this field.

Novelties in respect of the protection of authors of software are that an employee, as an author of software, is now entitled to require additional compensation for exploitation of such software by an employer. Also, owners of a copy of the software are now entitled to:

• permanent or temporary reproduction of a software by any means and in any form, in part or in whole;
• correction of errors within the software in alignment with its purpose;
• loading, displaying, running, transmitting or storing software if necessary, for its reproduction;
• translation, adaptation, arrangement and any other alteration of a software and its reproduced results.

Moreover, The Law on Copyright and Related Rights now envisages the possibility of decompilation of software for the purpose of interoperability with another software.

An important novelty regarding database producers is also envisaged. From now on, database can be considered as a work of authorship if the selection and the layout of the database’s content reach the originality level prescribed by the law.

These amendments stipulates in respect of lawsuits in case of the copyright or related right infringements, new claims which a plaintiff may request have been introduced.

The amendments further stipulates that the courts are now authorized to require information not only from the infringer, but from anyone found in possession of the infringing goods. Additionally, courts may now order the seizure of movable and immovable property or blocking of infringing bank accounts.

Lastly, revision as a legal remedy can now be filed in case of copyright and related rights infringement when the subject of the proceeding is not related to the pecuniary claims.

The Law on Protection of Topography of Semiconductors Products

Finally, amendments with respect to the protection of topography of semiconductors products, minor changes are introduced, regulating in more detail the protection of producers of microchips and processors for hardware and TVs.

The Law on Patents

The crucial amendments are related to the innovations made by an employee for the duration of the employment agreement.

The Laws entered into force on 26 September 2019.

See the separate section below for more details.

Amendments to the Patent Law in the Part Relating to Inventions Arising From the Employment Relationship

On 17 September 2019, the National Assembly of the Republic of Serbia adopted the Law on Amendments to the Patent Law that entered into force on 26 September 2019.

These amendments improves the legal framework primarily in the field of protection and exploitation of inventions arising from the employment relationship.

The latest amendments specifies certain terms, so inter alia it is prescribed that an invention arising from the employment relationship represents an invention created by the employee by performing the tasks specified in an employment agreement between the employee and the employer or created in accordance with a special act of the employer that regulates the research and development tasks. It is also specified that an employee is a natural person who performs work for an employer under an employment agreement.

The amendments further stipulates that the employee and the employer agree on the amount and manner of payment compensation to the employee.

The amendments specifies the content of invention report and extends the period from two to six months.

The amendments prescribes a new solution if the employer decides to submit an invention application, and in this case, the employer is obliged to do so within a reasonable time, while the previous legal solution prescribed a time limit of six months for submission of application, which in some cases was not adequate.

Costs of transportation of employees – Law on Personal Income Tax

Since 1 February 2019, there has been an ongoing public debate on the issue related to the cost of transportation of employees. When the Ministry of Finance issued its official opinion no. 011-00-12 / 2019-04 obliging employers to provide authentic documents (such as public transport monthly ticket bills, daily public transport tickets, or a single ticket for public transport, a fuel bill in the case of using own vehicles, etc.) to “justify” the transportation costs for their employees.

Otherwise, these expenses would be considered undocumented costs and would not be regarded as expenditures under Article 7a of the Corporate Income Tax Law.

Hence, they would be subjected to taxation.

The Draft inter alia states that in the future all transportation costs would have to be recorded with hard copy credible documents. Consequently, through this Draft, the solution from the Opinion will become a legal obligation imposing the employers’ duty to justify all transport expenses from the date of application of this law.

New Law on State Aid Control

On 10 October 2019 the National Assembly of Serbia has adopted the long awaited new Law on State Aid Control.

The main reason behind the adoption is harmonization with the European Union rules.

This Law regulates the control of state aid in order to protect competition on the market, applying the principles of market economy and stimulating economic development, ensuring transparency in granting of state aid, and procedure to be followed by the Commission when acting in administrative matters.

Unlike the 2009 Law on State Aid Control, this Law introduces the list of all state aid instruments, as follows:

• subvention (grants) or subsidized interest rate on loans;
• fiscal relief (reduction or exemption from taxes, contributions, duties and other fiscal duties);
• state guarantee, guarantee of any legal entity disposing of and/or managing public funds or other state aid provider, given on terms more favorable than market ones;
• waiver of profits and/or dividends of the state, local government or legal entity disposing of and/or managing public funds;
• debt relief to the state, local government or legal entity disposing of and/or managing public funds;
• sale or use of publicly owned property at a price lower than market;
• purchase or use of property at a price higher than the market price by the state, local government or legal entity managing or disposing of public funds;
• other instruments in accordance with the Law.

The Law introduces three new concepts:

• compatible state aid;
• cumulation of state aid;
• de minimis aid.

Compatible state aid is the aid of a social nature intended for consumers without discrimination as to the origin of the goods or products constituting the specific aid, that is to say, to remedy damage caused by natural disasters or other emergencies in accordance with the law governing disaster risk reduction and emergency management.

Cumulation of state aid is the sum of state aid granted that has a unique purpose irrespective of the type, instrument of grant and state aid provider.

De minimis aid is aid which does not have a significant effect on the distortion of competition in the market and on trade between the Republic of Serbia and the Member States of the European Union. It is not reported to the Commission, but the decision on the justification of the award is made by the de minimis aid provider, who informs the Commission of the de minimis aid granted.

Finally, an on-site inspection by the Commission is introduced for the first time. An on-site inspection is carried out with the beneficiaries of state aid in case of the reasonable assumption that state aid is non-compliant, despite the statement of the state aid provider indicating that such aid is in compliance or inaccuracy or incompleteness of the information provided.

Amendments to the Law on Personal Income Tax – introduction of the so-called “test of entrepreneur’s independence”

The most significant novelty in the Draft is the announced change to the system of flat-rate taxation of self-employed income. Namely, the Draft explicitly states that the term “other income” inter alia means a remuneration received by an entrepreneur on the basis of carrying out activities for the same principal – a domestic or a foreign legal entity, provided that this entrepreneur fulfils at least 5 of 9 criteria which represent the test of independence. If, however, the entrepreneur does not meet 5 of the 9 criteria, then the general taxation regime continues to apply.

Article 85 of the Draft inter alia introduces the so-called test of entrepreneur’s independence. Namely, the purpose of this test is to determine whether the entrepreneur earns income from self-employment or he/she is actually employed.

If the entrepreneur fulfills at least 5 of the aforementioned 9 criteria, he/she will not be considered as independent, and in that case the income this entrepreneur receives will be taxed as other income in accordance with Article 85 of the Law on Personal Income Tax (the “Law”). Further to that, the contributions for pension and disability insurance at the rate of 26% will also be calculated on this other income, as well as well as the health insurance contributions at the rate of 10.3% if the entrepreneur is not insured under another basis. By introducing this new legal solution, the legislator has opted to tax the income of the entrepreneurs who do not pass the test of independence as the “other income”, where the tax rate of 20% applies, along with the respective social contributions.

The Draft was proposed by the Government in order to suppress the “grey economy”, create conditions for more efficient suppression of illegal work of natural persons, as well as stimulate the employment. A lot of public attention has been attracted in the previous period regarding this Draft, especially in the IT sector.

One of the drawbacks of the Draft regarding novelties in Article 85 is its unpredictability, primarily because the criteria regarding the test of entrepreneur’s independence are very general and subject to different interpretations. In general, the tax inspectors will have a control function, i.e. they will control whether the test of entrepreneur’s independence has been done according to the regulations, which would inevitably cause a significant level of legal uncertainty.

Slovenia

Abrogation of the provision concerning the enforcement of right of exclusion in insolvency proceeding

Amendments to tax legislation