06.07.2017 ___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ ARTID:033, Edited:21.08.2017 SHReserve Fund of the Slovak LTD company (SK)The LTD company is not obliged to establish any reserve fund (RF) at the time of incorporation, however it must create it within its first year when it reaches at least 5 per cent of its first net profits. In this way the company replenishes the reserve fund in each year until the achieved amount is 10 per cent of its equity. Example:ABC company was established in 2014. Its basic capital is in the amount of 5,000.00 EUR. At its formation the company has decided not to create a reserve fund . In 2015, the Company had losses and therefore wasn´t oblidged to create a reserve fund. However in 2016, the company made a profit in the amount of 2,000.00 Eur . Firstly, the company had to tax the sum at 22%, so the remaining amount was 1,560.00 Eur. From this sum, the company had to earmark the minimum 5% - which is 78.00 Eur. This value represents the sum that is paid to the reserve fund for 2016. Every year, in which the company makes a profit, a minimum of 5% is paid to the reserve fund, until it reaches at least 500.00 Eur (500.00 Eur represents 10% of the amount of the basic capital of the company ABC s.r.o.). Unless the company has losses again in the next year, it won´t pay any money to the reserve fund.It is possible to replenish the reserve fund with a higher sum (members can define the sum in the Partnership agreement or in the Articles of associaton). The abovementioned example contains only the minimum percent laid down by law. Also it is possible to create the reserve fund immediately at the company´s beginning. The reserve fund may be created at any rate from the members´contributions provided beyond its contribution. If this option is pursued, the Partnership agreement shall include the period within which the members are obliged to provide the agreed allowances. The reserve fund exclusively serves to cover the company´s losses and it doesn´t have to be created only with money and it doesn´t have to be held in a special bank account (as of 2002). The disposal of the reserve fund is determined by the directors unless the partnership agreement states that the decisions concerning the reserve fund will be made by the general assembly. Problem from practice: The reserve fund is created from the profits established in the duly approved financial statement. However the general assembly, which approves the financial statement, always meets in the following year. For example if the financial statement for 2015 is approved, the general assembly meets sometime at the beginning of 2016. Therefore , some clients have problems because they don´t know, whether the reserve fund shall be created in 2015 or 2016. In this regard we wish to point out that the contribution to the reserve fund is always bound to the year in which the profit was made- in this case it´s 2015 (even if the general assembly approves the financial statement in 2016). 16.06.2017 ___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ ARTID:031How to set up a Slovak company – the whole process (SK)The best way to make a business in Slovakia is a formation of a business company. There are five types of companies but we recommend establishing a Limited Liability Company – mainly because of its many advantages: limited liability of the shareholders, simple structure, very low formation fees and operating costs and high flexibility. 99% of all business companies in Slovakia are LLCs. The following steps are necessary in order to form a company:1. Registered office/seat: at the beginning you need to have a registered office for the company (the address which will be published in the Business Register and where all the correspondence will go). This can be obtained by signing a contract with some provider of registered offices. After signing the contract and paying for the office, the provider will give you a document called Consent of the Owner.2. Trade notification: you have to register your company at the Trade Licensing Office, where you get identification number. This office will allow you to perform business activities of your choice (of course there are different conditions for different activities, therefore it is recommended to consult before with a lawyer). Trade Licensing Office will give you a Trading License after 2 – 3 days. It is possible to ask Trade Licensing Office to also register the company with the Tax Office so you don´t have to do this on your own afterwards.3. Business Register (managed by registered courts): after getting the Trading License you have to register your company with the Business Register. To properly do this following attachments are necessary: Trading License, Consent of the Owner, Memorandum of Association, Statement of the Depository, Specimen Signature and Statement of the Founder (stating that you as a foreign person are not obliged to provide the court with the consent of the Slovak tax authority). Naturally depending on the specific nature of your business, also other attachments might be needed. The registered court will issue a Business Extract in a few days which serves as a legal evidence of existence of your company.What do you need to set up a company?You will need your ID card and a Criminal Record (no older than 6 months) translated into Slovak language. If the founder is a legal entity also business documents are requested (this depends on the specific country where the entity was established), in most cases these documents need an Apostille.Author Dr. Soňa Šallai15.06.2017 ___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ ARTID:030, Edited:18.08.2017 SHThe authenticity of electronic invoice (SK)When using electronic invoicing, it´s necessary to ensure authenticity , content integrity and legibility. The authenticity means, that it´s indisputable who supplied the goods or services. According to the methodological guidelines of Financial Directorate of the Slovak Republic, the supplier who issues an invoice ensures the authenticity of its origin by registering it in accounting records. „Integrity of the content“ means that the content required according to this guideline has not been altered (converting of the format doesn´t mean that the content is changed) . All electronic invoices shall be legible for the recipient. If they are issued in a structured format (eg XML) it´s necessary to convert them to a legible form. In case of an audit, you must be able to render the invoices legible when requested to do so. VAT Act gives three possible alternatives how to reach authenticity. The tax payer can choose between these options: 1.Control mechanism of business process management: This is achieved by attaching other supporting documentations to an invoice (order, delivery note, contract, proof of payment etc.) It doesn´t imply that they need to be clipped together, but they shall be archived together and marked in order to easier match them up. 2.The invoice shall be signed by the qualified digital signature.3.Electronic data interchange EDI: EDI is the computer-to-computer exchange of business data. The agreement on EDI shall explicitly provide the terms and conditions for such invoices. 4.Other ways: possible combination of abovementioned ways or the taxable person can use other technologies of protection including scanning the invoice or using web portals. In these cases we recommend observing the first point as well.In conclusion, in compliance with the directive on invoicing, the tax administrator is not allowed to restrict the tax payers regarding which option they choose. We recommend that you choose themethod , which is the most effective one for you and your business partners giving consideration to the amount of released invoices. 14.06.2017 ___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ ARTID:029, Edited:18.08.2017 SHWhat is considered to be a valid electronic invoice ? (SK)Since 1.1.2013 both paper and electronic invoices are recognized equally . They are bound by equal requirements stated in VAT directive Sec.74. Some enterpreneurs believe, that there is specific format for electronic invoices as provided by law. It´s not true. Electronic invoices are the following:•invoices in any electronic format including PDF or XML (recipient can convert the invoice to another format that is more convenient for him) •invoices drawn up as paper invoices and then scanned •invoices sent by e-mail as attachments•invoices received by fax in electronic format•invoices signed by qualified digital signature or without it Some notes to electronic formats of invoices:•it depends on you which format of electronic invoice you choose. it is neither determined by the directive (2006/112 ES amended by the directive 2010/45/EU) nor by the state. •if you sign the invoice by qualified digital signature and then its format is changed, it´s necessary to enter it in the check list.•invoices can be also sent in structured messages in XML or EDI formats. Except for the compliance of all particulars of invoices, set out in the provisions of Section 71 (3) of the VAT Act, every invoice must be legible and have a-legible format. The invoice may be sent electronically with the consent of a business partner. As of 2013, the acceptance does not need to be made in writing. It can be expressed by e-mail or in the agreement, The consent to using electronic invoices is also implied by payment of such invoice. If the recipient does not agree with sending the electronic invoices for any reasons, you are oblidged to send him the invoice in paper form. 14.06.2017 ___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ ARTID:028, Edited:18.08.2017 SHWhat does DECLARATION OF TRUST involve ? (INTL)This term is usually … (the docu is being processed) 10.06.2017 ___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ ARTID:026, Edited:18.08.2017 SHWhen is it possible to pay company´s profit out among the company members ? (SK)Members of an LTD have the right to share in the company´s profits . Unless otherwise provided in the partnership agreement this share is determined by the paid contribution . Profit distribution shall be realized within the legal terms and it can be subject to the following conditions: 1. Distribution of profit must be preceded by approval of the General Assembly of the financial statement. The General Assembly shall have the right to distribute all or part of the profits among the members. 2. A company may distribute only the net profit reduced by obligatory reserve fund and unpaid losses from the previous periods, i.e. settlement of losses from previous periods take precedence over distribution of profit. LTD companies are oblidged to establish a reserve fund in the amount of 10% of its basic capital. Joint-stock companies are oblidged to establish a reserve fund in the amount of 20% of its basic capital. Example: XY Ltd has two members whose contribution to the basic capital is 5,000.00 Eur paid by the equal contribution in amount of 2,000.00 Eur. While the company hasn´t modified profit contribution in its partnership agreement, the profit shall divide profit equally. The company has reached net profit in amount of 8,000.00 Eur. The company is obliged to create the reserve fund in accordance with the provisions of article 124 of Commercial Code and supplements the reserve fund on an annual basis by sum of 5% of the net profit, resulting from an annual financial statement. In 2017, after duly approved financial statement for 2016, the company supplemented the reserve fund by sum of 400,00 Eur. The rest of the net profit was divided among two members in amount of 7,600.00 Eur (provided that they don´t have to settle a loss from the previous periods). 3. On the contrary, if in the past, the company reached a profit which wasn´t divided among the members and the company hasn´t used the money in any other way, the company can pay out the profit only by including it to the actual profit and then it can be divided among the members. Undivided profit from the previous years and money from other capital funds can´t be paid out through other financial implementation during the year; the company may perform the payment only by paying out the profit from the company after duly appoval of the annual financial statement. 4. Paying out the profit is not possible, if the company went bankrupt due to this payment or its basic capital (according to the financial statement) is lower than the total sum of basic capital and reserve fund. 5. Advanced payment for profit shares during the accounting period is not allowed. It is also unlawful to pay out the interest out of the members´ contributions. If the profit share is paid out contrary to the rules, the members are obliged to pay the funds back . Paying the funds back is guaranteed by the directors announced approval of such payout . Directors are obliged to pay attention to these duties. If the company is liable to be harmed in the context of such proceeding due to breaching the duties to execute their duties professionally, directors bear full responsibility for it owing to absence of . 06.06.2017 ___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ ARTID:025, Edited:18.08.2017 SHNew general data protection regulation in the EU - GDPR (EU)All over the EU, regulations regarding data protection regulation have been introduced. These regulations outline the rights of website providers, webshops, employers, providers of marketing services, biometric, camera and access systems and retailers. General data protection regulation pertains not only to the category of personala data. It also relates to cookies, geolocations, e-mails, IP addresses, genetic data. Beyond these, the territorial scope of GDPR is widening . It applies to those providers, who process the personal data outside the EU and the providers outside EU who process personal data of the European citizens (mainly when they provide services or sell goods ).We are bringing you some new institutions: Right „to be forgotten“:Personal data provided for a specific purpose by the person whom it concerns that which is no longer necessary, can be erased. The person may ask for data erasure anytime, if the person decides to withdraw the consent to provide the personal data. Right to data transmission:It provides the person in concern the right to ask the provider for his own personal data. The provider is obliged to provide it in a legible, structured format. The person is entitled to transmit the data to another provider. Right to announce security incident:If there is a breach of security of personal data, the provider shall report this breach without undue delay (no later than 72 hours) to the competent Supervisory Authority.Companies which process personal data on a large scale (eg. marketing, market research etc) are obliged to appoint an independent and responsible person - the Data Protection Officer. GDPR determines the requirements for SK enterpreneurs as well so that they can modify the general data protection despite the fact that Slovakia has had the strictest legislation in this area. Regardless of whether your company processes the personal data in large scale itself or a third party has been appointed ( this categhory applies to the enterpreneurs mentioned at the beginning of this article), you should modify your genaral data protection in accordance to the provisions of GDPR or contact our lawyer, who will explain the details to you.
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