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  06.07.2017 ___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ ARTID:033, Edited:21.08.2017 SH Reserve 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:031 How 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 Šallai     15.06.2017 ___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ ARTID:030, Edited:18.08.2017 SH The  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 SH What 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 SH What does DECLARATION OF TRUST involve ?   (INTL) This term is usually … (the docu is being processed)   10.06.2017 ___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ ARTID:026, Edited:18.08.2017 SH When 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 SH New 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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