KPMG InfoCourier September 2016

InfoCourier September 2016

InfoCourier is a monthly newsletter which gives an overview of the latest changes in legislation.

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InfoCourier September 2016

Taxation of options granted to employees will be eased

The Cabinet decided to ease tax rules applied to share options in the event of the sale of a business. 

Under the current Income Tax Act, exercising of options is not deemed to be a fringe benefit if the employee has held the options for at least three years and the underlying asset of the share option is a holding in the employer or a company that belongs to the same group as the employer.

According to the Cabinet’s decision, as regards option agreements of at least three years, in two cases exercising of an option prematurely will not be deemed to be a fringe benefit to the extent corresponding to the time of holding the option:

  • exercising employees’ options under the circumstances where an investor acquires the entire shareholding in the business who granted the option to an employee and the employee is allowed to exercise the options earned by that moment; and
  • under the circumstances where an employee holding options suffers a serious injury or dies.

In addition, an amendment to the Income Tax Act is planned allowing changing the underlying assets of an option without interrupting the three-year option period (under the circumstances where the underlying asset specified in the initial option agreement is replaced with the shares of the investor who acquired the business).

For further information, please contact Einar Rosin, tax adviser, erosin@kpmg.com

 

Draft amendment to the Value-Added Tax Act

At the end of July a draft amendment to the Value-Added Tax (VAT) Act was initiated. According to the draft threshold of registering as a person liable to VAT is planned to be raised and additions will be made to the list of goods subject to special arrangements for imposing VAT (reverse charge).

The updated list of goods subject to reverse charge is scheduled to enter into force on 1 September 2017, and the new threshold of registering for VAT on 1 January 2018.

The threshold of registering for VAT is planned to be raised from 16,000 euros to 40,000 euros. The aim of the measure is to increase the amount of businesses who do not have an obligation to register for VAT.

The procedure of voluntary registration for VAT will not be amended.

The list of goods subject to reverse charge will be supplemented with certain metal products that are mostly used in construction services and mechanical engineering, e.g. metal armature for building, sheet metal both coiled and in flat sheets; water and gas pipes; square bars; and girders. The aim of the amendment is to provide businesses with equal conditions for competition in the metal sector and reduce tax fraud.

For further information, please contact Merike Oja, tax adviser, moja@kpmg.com

 

The final date for submitting claims for VAT refund is 30 September

Claims for refund of VAT paid in Estonia by foreign persons not registered as liable to VAT in Estonia can be submitted until 30 September. The above date applies to the taxpayers of both other EU member states and the states outside the EU (third countries). 

Estonian businesses can apply for refund of VAT paid in another member state also up to 30 September at the latest (in some states, an earlier deadline may apply).

Claims for VAT refund are submitted electronically. For claimants the procedure is similar for all member states, the application is issued via the e-Tax Board under section EL Tagastustaotlused (EU Claims for Refund). Claims for refund of VAT incurred in third countries are submitted on a special form directly to the tax authority of the refunding country. Under reciprocity principle VAT is refundable from Norway, Island, Israel and Switzerland.

For further information, please contact Merike Oja, tax adviser moja@kpmg.com

© 2017 KPMG Baltics OÜ, Eesti osaühing ja Šveitsi ühinguga KPMG International Cooperative (”KPMG International") lepinguliselt seotud sõltumatute ettevõtjate võrgustiku liige. Kõik õigused kaitstud.

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