Tax News, December 2024

In December edition of tax news we inform you about the OECD Multilateral Competent Authority Agreement on the Automatic Exchange of Information based on the Crypto-Asset Reporting Framework and the Amendment to the Existing Multilateral Competent Authority Agreement on the Automatic Exchange of Financial Account Information, about the constitutionality of late payment interest and about the upcoming tax changes.

OECD MULTILATERAL COMPETENT AUTHORITY AGREEMENT ON THE AUTOMATIC EXCHANGE OF INFORMATION BASED ON THE CRYPTO-ASSET REPORTING FRAMEWORK AND THE AMENDMENT TO THE EXISTING MULTILATERAL COMPETENT AUTHORITY AGREEMENT ON THE AUTOMATIC EXCHANGE OF FINANCIAL ACCOUNT INFORMATION

At the 17th Plenary Meeting of the Global Forum on Transparency and Exchange of Information for Tax Purposes in Paraguay, the OECD Multilateral Competent Authority Agreement on the Automatic Exchange of Information based on the Crypto-Asset Reporting Framework and the Amendment to the Existing Multilateral Competent Authority Agreement on the Automatic Exchange of Financial Account Information were signed by Slovenian Finance Minister Boštjančič.

The agreement on the automatic exchange of information introduces innovations and changes in the scope of reporting, where it introduces mandatory standardised reporting of tax-relevant information relating to crypto-asset transactions for the purpose of automatic exchange of such information with taxpayers' jurisdictions of residence on an annual basis.

The amendment to the existing Multilateral Competent Authority Agreement on the Automatic Exchange of Financial Account Information focuses on improving existing standards for the exchange of financial account information, expanding the scope of reporting, and strengthening cooperation among the competent authorities of member countries.

CONSTITUTIONALITY OF LATE PAYMENT INTEREST

The Constitutional Court, based on a request from the Supreme Court, reviewed the constitutionality of Article 95 of the Tax Procedure Act (ZDavP-2), which stipulates, among other things, that if the tax authority determines a tax liability during a tax audit, interest at an annual rate of 7% is calculated from the due date for tax payment until the issuance of the decision.

The Supreme Court (the petitioner) argued that this provision is inconsistent with the principle of legal certainty from Article 2 of the Constitution, as it regulates interest similarly to the previously valid law, which the Constitutional Court had already declared unconstitutional. It also argued that the interest includes a penal component and is not merely compensation for the use of money, which is inconsistent with Article 29 of the Constitution, as the legislator did not provide constitutional guarantees for the procedure of determining this interest.

The Constitutional Court considered the positions from the 2004 decision but emphasized that the legal environment has changed, and taxpayers are no longer in a state of legal uncertainty. It assessed that the interest ensures tax fairness and encourages timely payment of taxes, so its rate is not inconsistent with the Constitution, even though it exceeds market interest rates. It also rejected the claim of inconsistency with Article 29 of the Constitution, as the interest is not a penal sanction, being based on objective circumstances. The Constitutional Court concluded that Article 95 of ZDavP-2 is not inconsistent with the Constitution.

UPCOMING TAX CHANGES EFFECTIVE FROM 1 JANUARY 2025

We would like to remind you that, starting from 1 January 2025, the recently adopted amendments to the Corporate Income Tax Act, the Tax Procedure Act, the Value-Added Tax Act, and the Income Tax Act will come into effect, whereby the new income tax rules will already apply to income payments made for December in January.

For more information on the adopted measures, please refer to:

• The November issue of EY Tax News, and
• The December EY Tax Alert.