Foreign currency loans – Taxation: The tax implications of the Settlement Act are unclear

According to Good Finance, domestic financial institutions may have a problem with the tax implications of the Clearing Act that came into force a few weeks ago when settling foreign currency loans.

The advisory states in its statement that, according to a preliminary timetable for the Clearing Act, which entered into force on November 1, banks and leasing companies will settle their clients’ repayments on foreign currency loans and leases early next year.

Banks and leasing companies will need to conduct a detailed investigation


To determine the VAT consequences of accounting with customers either in the accounting year or in previous years. The application of the general principles of VAT does not preclude a change in the tax liability of financial institutions or in their self-regulation and significant administrative burden.
The MNB decree of 7 November relating to the settlement and the adopted tax laws also left open questions.

It is questionable, for example, how financial institutions should deal with the indirect accounting effects of clearing but also whether they can take into account the effect of clearing on accrued or used losses.
It is unclear how to deal with the impact of accounting on credit institution special tax, how long to track accounting and tax effects, and how to interpret accounting for tax base items (such as local business tax, royalties, development reserves, etc.). direct and indirect effects.

Good Finance draws attention to the fact that while financial institutions

May use their losses up to the last day of this year’s tax year in the tax year ending December 31, 2025 at the latest, losses that occur later will only be available in the five tax years following the year in which they occur.

Next year’s tax package also introduced new restrictions on the use of losses that were transferred to a company as a result of legal succession or a change in majority ownership.

Under the restriction

Under the restriction

Taxpayers may use the tax loss for each tax year at the rate of revenue from that activity prior to the transformation or change of ownership of the transferred or continued business, Good Finance said in a statement.

About Amanda Delgadillo

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