Changes in accounting and accounting transactions in Slovakia for 2019

In 2018, ten of the most important laws affecting businesses changed 32 times in Slovakia, with some of the changes reaching to 2019 as well. Many of them are related to wages: minimum wage increase, increased minimum contributions paid by sole traders, a two-stage increase in compensation for night and weekend shifts during the year, increased subsistence level resulting in an increase in the child tax bonus, or the introduction of recreation vouchers. Other changes affect taxation, primarily VAT. And everyone will somehow be affected by the introduction of a special contribution to be paid by retail chains and the introduction of insurance tax. As for individual accounting policies, only minor changes have been adopted that are related to accounting in specific areas of business (guaranteed energy service, commodity trading, accounting for single-purpose and multi-purpose vouchers) as well as purely accounting transactions (treatment of goodwill and profit/loss distribution).

Treatment of guaranteed energy service

Section 30e of an amendment to measure no. MF/017028/2018-74 issued by the Ministry of Finance of the Slovak Republic defines a new accounting method for the treatment of guaranteed energy service. The method is related to amendment to Act No. 321/2014 Z.z., on Energy Efficiency and on Changes and Amendments to Certain Acts. Changes are made to the method of accounting for the guaranteed energy service both on the part of the energy service company (subsections 2 to 5) and on the part of the recipient of the guaranteed energy service (subsections 6 to 8). The guaranteed energy service (defined in subsection 1(a)) provided under an energy performance contract for the public sector is recognised in two stages:

• as energy improvement of assets;
• as operating services.

The energy improvement of assets is carried to the energy service company’s accounts in compliance with the construction contract principle, while for the recipient of the service it is technical improvement of assets. The treatment of operating services is subject to the methods applicable to the provision and purchase of other services.

Treatment of vouchers

The amendment also defines the treatment of single-purpose and multi-purpose vouchers that will be introduced by an amendment to the Value Added Tax Act with effect from 1 October 2019. A voucher is an instrument carrying an obligation for the provider (the issuer of the voucher) to provide a service or supply goods for which the voucher is issued and accept the voucher as a means of payment – as consideration for the performance provided. The voucher gives its holder the right to obtain corresponding goods or service.

The accounting policies define the voucher as a negotiable item (account 213 – Stamps and vouchers) and stipulate the accounting method for the issuer of the voucher. At the time of sale of the voucher, the issuer recognises accrued income (account 384 – Accrued income). At the time of actual performance, it is then carried by the issuer to the relevant income account. The recognition should distinguish whether it is a single-purpose or a multi-purpose voucher. This is not only due to the relation to VAT but also due to the recognition of the income in the issuer (S. 56(12) of the Accounting Policies) – distributor (S. 64(3) and S. 75(2) of the Accounting Policies) – purchaser chain (S. 47(2) of the Accounting Policies).

Treatment of commodities

Other changes in accounting policies are rather minor and apply to the treatment of commodities. With effect from 1 January 2019, commodities traded on a public market and acquired by a company for resale on a public market are accounted for as non-current financial assets under S. 17(10)(d) of the Accounting Policies. As at the date of the financial statements, the company is required to revalue such commodities at fair value (at market value under S. 27(1)(f) of the Accounting Act) by a corresponding entry in account  564 (S. 70(4) of the Accounting Policies) or account 664 (S. 80(4) of the Accounting Policies).

Amendments to goodwill

Another adjustment to goodwill and negative goodwill has been included in the Accounting Policies (S. 37(12)(d) that is recognised upon merger or demerger by the successor company. Goodwill/negative goodwill is adjusted by the value of valuation differences recognised by the dissolving company on assets acquired after the acquisition of the shareholding by the successor company.

Accounting for profit/loss

A minor amendment also applies to the specification of the accounting method for recognising profit/loss to be approved, specifically in the decision of a company’s body regarding the distribution of accounting profit or the settlement of accounting loss. S. 7(4)(a) and (b) of the amended accounting policies stipulates that instead of account 364 – Liabilities to partners and members upon profit distribution, any account within group 36 – Liabilities to partners and association will be used in profit distribution. Any account within group 35 – Receivables from partners and association may be used instead of account 354 – Receivables from partners and members upon loss settlement.

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