Taxes in Slovakia: Recent changes to legislation

In recent months, Slovakia has implemented several changes to legislation concerning corporate income tax and value added tax. A new financial transaction tax has also been established. The Ecovis experts explain the main key points of changes in taxes in Slovakia.

Corporate income tax (CIT)

The minimum amount of tax payable (tax license) for legal entities will apply for the first time for the tax period starting on 1 January 2024. The tax license depends on the entity’s taxable income:

In addition, the Slovak Income Tax Act was amended to introduce changes to the rates of CIT. The rate depends on the taxable income of the entity:

• 10% for entities with taxable income not exceeding EUR 100,000
• 21% for entities with taxable income between EUR 100,000 and EUR 5 million
• 24% for entities with taxable income exceeding EUR 5 million

The new tax rates will apply to the tax period starting on 1 January 2025.

Valued added tax (VAT)

The most significant change to the Slovak VAT Act is the change in the VAT rate. Currently, until 31 December 2024, there are two general VAT rates (except for specific cases related to state supported rental accommodation) of 10% and 20%. From 1 January 2025, these be replaced by three VAT rates of 5%, 19% and 23%. The standard VAT rate will be 23%.

Other changes include (among others):

• adjustment of the registration obligation for domestic and foreign entities
• introduction of specific rules for small business
• introduction of the reverse-charge mechanism for the import of goods in Slovakia under certain conditions (the effective date differs for domestic and foreign persons).

Would you like to know more about the individual tax measures? Please feel free to contact us.

Lubomir Alezar, Partner, ECOVIS LA Partners Tax, s.r.o., Bratislava, Slovakia

Financial transaction tax (FTT)

A significant change to legislation which may increase entrepreneurs’ costs is the introduction of a financial transaction tax. The FTT Act is effective as of 1 January 2025 with the first taxable period in April 2025. The FTT will apply to legal entities and natural persons carrying out business activity, i.e. not to all individuals.

In general, the FTT will apply to the following, with certain exemptions:

1. Debit payment transactions

• Bank account transactions will be taxed at a rate of 0.4% of the amount paid with a limit of EUR 40 per transaction
• Cash withdrawals will be subject to a tax of 0,8 % of the amount withdrawn (without limit)
• A flat rate tax of EUR 2 per year will apply to each payment card used by the entity at least once in a calendar year

2. Recharged costs associated with the execution of financial transactions in connection with the taxable person’s activities in Slovakia will be taxed at a rate of 0.4% of the amount recharged without a limit. The minimum amount of the tax is EUR 0.01.

The taxpayers in this case are:

• Local banks or Slovak branches of foreign banks in the case of local bank accounts
• The taxable person him/herself
  • if he/she uses a foreign bank that does not have a branch in Slovakia
  • if he/she is recharged with the costs of carrying out financial transactions in connection with the taxpayer’s activities in Slovakia
  • if he/she carries out financial transactions on an account other than a bank account

The tax base is the amount of the payment or the amount of the recharged costs. The tax period is a calendar month and the tax must be paid and the relevant tax notice filed by the end of the following month.

For further information please contact:

Lubomir Alezar, Partner, ECOVIS LA Partners Tax, s.r.o., Bratislava, Slovakia
Email: Lubomir.Alezar@ecovis.sk