Last modified: 21/01/2025 10:38

Corporate taxation

1.  If a legal entity with its registered office in the Slovak Republic owns a share of at least 10% in another company will sell the share after more than 2 years (and it will meet other legal criteria as wel), it does not pay any tax on this sale.

Residence: Pursuant to § 2 d) point 2 of the Income Tax Act: a taxpayer with unlimited tax liability (tax resident) is a legal entity with a legal seat (registered office) or a place of effective management in the territory of the Slovak Republic.

Basis: A resident company is subject to corporate income tax on its worldwide profits and gains, with the option to exclude profits and gains of foreign permanent establishments (PEs). A non-resident company in the Slovak Republic is subject to corporate income tax for PE’s trades.

Taxable income: The subject of corporate tax is income from the company’s activities and from the disposal of the taxpayer’s property (in addition to the specially defined subject of tax of companies not established for business purposes). Taxable income is income that is subject to tax and is not exempt from tax under the Income Tax Act or under an international treaty.

Significant local taxes on income: None

Alternative minimum tax: None

Taxation of dividends: Dividends paid to companies are taxable by withholding tax only in two cases. If the dividend recipient is a resident company of the Slovak Republic and the source of income (of the dividends) is in a foreign non-contracting state – this income has to be taxed in the tax declaration of the resident company. If the resident company is paying dividends (source of income of dividends in SR) to non – the contracting state – this income will be taxed via withholding tax.

Capital gains: There is no separate capital gains tax in the Slovak Republic. If a legal entity with a registered office in the Slovak Republic that owns a share of at least 10% in another company will sell the share after more than 2 years (and it will meet other legal criteria as well), it does not pay any tax on this sale.

Losses: From the year 2020, a tax loss may be deducted for five consecutive tax periods, beginning with the tax period immediately following the tax period for which the tax loss was recognized. 1. a regular legal entity (i.e. not a micro-taxpayer) may deduct a tax loss of a maximum of 50% each year from the tax base. 2. The micro-taxpayer may claim this deduction up to the amount of the tax base on taxable income. For the 2024 tax year and following tax years, there is no more option to amortizate the tax losses incurred for 2019.

Foreign tax relief: 1. Investment Incentives Investment incentives (including tax credits) are potentially available for projects in the following areas: industry, technology centers, shared services centers, and tourism. The granting of tax relief is subject to the approval of the Slovak authorities. If certain conditions are met, a taxpayer may apply for tax relief in the ten subsequent years following the tax period in which the relief was granted. 2. Foreign tax credit Foreign tax credits can be claimed if they are granted on the basis of an applicable DTT. 3. Investment deduction As of 1 January 2022, taxpayers are eligible to apply a newly introduced investment deduction according to which taxpayers may deduct the determined percentage of expense from depreciation from the investment, the amount of which depends on the planned percentage of reinvestment of the average value of investments and the value of reinvestment of this planned average value of investments stipulated in the investment plan.

Participation exemption: See above under ‘Taxation of dividends’ and ‘Capital gains’

Holding-company regime: There is no official holding company tax regime. However, with the help of an experienced tax advisor, you can gain tax advantages by structuring your business properly throughout the holding structure (parent-subsidiary relationship).

Tax-based incentives: 1. Investment Incentives Investment incentives (including tax credits) are potentially available for projects in the following areas: industry, technology centers, shared services centers, and tourism. The granting of tax relief is subject to the approval of the Slovak authorities. If certain conditions are met, a taxpayer may apply for tax relief in the ten subsequent years following the tax period in which the relief was granted. 2. Research and development (R&D) super deduction

Taxpayers who perform R&D activities may apply for a special form of support, the super-deduction of R&D costs. The total of the following items may be deducted from the tax base adjusted by the tax loss deduction: 100% of R&D costs incurred in the taxable period for which the tax return is filed; and 100% of the positive difference between the average of the total R&D costs incurred previously 3. Tax exemption for intangible assets (Patent box)

The amendment of the Income Tax Act valid since 1 January 2018 introduced a tax exemption of 50% for income from considerations for granting a right to use, or for use, a protected patent, utility model, or software created by the taxpayer (basic patent box). Tax exemption refers only to assets created by my own activities and applies to tax periods in which the amortization of an intangible asset is included in tax expenses.

A similar exemption also applies to a certain part of the income from selling goods that were manufactured on the basis of a protected patent or a utility model (extended patent box). The exemption is 50 % of the income attributable to the selling price reduced by the related costs and reduced by the profit margin.

Possibility of concurrence with super deduction (R&D project must be filed before applying the patent box); 4. Foreign tax credit Foreign tax credits can be claimed if they are granted on the basis of an applicable DTT. 5. Investment deduction As of 1 January 2022, taxpayers are eligible to apply a newly introduced investment deduction according to which taxpayers may deduct the determined percentage of expense from depreciation from the investment, the amount of which depends on the planned percentage of reinvestment of the average value of investments and the value of reinvestment of this planned average value of investments stipulated in the investment plan

Group relief/fiscal unity: There is no concept of group CIT in the Slovak Republic. Each company in a group is taxed individually. In general, royalties, commissions, and other payments paid to foreign-related parties are tax-deductible, provided they are incurred for genuine business reasons and the charges are in line with transfer pricing rules.

Small company/alternative tax regimes: Micro taxpayer -> 10% CIT and other benefits

Corporate taxation: compliance

Tax year: The tax period is a calendar year. If the accounting period has changed to a financial year in accordance with the Accounting Act, the financial year is considered a tax period.

Consolidated returns: Consolidated tax returns are not permitted; each company must file a separate tax return for itself.

Filing and payment: The tax return has to be filed electronically and tax paid until 31 March of the calendar year following the end of the tax period. The filing of a tax return can be postponed without giving a reason for three calendar months (max. until 30 June) or six calendar months (max. until 30 September), if the taxpayer receives income from a source abroad.

Penalties: For example: The tax administrator shall impose or collect a penalty on the taxpayer for failure to comply with tax obligations for an administrative offense if : a) fails to file a tax return within

1. the specified time limit,

2. within the time limit specified by the tax administrator in the notice pursuant to Article 15(1) of the Tax Code,

3. within the time limit specified by the tax administrator in the notice pursuant to Article 15(2) of the Tax Code, b) fails to fulfill the registration obligation within the specified time limit, c) fails to comply with the notification obligation within the specified time limit; etc.

The tax administrator shall collect interest on late payment if the taxpayer fails to pay or remit within the prescribed period or in the prescribed amount or within the period or in the amount specified in the decision of the tax administrator: – the tax or the tax difference, – an advance payment of tax, – an installment of tax, – the tax advance collected, – WHT, – the amount withheld to secure the tax. The total interest on late payment is calculated as a percentage of the amount owed for the period of delay, for each day that passes from the due date until the date of payment of the debt.

Rulings: Binding rulings can be obtained through your local tax advisor or the Tax Directorate of the Slovak Republic. We recommend contacting your local tax advisor before contacting the Tax Directorate, as the wording of the request must be precise.

Taxation of individuals

* A self-employed person may also have a 15% tax rate if his taxable income (revenue; i.e. not the tax base) for the tax period does not exceed 100 000 Eur. The taxpayer does not have to meet the criteria for a micro-taxpayer to be subject to the 15% tax rate.

Residence: Tax residents are citizens who have a permanent residence, domicile, or usually stay in the territory of the Slovak Republic for at least 183 days in the relevant calendar year.

Basis: All resident individuals are taxed on their worldwide income. Non-resident individuals are taxed on Slovak source income only.

Taxable income: 1) Employment income 2) Income from business, from other self-employed activity, from rent, and from the use of work and artistic performance 3) Income from capital assets 4) Other income

Capital gains: Capital gains generally are included in total income, although gains from the sale of assets used to generate income, or to carry on a business or independent profession are treated as business and independent professional income.

Deductions and allowances: For 2025, the personal allowance is set at EUR 5 753,79 Eur based on the minimum subsistence amount valid on 1 January 2025. There is also a spouse allowance, Child Tax Bonus, and non-taxable part of the tax base for contributions to supplementary pension savings (Pillar III) or mortgage interest paid allowances. A Slovak tax non-resident can claim these allowances only if 90% of one’s worldwide income is from Slovak sources.

Foreign tax relief: A Slovak tax resident may receive a credit for foreign tax paid on foreign-source income taxable in Slovakia, provided that the Double Taxation Treaty (DTT) between Slovakia and the foreign country allows for such credit. The credit is limited to the amount of tax that would be payable on that income in Slovakia. If the DTT mandates the exemption method to prevent double taxation, this method must be followed. Alternatively, the taxpayer may choose, according to Slovak law, to utilize the exemption method for foreign-source employment income if it proves more advantageous. In cases where Slovakia has not concluded a DTT with a foreign country, employment income from foreign sources that has been taxed abroad may be exempt from taxation in Slovakia.

Taxation of individuals: compliance

Tax year: Calendar year. There is no option to claim other period as a tax period (i.e., shortened or fiscal period).

Filing and payment: A tax return has to be filed and tax paid until 31 March of the calendar year following the end of the tax period. Individual – the entrepreneur is obliged to file a tax return only electronically. The filing of a tax return can be postponed without giving a reason for three calendar months (max. Until 30 June) or six calendar months (max. Until 30 September), if the taxpayer receives income from a source abroad. Individuals in position of employees do not file their tax returns, as the annual reconciliation is filed on behalf of them by their employers.

Penalties: Please see the penalties in the Corporate Taxation: Compliance section.

Rulings: Binding rulings can be obtained through your local tax advisor or the Tax Directorate of the Slovak Republic. We recommend contacting your local tax advisor before contacting the Tax Directorate, as the wording of the request must be precise.

Withholding taxes

1. No withholding tax applies on dividends distributed by one Slovak-resident entity (company) out of profits generated from 2017 onwards to another Slovak-resident entity (company); the rate 7% is for dividends paid to individuals on 2017 – 2023 profits and the tax rate 10% is for dividend paid for 2024 (now 7% rate will apply to the payment of dividends on 2025 onwards profits). Dividends paid out of profits arising from 2004 to 2016 are not subject to Slovak WHT, but may be subject to health insurance depending on the year.

2. A 19% withholding tax rate applies to interest from deposits paid to a resident. Interest on loans and borrowings paid to a resident is exempt from withholding tax.

3. No withholding tax applies on royalties paid to a resident. Royalties paid to a nonresident are subject to a 19% withholding tax.

4. No withholding tax is imposed on fees for technical services paid to a resident. Fees paid to a nonresident in respect of technical services provided within the Slovakian territory are subject to tax in Slovakia at 19%.

*Generally, a 19% withholding tax applies (unless limited under a tax treaty); an increased tax rate of 35% applies if the recipient or payor is a resident of a non-contracting state (applicable to all 4 types of income).

Branch remittance tax: None

Anti-avoidance legislation

Transfer pricing: The OECD Transfer Pricing Guidelines (TPG) are legally binding since 2023 and fully acceptable as an explanatory instrument. Primary legislation regarding arm’s lenghth principle and transfer pricing are stipulated in Income Tax Act (ITA), Article 17, para 5 and Article 18, para 1 Regulation which require tax payer to preprare transfer pricing documentation. Guidance of Ministry of finance of the Slovak republic MF/020061/2022-724 on determining the content of documentation according to ITA Article 18 section 1 . Master file consistent with Annex I to Chapter V of the TPG. Local file consistent with Annex II to Chapter V of the TPG.

Interest restriction: In the tax periods commencing on or after January 1, 2015, interest and other expenses related to loans received from a related party exceeding 25 % of an amount in principle corresponding to EBITDA will be non-deductible for tax purposes. The rules apply to related parties – in line with the definition of related parties for transfer pricing purposes, i.e. to foreign and domestic related parties. These rules do not apply to certain financial institutions, e.g. banks, insurance companies, reinsurance companies. Slovakia has transposed Article 4 of EU Directive 2016/1164 laying down rules limiting net interest expenses for legal persons (these rules take precedence over Article 11(6) of the said Directive). The new rules apply exclusively to dependent persons for transactions from 1.1.2024. The limitation of net interest expenses will apply to taxpayers whose amount of such interest exceeds EUR 3,000,000. If the interest does not exceed this amount, the taxpayer will use the safe harbor rules where net interest expenses are considered tax deductible, but additionally verify the rules for EBITDA.

Controlled foreign companies: As of January 1, 2019, Control Foreign Company (CFC) rules apply in Slovakia. The non-resident company is treated as a CFC if it is controlled by a Slovak resident or jointly with related parties, by direct or indirect share participation in the share capital or voting rights of at least 50% or at least 50% profit share, and the corporate income tax of the CFC paid abroad is lower than 50% percent of the Slovak tax. In such cases, the corporate income tax base of the CFC will be included in the corporate income tax base of its Slovak controlling company and taxed in accordance with Slovak tax legislation. Some of the foreign tax paid on the CFC’s income may be credited against the final tax liability. The rules for controlled foreign companies (CFC) shall not apply to individuals from August 1st, 2023.

Hybrid mismatches: As of January 1, 2020, the ATAD and ATAD II as implemented into the Income Tax Act became effective in the part dealing with the prevention of tax avoidance with respect to hybrid mismatches. The introduced rules prevent from benefiting from hybrid entities and hybrid instruments which arose as a result of the different tax treatment of financial instruments and/or taxpayers and which lead to a decrease of tax liability.

Disclosure requirements: Country-by-country report consistent with Annex III to Chapter V of the TPG

Exit taxes: As of January 1, 2018, the Income Tax Act introduced the “Exit tax”. If a tax resident or a tax non-resident with a PE established in Slovakia decides to transfer assets or business activities or its tax residence abroad, an obligation to tax the economic value of all capital gains normally generated in Slovakia will arise, despite the fact that profit had not been realized at the time of exit. Assets transferred outside the territory of Slovakia will be subject to tax even if no sale/change of the legal ownership arises, as long as Slovakia loses its right to tax this income due to the transfer of the property. The exit tax is applied at a rate of 21%.

General anti-avoidance rule: Yes. Included at ATAD.

Digital services tax and Other significant anti-avoidance legislation: The Slovak tax authorities may disregard any transactions or arrangements that do not have any commercial substance, and whose main purpose (or one of the main purposes) is to obtain a tax benefit (the “substance over form principle”) and deny any resulting tax benefits. Currently, there is no specific legislation which stipulates the exact rules.

Value-added tax/Goods and services tax

Type of tax: VAT is imposed on the supply of goods and the provision of services, and on intracommunity acquisitions of goods and imports.

Standard rate: 23%

Reduced rates: 19%, 5%, 0%

Registration: A domestic taxable person becomes a VAT payer on the first day of the calendar year following the calendar year in which its turnover exceeded EUR 50,000. A taxable person may become a VAT payer earlier if any of the following situations occur: – the turnover in the current calendar year exceeds EUR 62,500, – a situation exhaustively defined in the VAT Act occurs (e.g. upon acquisition of a business/part of a business, spin-off, delivery of a building/part of a building/building plot, if the turnover from this delivery is to exceed EUR 62,500 or upon receipt of payment before this delivery). Voluntary registration is possible before the exceeding the threshold of EUR 50 000. A taxable person who is not domestically established, i.e. who does not have a seat, place of business, establishment, residence, or does not usually reside in the country, is obliged to submit an application for registration for tax to the Bratislava Tax Office before commencing to carry out an activity which is subject to tax. The foreign person does not have a specified turnover or any other limit for registration in the domestic territory.

Filing and payment: The tax period of a newly registered taxpayer who is registered after 1 October 2012 is a calendar month. A registered person can apply for a calendar-quarter assessment period if its turnover is less than 100 000 Eur in the preceding 12 consecutive months, and the person has been registered for VAT for at least one calendar year.

Social security contributions

Social insurance of employee and employer for employee is calculated from the employee´s brutto wage.¹

¹The basis for calculating insurance contributions is the gross wage. The minimum wage in 2025 is 816 Eur (Brutto). The hourly minimum wage is 4,690/hour. The amount of the minimum wage may be affected by the degree of difficulty of the work performed.

Health insurance of employee and employer for employee:

²The rate for an employee who is severely disabled is reduced by half (i.e. 5,5% and 2%).

Self-employed

Social insurance 33,15%. Health insurance: 15%. The rate for a Self-employed who is severely disabled is reduced by half (i.e. 7,5%) The basis for calculating insurance contributions is calculated by formula. Therefore, we recommend you contact your local tax advisor in this matter. The minimum monthly contributions in 2025 will be total in EUR 344,27 for the self-employed.

Other taxes

Capital duty: None

Immovable property taxes: Local taxes – land tax, building tax, and tax on the apartment and non-residential premises in an apartment building. The tax liability arises for a person who has become the owner, administrator, tenant, or user of real estate that is subject to real estate tax. Immovable property tax is calculated based on the area of the real estate, its location, and its type, as well as the tax rate of each self-governing region. Local taxes are administered by the relevant municipality.

Transfer tax: None

Stamp duty: None

Net wealth/worth tax: None

Inheritance/gift taxes: None

Other: 1. Special tax on regulated industries on electronic communication, insurance, energy, public health care insurance, pharmaceuticals, railway transport, post services, public water distribution and sewerage, and air transport. The tax liability arises for companies with profits exceeding EUR 3 million. The special tax is calculated by multiplying the coefficient, tax base, and tax rate.

2. Motor vehicle tax (MVT) applies to vehicles that are registered in the Slovak Republic and used for business purposes. The taxpayer is the entity that uses the vehicle for business purposes. The tax rate depends on engine capacity, vehicle size, etc.

3. The excise tax applies to the release of tobacco products, wine, spirits, beer, mineral oil, electricity, coal, oil and natural gas into tax-free circulation or upon importation. The specific excise tax rate is determined based on the customs classification of each respective product. The entity responsible for overseeing excise duty matters is the Customs Authority. If a company is a VAT-registered entity in Slovakia or is represented by a tax advisor or attorney, all communication with the Customs Authority must be conducted electronically.

4. Financial transaction tax on financial transactions carried out on the bank account of Slovak and foreign legal entities or individuals who have their registered office or place of business in Slovakia and who also have a bank account or carry out business activities in Slovakia. The taxpayer may be directly the bank who operate the bank accounts or any person entitled to provide financial transaction to their customers. Also, a company or individual may be a taxpayer if they use a foreign bank account or provide activity to Slovak companies from abroad seat.

The financial transaction tax rate is following:

– 0.4% (up to EUR 40 on transaction) for a transfer of money from an account; or to a payment made on behalf of a taxpayer by another person and this person charged him the cost of making the payment

– 0.4% (without limit) for a recalculated costs related to the execution of a financial transaction that relates to the taxpayer’s activities carried out in Slovakia

– 0.8% withdrawing money from an ATM

– EUR 2 for usage of banking payment card We recommend to contact your tax advisor to help you with this obligation as the Financial Transaction Tax Act is very hard to understand (i.e., reporting obligation, excluded transaction, etc.).

Tax treaties

The Slovak Republic has concluded 74 double taxation treaties. It is also a signatory to the OECD Multilateral Instrument. In addition, the Slovak Republic has already implemented the MLI rules and updated several double taxation treaties.