The Slovak Parliament adopted a consolidation package on 3 October 2024, which brings significant changes to tax legislation with the aim of improving the state of public finances. Most changes will take effect on 1 January 2025, with the most important changes applying to tax periods starting from 1 January 2025. This means that 2024 will be closed according to the currently valid tax rules.
The adopted legislative proposals are awaiting the president's signature.
Below we provide an overview of key changes that may significantly affect the business environment.
Corporate Income Tax
- Withholding tax on dividends: The withholding tax rate for individuals will be reduced to 7% for dividends paid from profits generated in tax periods starting from 1 January 2025. The increase in this tax rate from 7% to 10%, which came into effect from 1 January 2024, will therefore only apply to dividends paid from profits reported for tax periods starting from 1 January 2024, and ending by 31 December 2024. This change will also apply to the taxation of shares in liquidation balances and the taxation of settlement shares of individuals.
- Increase in the threshold for application of the reduced income tax rate: The amount of taxable income (revenues) allowing the application of the reduced tax rate for individuals receiving income from business and other self-employment (self-employed persons), and for legal entities, will be increased from the current EUR 60,000 to EUR 100,000.
- Income tax rate for corporate entities and individual entrepreneurs:
- Legal entities whose taxable income does not exceed EUR 100,000 in the tax period will pay income tax at 10% instead of the current 15%.
- Individuals with taxable income (revenues) from business and self-employed persons earning up to EUR 100,000 of taxable income in the tax period will apply the reduced tax rate, which will remain unchanged at 15%.
- Legal entities whose taxable income in the tax period exceeds EUR 5,000,000 will pay income tax at an increased tax rate of 24%.
Below, we provide a summary of corporate income tax rates effective from 1 January 2025:
| Amount of taxable income (revenues)* | Tax rate |
|---|---|
up to 100 000 EUR |
10 % |
EUR 100,000 – EUR 5,000,000 |
21 % |
above EUR 5,000,000 |
24 % |
*Since the law refers to taxable income (revenues), the taxpayer must not rely on the sum of revenues reported in the accounting. Income exempt from tax or not subject to tax must be excluded from the amount of income decisive for the application of the tax rate (e.g. dividend income or income from the sale of shares and ownership interest meeting the conditions under the provisions of §13a of the Income Tax Act).
- Tax-deductible costs for consumed fuels: A new method of calculating costs for consumed electric energy for home charging of vehicles allocated to depreciation group 0 (BEV and PHEV vehicles) will be introduced. Tax deductible costs for consumed electric energy will be determined according to the average monthly prices announced by the Statistical Office of Slovakia for the relevant charging according to the consumption stated in the vehicle's technical documentation or additional data from the manufacturer / seller, depending on the distance driven for business purposes.
- Deduction of investment expenses: The period for which an investment plan is prepared, i.e. a plan during the implementation of which it is possible to apply the deduction of investment expenses (costs) under the set conditions, is extended from four to six years. The last tax period for the deduction of investment costs will be the tax period ending on 31 December 2027.
- Non-monetary income of an employee related to the employer's motor vehicle: To support the development of electromobility, a reduced amount of non-monetary income for an employee who an employer has provided with a motor vehicle for private purposes is introduced. This will be 0.5% of the vehicle's initial price or the price reduced by the legally determined depreciation value for a vehicle in depreciation group 0 (BEV and PHEV vehicles). For other employer's vehicles provided for an employee’s private use, the calculation of non-monetary income remains unchanged (1% of the initial / reduced initial price).
- Minimum tax: The minimum tax for legal entities, which was introduced for tax periods starting from 1 January 2024, will not apply to a registered social enterprise. This provision will apply to tax returns filed after 31 December 2024.
- Changes to depreciation groups: Another step to support electromobility is the inclusion of electric bicycles and scooters in depreciation group 0 (depreciation period of 2 years) and the reclassification of trolleybuses and electric buses into depreciation group 1 (depreciation period of 4 years). This will also apply to assets put into use prior to 1 January 2025, with previously applied depreciations not being adjusted retroactively.
VAT
- Increase of the basic VAT rate: The basic tax rate will be increased from 20% to 23%.
- Change to reduced VAT rates: From 1 January 2025, two reduced tax rates of 19% (instead of 10%) and 5% (this reduced rate remains unchanged) will apply. The list of goods and services to which reduced rates apply has been amended. An overview of the application of reduced rates is provided below.
|
Current rate |
New rate |
|---|---|---|
Basic food |
10% |
5% |
Other food |
20% |
19% |
Electric energy |
20% |
19% |
Medicines |
10% |
5% |
Printed books, magazines |
10% |
5% |
Electronic books |
20% |
5% |
Medical devices |
10% |
5% |
Accommodation services |
10% |
5% |
Restaurant services - food |
10% |
5% |
Restaurant services - non-alcoholic beverages |
10% |
19% |
Restaurant services - alcoholic beverages |
20% |
23% |
Fitness centre - entrance fees |
10% |
5% |
Ski lifts, entrance fees to sports facilities and swimming pools |
10% |
23% |
Entrance fees to sports events |
20% |
5% |
Social enterprises |
10% |
5% |
Rental apartments |
5% |
5% |
- Transitional provisions: If after 31 December 2024 there is a correction of the tax base for which the tax liability arose before 31 December 2024, the tax rate valid at the time when the tax liability arose will be used for the adjustments. A similar transitional provision will also apply to the adjustment of deducted tax.
Special Levy in Regulated Industries
- Regulated entities: the list of regulated entities will include pharmacies that have received permission from the State Institute for Drug Control and companies that manufacture petroleum products.
- Obligation to pay the levy: New regulated entities will be obliged to pay the levy from January 2025 if they plan to continue performing regulated activities and their financial result for the immediately preceding accounting period before 1 January 2025, was at least EUR 3,000,000 or it is estimated it will be at least this amount in 2025.
- Levy rate for telecommunications companies: increase from 0.00363 to 0.01576 (it will be reduced to 0.00363 from 1 January 2040).
- Levy base: According to the current law, the levy base is the annual financial result multiplied by a coefficient. From 1 January 2025, before multiplying, the annual financial result will be reduced by the yield of government bonds.
Financial Transaction Tax
- Introduction of a new tax: From 1 January 2025, a new tax – the financial transaction tax – will be introduced. The first taxable period will be April 2025.
- Taxable persons (taxpayer): Taxpayers will be individual entrepreneurs, legal entities, and branches of foreign entities that are clients of a payment service provider performing financial transactions. Exceptions include the Social Insurance Agency and budgetary organisations.
- Payers of the tax: The law distinguishes between the taxable person and the person responsible for the tax collection and transfer to the budget. Payment service providers (banks and similar institutions) that have a registered office or branch in Slovakia will collect the tax from taxpayers and remit it to the tax administrator. If a Slovak entrepreneur is a client of a payment service provider seated outside Slovakia and with no branch here, the obligation to declare and pay this tax will be the responsibility of the respective entrepreneur. This obligation will still apply if the entrepreneur authorises another entity to perform the financial transaction.
- Subject of the tax: 1) Financial transactions resulting in debiting the entrepreneur’s bank account with a specific amount. 2) Use of a payment card issued to a business account. 3) Charged expense related to the performance of a financial transaction that applies to the entrepreneur’s activities carried out in Slovakia.
- There are a number of exceptions. The following will not be subject to the tax:
- payment of taxes, levies, and similar.
- purchase of government bonds.
- certain operations of a securities dealer related to the purchase of securities on behalf of a client.
- payment operation carried out between the taxpayer's accounts maintained by the same provider.
- payment operation of handing over or returning money from notarial custody.
- payment of taxes, levies, and similar.
- Tax base: The amount of funds withdrawn from the taxpayer's account.
- Tax rate: The basic tax rate is 0.4%, capped at EUR 40 from the tax base. For a payment card, the annual rate is EUR 2. 0.4% of charged expenses without a cap.
- Administration: The taxable period is a calendar month. The deadline for filing a tax return and paying the tax is the end of the calendar month immediately following the taxable period. It will be possible to pay the tax for the first 3 taxable periods (April, May, and June 2025) by 31 July 2025. However, there are exceptions from this simplification.
- In addition to filing tax returns, detailed records for individual taxable periods should be kept to the extent necessary to determine the tax correctly.
- An individual entrepreneur without a separate payment account to perform financial transactions related to their business activities are obliged to open such an account by 31 March 2025.
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