Slovakia: Business Environment
Certain supplies and services are exempt without credit entitlement (certain postal services, financial and insurance services, education, public radio and TV broadcasting services, health and social services, the transfer and leasing of real estate (with exceptions), services related to sports and physical education; social welfare and lottery services); others are exempt but give the right to credit ("zero-rated" - financial and insurance services provided to extra EU customer, supply of goods to other EU member states, certain import of goods, and export of goods and services).
The tax exemption on import of small consignments (not exceeding EUR 22) will be abolished with effect from 1 July 2021.
A vehicle tax applies to vehicles that are registered in the country and used for business purposes. The taxpayer is the entity that uses the vehicle for business purposes. The tax rate varies according to engine capacity, vehicle size, etc.
Road tax, real estate tax, and most other such taxes are tax-deductible. Social security contributions paid by an employer with respect to employees are also tax-deductible. VAT charged to profit and loss is tax-deductible only if certain conditions are met. Contributions to supplementary pension savings made by the Slovak employer on behalf of the employee are tax-deductible (capped at 6% of the employee's gross salary). Start-up expenses are tax-deductible in the period when incurred.
In general, interest expenses incurred in order to generate taxable income can be treated as tax-deductible, subject to thin capitalisation rules.
Charitable contributions are treated as gifts, hence are not tax-deductible. Subject to conditions, expenses incurred by the employer on transporting employees to and from work can be deducted.
Certain expenses for practical education provided to students can be deducted (capped at EUR 3,200/student/year).
Tax losses can be carried forward in equal amounts over a period of four years. The carryback of losses is not permitted. From 1 January 2020, a company or branch may carry forward and utilise a tax loss equally over a period of five years following the year in which the tax loss arose, capped at half of the tax base in the respective tax period. From 1 January 2021, micro taxpayer (total income or revenues up to EUR 100,000) may carry forward and utilise a tax loss equally over a period of five years following the year in which the tax loss arose up to the amount of the tax base in the respective tax period.
Other taxes include:
Slovakia | Eastern Europe & Central Asia | United States | Germany | |
Number of Payments of Taxes per Year | 8.0 | 13.9 | 10.6 | 9.0 |
Time Taken For Administrative Formalities (Hours) | 192.0 | 226.2 | 175.0 | 218.0 |
Total Share of Taxes (% of Profit) | 49.7 | 36.5 | 36.6 | 48.8 |
Source: Doing Business, Latest available data.
Income Tax | From 19% to 25% |
From EUR 0 to EUR 37,981.94 | 19% |
Above EUR 37,981.94 | 25% |
Self-employed individuals and micro-taxpayers (income up to EUR 49,790) | 15% (if above the threshold, the standard rates apply) |
Income from capital | 19% |
Dividend income arising from profits before 2004 and after 1 January 2017 | 7% (35% if dividends are from foreign sources of non-cooperating state) |
The personal allowance of 21 times the minimum subsistence amount - announced each year on 1 January - is available to all individuals whose annual tax base does not exceed a certain limit. If the tax base of a taxpayer exceeds a certain limit, the personal allowance is reduced to nil progressively, based on a specific formula. For 2021, the personal allowance is set at EUR 4,511.43 if the aggregate annual net active income is up to EUR 19,936.22.
Slovak tax residents with permanent residency in Slovakia can also claim a dependent spouse allowance of up EUR 4,124.74, provided the aggregated net active income of that taxpayer does not exceed certain limits.
Tax bonuses are available for dependent children, as follows:
- from 1 January 2021 till 30 June 2021: EUR 46,44 per child up to 6 years; EUR 23,22 per child above 6 years of age
- from 1 July 2021 till 31 December 2021: EUR 46,44 per child up to 6 years; EUR 39,47 per child from 6 years to 15 years; EUR 23,22 per child above the age of 15 years of age.
Private entrepreneurs may deduct ordinary business expenses incurred to maintain, secure, and generate business income, provided they keep accounts recording their income and costs. The costs should be recorded in the sequential order for rental income. Alternatively, an entrepreneur (apart from a person having just rental income) who is not a Slovak VAT payer can opt to deduct lump-sum expenses. The lump-sum expenses can be up to 60% of income (capped at EUR 20,000 per annum) in order to determine the taxable income (actual business expenses or rental costs are not tax-deductible if the taxpayer opts for the lump-sum deduction).
Find out more about Taxes and Accounting in Slovakia on GlobalTrade.net, the Directory for International Trade Service Providers.
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Latest Update: April 2022