The tax rates
applicable for income derived in 2016 are:
annual taxable income (except for income from capital) up to EUR 35,022.31 is taxed at 19%
annual taxable income (except for income from
capital) above EUR
35,022.31 is taxed at 25%
income from capital is taxed at flat rate of 19%
Moreover, an additional tax of 5% is to be paid by the representatives of constitutional bodies (e.g. the President, Members of Parliament) on their employment income.
Certain types of income are not aggregated, but are subject to a final withholding tax of 19%.
Individuals who have their permanent residence or habitual abode in Slovakia are treated as residents. An individual has his habitual abode in Slovakia if he/ she is present in Slovakia for at least 183 days (in aggregate) in a calendar year (except individuals who stay there for the purposes of studying, receiving medical treatment, or who cross the borders of the Slovak Republic on a daily basis or in the agreed upon intervals exclusively for the purposes of performance of his/her dependent activity, the source of which is located in the territory of the Slovak Republic). All other individuals are treated as non-residents.
Individuals who are residents for tax purposes in Slovakia are taxable on their worldwide income. Taxable income of an individual is usually calculated by aggregating the separate net results of the following income categories:
- employment income;
- business, independent professional activities, rental income and income from the use of work and art performance;
- and other income (e.g. income from occasional activities).
Starting from 1 January 2016 income from capital is not aggregated but separate tax base is to be calculated on that income.
Specific exemptions and deductions apply for the purposes of determining the net result of each income category.
Dividends paid out of profits derived from 1 January 2004 are not subject to any tax.
Slovakia Tax period - Calendar year
Taxpayers deriving income that is not taxed through a withholding tax or are exempt have to file an income tax return by 31 March in the year following the tax year (self-assessment). The filling period may be extended upon certain conditions.
Taxpayers whose annual income does not exceed 50% of the amount of the basic allowance have to file a tax return only if losses are declared. Taxpayers having income only from a single employment are not required to file a tax return, if certain conditions are met.
Tax losses generated from business activities and other independent professional activities may only be set off against income derived from those types of activity. Losses that cannot be set off may be carried forward. The standard carry forward period is 4 years, and the losses must be carried forward evenly.
Supplementary pension insurance contributions may be deducted up to EUR 180 per year if certain conditions are met. Further, certain voluntarily contributions to supplementary pension insurance may be deducted up to an amount equal to 2% of the income from employment, business activities and other independent gainful activities. In 2016, this deduction may, however, not exceed EUR 1,029.60 per year.
Individuals who conduct business activities other than those whose last known tax liability was EUR 2,500 or less are required to pay advance payments (quarterly or monthly as the case may be).
In the case of employment income, the employer is obliged to remit the tax to the tax authorities no later than on the fifth day after the wages were paid.
Basic personal allowances
Basic personal allowance can be claimed only with respect to aggregate income from employment, business activities and other independent gainful activities. In 2016, the following annual basic personal allowances can be claimed:
- EUR 3,803.33 (19.2 times the living minimum*) if the aggregate annual income is up to EUR 19,809; and
- EUR 8,755.58 (44.2 times the living minimum*) less one fourth of the aggregate income if the aggregate annual income is higher than EUR 19,809. If the result is negative (i.e. if the aggregate annual income exceeds
EUR 35,022.31), the basic personal allowance cannot be claimed.
* The living minimum applicable on 1 January of the tax year (EUR 198.09 for 2016)
Dependent spouse allowance
Allowance of up to EUR 3,803.33 can be claimed by a resident
spouse does not have annual taxable income and if the aggregated
income of that
taxpayer does not exceed EUR 35,022.31. If a spouse earns less
3,803.33, this allowance is calculated as the difference between
EUR 3,803.33 and
the spouses actual income. If the taxpayers annual taxable income exceeds EUR 35,022.31, the allowance is gradually reduced to nil, such that those whose annual income exceeds EUR 50,235.62 are not entitled to the allowance.
Resident taxpayers are entitled to a tax credit for each child living in the same household with him if his employment or business income exceeds EUR 2,430 for 2016 (six times the minimum salary, which is EUR 405 in 2016). In 2016, the credit can be claimed in the amount of EUR 21.41 per child per month.
Foreign source income
Resident individuals are subject to tax on their worldwide income. Taxable amount is generally calculated in the same way as in the case of domestic income.
Foreign dividends are generally exempt if paid from profits derived by the distributing company from 1 January 2004.
Double taxation relief
Income earned from employment performed
exempt in Slovakia if the taxpayer can prove that such income
has been taxed
abroad. There is no other unilateral double taxation relief, but relief may be obtained under a tax treaty.
Non-resident individuals are taxed only on their income derived from Slovak sources. Employment income derived by non-residents from employment performed in Slovakia for a period not exceeding 183 days in 12 consecutive months is exempt. The exemption does not apply to activities performed by artistes or sportsmen, or through a permanent establishment. The income of nonresidents is generally taxed according to the rules applicable to residents, unless a law or a tax treaty provides otherwise.
Non-residents are entitled to the basic personal allowance (see above). In case their income from Slovak sources in the tax year is at least 90% of their total income, they are entitled also to the dependent-spouse allowance and tax credits for child.
Withholding tax - Generally, 19% withholding tax or tax security is levied (unless limited under a tax treaty); an increased tax rate of 35% applies if the recipient is a resident of a non-contracting state.
There is no withholding tax on dividends paid to non-resident individuals out of profits derived by the distributing company as from 1 January 2004
Corporate income tax rates
Income and capital gains
Corporate income tax is levied at a rate of 22%. This is the final tax burden on corporate profits because dividends paid out of profits derived after 1 January 2004 are not taxed in the hands of the shareholders.
Starting from 1 January 2014, resident companies are subject to a minimum corporate tax even in the case of losses (so-called tax licenses). The minimum tax may range from EUR 480 to EUR 2,880 depending on certain conditions.
Several exemptions may apply.
Withholding tax on domestic payments
Withholding tax of 19% is levied on income from participation certificates, certain debentures, vouchers and investment coupons; and interest from bank deposits and current accounts in general.
With effect from 1 January 2011, the tax withheld is considered to be a final tax rather than an advance payment of tax. The only exemption from this rule applies to income from participation certificates.
Corporate income tax - General information
A company is treated as resident if it has its legal
seat or place of
effective management in the Slovak Republic.
Taxable income: Resident companies are taxable on their worldwide income, including capital gains. The taxable income is computed on the basis of the accounting profits and is adjusted for several items as described in the tax law.
Tax period - Calendar year or the business/financial year
Tax returns and assessment
The taxpayer has to calculate the tax due in the corporate income tax return (self-assessment). The deadline for filing the return is by the end of third month following the end of the tax period. The filing deadline may be extended by maximum 3 or 6 months (if part of a taxpayers tax base consists of foreign-source income).
Quarterly, if tax paid for previous year was between EUR 2,500 EUR 16,600. Monthly, if tax paid for previous year was higher than EUR 16,600. A new business entity established during the tax year (except if it is established by conversion, merger or division) is not required to make advance tax payments.
As a general rule, expenses incurred in obtaining, ensuring and maintaining taxable income are fully deductible, unless they are listed as nondeductible items or items which are deductible only up to a limit set by the law.
Carry forward of losses
Tax losses derived after 1 January 2014 may be carried forward uniformly for 4 tax years. This limitation applies also to tax losses for the tax periods ended 2010 2013 and not utilized until 1 January 2014 (4 years uniformly as of aggregate). Losses derived before 31 December 2009 may be carried forward for up to 5 years.
Dividends paid out of profits derived from 1 January
2004 are not subject to any tax in the hands of the shareholders. Other dividends are taxed at the standard tax rate of 22% if distributed after 31 December 2013.
Corporate income tax relief can be provided under the Law on Investment Incentives. Certain corporate income tax relief can be provided also under the Law on Research and Development Incentives. The relief is subject to approval of the Ministry of Economy or Ministry of Finance, as the case may be.
If a taxpayer does not claim corporate income tax relief under the Law on Research and Development Incentives, a special regime for research and development expenses, introduced with effect from 1 January 2015, can be claimed if certain conditions are fulfilled For employers involved in vocational training of students
Special taxes on corporate income
Regulated industries (energy, insurance and reinsurance, public
insurance, electronic communications, pharmaceutics, postal
services, rail traffic,
public water and sewer systems, air transport and health care
special legislation): With effect from 1 September 2012 a
contribution applies. The obligation to pay the contribution
arises if the expected
annual accounting profit is at least EUR 3 million. The monthly
rate of the
contribution is 0.363%, i.e. an annual rate of 4.356%. The contribution will apply until 31 December 2016.
With effect from 1 January 2012, Slovak banks and branches of foreign banks operating in the Slovak Republic, established according to special legislation on banks, are subject to a bank levy
Foreign income and capital gains - Resident companies are subject to tax on their worldwide income and capital gains. Taxable amount is generally calculated in the same way as in the case of domestic income.
Losses of foreign permanent establishment (calculated based on Slovak tax rules) may be offset against domestic profits unless, on the basis of an applicable double tax treaty, the exemption method applies for double tax relief.
Dividend income paid by non-resident company
Dividends paid out of profits generated from 1 January 2004 are not subject to any Slovak tax. Dividends paid out of profits generated before 1 January 2004 are included in the taxable base of the recipient and taxed at a standard tax rate of 22% unless rules implementing EU Parent-Subsidiary Directive applies.
Double taxation relief
No unilateral double taxation relief is provided. Double taxation is relieved only on the basis of tax treaties.
Non-resident companies are taxed only on income derived from Slovak sources. They are generally taxed according to the rules applicable to residents. Income attributable to a Slovak permanent establishment is generally taxed at 22% rate through a tax return (self-assessment).
Generally, 19% withholding tax or tax security is levied (unless limited under a tax treaty); an increased tax rate of 35% applies if the recipient is a resident of a non-contracting state (i.e. a state not on the white list published by the Slovak Ministry of Finance). For interest and royalty payments EU Interest and Royalties Directive was implemented.
Dividend paid by resident companies to non-resident - There is no withholding tax on dividends paid to non-resident companies out of profits derived by the distributing company as from 1 January 2004. Dividends paid out of profits generated before 1 January 2004 are (unless rules implementing EU Parent Subsidiary Directive apply) subject to a 19% final withholding tax, unless a reduced rate applies under a tax treaty. A rate of 35% applies if such dividends are paid out to the taxpayer of a non-contracting state.
Standard rate: 20%, reduced rate 10%.
Export of goods and services is zero rated.
Intra-Community supplies of goods are zero rated under certain conditions
In 2014 the individual income tax rate in Slovakia is 19% for income up to EUR 35,022 and 25% for income exceeding this ceiling.
Exemptions are granted to taxpayers with specific types of income.
An individual in Slovakia is liable for tax on his income as an employee and on income as a self-employed person. In the case of an individual who answers the test of a "permanent resident" of Slovakia, tax will be calculated on his worldwide income.
A foreign resident who is employed in Slovakia pays tax only on his Slovak source income.
To be considered a Slovak resident, permanent residence permit should be obtained or residence of at least 183 days during any calendar tax year must be established.
An employer is obligated to deduct, immediately, each month, the amount of tax and national insurance (health insurance and social insurance) due from a salaried worker.
A self-employed individual is obligated to make quarterly advance payments on income tax, provided that his last tax due was higher than EUR 1,659.70 and monthly advance payments on income tax, provided that his tax due from previous tax year was at least EUR 16,596.96. The advance payments on income tax will be offset on filing an annual report. In the case of a new business, the advance payments will be calculated according to the estimates of the owner of the business.
Certain payments are deducted from taxable income as detailed below.
Losses from various activities of individuals can be offset against each other, however none of them can be offset against employment income.
The standard 2014 corporate tax in Slovakia is fixed at 22%.
There is also a minimum tax regime for companies.
The minimum tax sum is EUR 480/960 or EUR 2,880 depending on VAT registration and annual turnover.
Slovak companies are taxable on their worldwide income.
Foreign companies in Slovakia are taxable only on income that
has its source in Slovakia.
Capital Gains Tax in Slovakia
A capital gain in Slovakia is added to regular income and is taxable at the same rate as regular income for both an individual and a company.
A capital loss from the sale of an asset may, in most cases, be offset against regular taxable income.
Tax Deductions at Source in Slovakia
Taxation of Employee
An employer is obligated to deduct tax at source from an employee and to make additional contributions to social security.
An employee: the employer's contribution is approximately 35.2% of the salary. The employee's contribution is approximately 13.4%.
A self-employed person pays contributions to social insurance and health insurance system by himself.
The insurance covers pension, unemployment, sickness, and work
Other deductions in Slovakia
Tax, in Slovakia, must be deducted at source from the following payments according to the following table:
Dividend - 0%.
Interest - the standard rate of tax deducted at source - 19%
Royalties on patents -19%.
Notes- Deduction at source for foreign residents is subject to
the Double Tax Prevention Treaties and EU directives.
Slovakia Dates of filing Returns / Reporting and Payment
The tax year in Slovakia is the year ending on December 31.
Corporate entities can however change the tax year to economic year that is different to the tax year, and should take 12 calendar months.
Advance payments of tax are made as specified below:
An Individual - An individual with only employment income is not obligated to file an annual return. The employer deducts tax advance payments from the employee's wage and transfers it to the tax authority every month.
-A self-employed individual is obligated to make quarterly advance payments on income tax, provided that his last tax due was higher than EUR 1,659.70 and monthly advance payments on income tax, provided that his tax due from previous tax year was at least EUR 16,596.96.
- A self-employed individual must file a tax return by 31 March
in the year after the end of the tax year. The deadline for
filing the tax return can by extended by written announcement by
3 months, or by 6 months if the individual had foreign income.
A Corporate Entity It is compulsory to submit the corporate income tax return with the financial statements by 31 March of the year following the tax year. In case that the corporate entity follows the economic year, the corporate income tax return should be filed by 3 months after the end of the economic year. The deadline for filing the tax return can by extended by written announcement by 3 months, or by 6 months if the individual had foreign income.
- The corporate entity is obliged to make quarterly advance payments on income tax, provided that his last tax due was higher than EUR 1,659.70 and monthly advance payments on income tax, provided that his tax due from previous tax year was at least EUR 16,596.96
- Small businesses make only one advance payment.
- Not submitting or delay in submitting the annual return after the date prescribed is liable to a fine.