The government of the Slovak Republic has approved and filed to the Slovak Parliament for further proceeding the so-called “consolidation package” representing a set of measures with the aim to improve the state of public finances.
Most of the changes will be effective from 1 January 2025 or will apply for the tax period starting on 1 January 2025.
Please note that these changes have not yet been approved by the Slovak Parliament and the approval process is ongoing these days. We will inform you about any changes.
The following changes are proposed:
Value Added Tax
Changes in VAT rates
- increase in standard VAT rate from current 20% to new 23%
- new reduced VAT rates from current 10% and 5% to new 19% and 5%
- changes in goods and services for which a reduced VAT rates will be applied:
□ 19% - food other than basic, electricity
□ 5% - basic foodstuff, medicines, selected medical supplies, books, accommodation, state rental housing, gastro (food only)
Income Tax
Changes in tax rates
- for legal entities with taxable income above EUR 1 million, new income tax rate of 22% will apply
- the income threshold for applying the reduced income tax rate is increased from EUR 60,000 to EUR 100,000
- change in reduced income tax rate for legal entities from current 15% to new 10%
Reduction of the tax rate on profit shares (dividends) from 10% to 7%
- the withholding tax will return to the original 7% and apply on payments of dividends from the profit generated for the period beginning on 1 January 2025 (i.e. only profit generated in 2024 will be taxed at a 10% tax rate)
Changes in the conditions for applying the child tax bonus
- only up to 18 year of age of the child
- gradual reduction of the tax bonus for parents with a higher income
- percentage limits of the maximum amount of the tax bonus according to the number of children and the tax base
- at least 90% of the taxpayer´s income from sources in Slovakia
Other important changes
- the possibility for individuals to remit a share of the tax paid in the amount of 2% for each of the parents who are pension recipients
- shorter depreciation period for electric bicycles, electric scooters (2 years), trolleybuses and electric buses (4 years)
- reduction of the employee´s non-monetary income from current 1% to new 0,5% for private use of a business electric motor vehicle (BEV or PHEV)
Financial Transaction Tax
- it is proposed to introduce a new financial transaction tax
- taxpayer is business entity (not private individual), i.e. individual – entrepreneur, legal entity and organizational unit of a foreign person, who is a client of a payment service provider performing financial transactions
- subject to tax are financial transactions where the funds are debited from an account, use of a payment card, cash withdrawal from an account (ATM). Exceptions are precisely defined by the proposed act
- tax rate will vary depending on the subject of the tax:
□ debit financial transactions - 0,4% of the transaction, with cap of EUR 40;
□ cash withdrawal – 0,8%, with no cap limit;
□ use of the payment card – flat rate of EUR 2 per year
- proposed effectiveness date is 1 April 2025
- the person who will pay the tax to the tax authorities is:
□ provider of financial services based in the country;
□ organizational unit of the financial service provider located in the country;
□ taxpayer who is a client of a provider based outside the territory of the Slovak Republic and does not have an organizational unit located in the country;
□ taxpayer to whom the costs related to the financial transaction, which refers to the taxpayer's activities performed in the country, are charged;
□ taxpayer who carries out financial transactions on a non-transaction account
- in connection with the proposed new tax, additional obligations will arise for taxpayers:
□ obligation to setup a separate business bank account by 31 March 2025
□ obligation for the entrepreneur, who is obliged to use the cash register, to allow the buyer to make a payment without cash, i.e. via payment card, online payment transfer, QR code payment, etc.
Regulated industries
- changes in special tax levy for regulated industries (such as energetic businesses, banks, pharma business):
□ added industry of oil, i.e. production of oil products and its chemical processing. Proposed levy rate is 0,025
□ increase of levy rate for the energy sector from current 0,00363 to new 0,025
□ increase of levy rate for electronic communications (including mobile operators) from current 0,00363 to new 0,01576