Taxation of individuals

A tax resident of the Slovak Republic is subject to tax on worldwide income, irrespective of whether the income is remitted to the Slovak Republic.

A Slovak tax non-resident is liable to tax on Slovak-source income only. Slovak-source income includes income from work performed in the Slovak Republic, including director's fees, income from an independent business done through a permanent establishment (PE), and income from services carried out in the Slovak Republic. Slovak-source income also includes interest income, licence fees, and income from the sale or rental of property located in the Slovak Republic.

Personal income tax rates

The tax rates applicable in Slovakia are as follows:

• The tax base of up to 176.8 times the subsistence level (i.e. 41,445.46 euros for 2023) is subject to a 19% tax rate. The exceeding part of the tax base is taxed at 25%.

• Dividend income arising from profits before 2004 and after 1 January 2017 is included in a specific tax base taxable at a 7% rate (if paid from abroad) and 7% withholding tax (WHT) if paid by a Slovak company.

• Income of constitutional authorities from dependent activity is, in addition to the tax calculated as listed above, subject to a special tax rate of 5%.

• Income from capital gains is included in a specific tax base taxable at a 19% rate.

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Social Contribution  

Slovak and European Union (EU) nationals working in Slovakia, as well as other employees of Slovak companies, must contribute to the Slovak statutory social security and health insurance schemes, unless they have an exemption to this under EU rules (e.g. they contribute in their home state and have issued a form E101/PD A1) or under a social security treaty between Slovakia and the country in which they pay contributions.

As of 1 January 2018, employee’s social security contributions total 9.4% of remuneration; however, due to caps on the amounts on which these contributions are levied, the total contribution does not exceed EUR 796.83 per month in 2023.

The employee’s health insurance contributions total 4% of remuneration; however, as of 1 January 2017, caps on amounts on which these contributions are levied were abolished and the health insurance contributions are levied from the total remuneration of the employee.

Employer’s social security contributions total 24.4% of remuneration; however, due to caps on the amounts on which these contributions are levied, the total contribution does not exceed EUR 2,068.36 per month in 2023, plus they pay injury insurance contributions of 0.8% of employees' total salary costs per month, which are not capped.

The employer’s health insurance contributions total 10% of remuneration; however, as of 1 January 2017, caps on amounts on which these contributions are levied were abolished and the health insurance contributions are levied from the total employee’s remuneration.

The regular monthly contributions to the health insurance system are treated as advance payments for the yearly liability and are subject to an annual reconciliation of health insurance contributions. Reconciliations are performed by a health insurance company.

Note that non-cash benefits and income from the sale of shares are subject to health insurance contributions. Dividend income received from profits arising from 2012 until 2016 is subject to health insurance contributions at a rate of 14%, up to 60-times the average monthly salary from two years prior (i.e. EUR 51,480). The recent amendment of the Income Tax Act (ITA) abolishes the 14% statutory health insurance contribution from dividends received from profits arising from 1 January 2017 or later years.

Taxation of legal persons

As a member state of the Organisation for Economic Co-operation and Development (OECD), the Slovak Republic’s (Slovakia's) system of corporate taxation generally follows OECD guidelines and principles.

The corporate income tax (CIT) applies to the profits generated by all companies, including branches of foreign companies.

Slovak tax residents are taxed on their worldwide income. Slovak tax residents may utilise a method of elimination of double taxation if their income is taxed abroad. The exemption or credit method can be used to eliminate the double taxation, depending on the relevant double tax treaty (DTT) and the type of income.

Slovak tax non-residents are taxable in Slovakia on their Slovak-source income only. Slovak-source income is defined by local tax law and includes, inter alia, the business income of permanent establishments (PEs) and passive types of income, such as royalties, interest, and income from disposal of assets.

The standard CIT rate for 2023 is 21%. The reduced CIT rate for 2023 at 15% is applicable for corporate taxpayers and entrepreneurs and self-employed individuals that achieve taxable income (revenues) up to 49,790 euros (EUR) for the relevant tax period.

WHT of 7% may apply to certain taxable dividend payments to individuals.

Further, some income, such as interest or royalties, may be subject to a 19% WHT rate. A specific 35% WHT rate applies for payments to taxpayers from non-cooperative jurisdictions (i.e. where no DTT or tax information exchange agreement [TIEA] exists, the taxpayer is from a jurisdiction that is listed in the EU's List of Non-Cooperating Countries or a state that does not apply CIT, or a zero CIT rate applies) or where the beneficial owners of the income cannot be identified, including payments of taxable dividends.

 
Value Added Tax - VAT

A basic VAT rate of 20% applies to all taxable supplies, with certain exceptions. Certain medical products, printed materials and media, various foodstuffs and ‘basic goods’ (e.g. milk, butter, meat) classified under selected codes of the Common Customs Tariff, and some accommodation services have a VAT rate of 10%.

From 1 January 2023, a reduced rate of 5% applies to the supply of the buildings that meet certain conditions of the buildings supported by the state under the state social accommodation program.

The threshold for obligatory VAT registration for taxable persons with their seat or permanent address, place of business, or VAT establishment in Slovakia is a turnover of EUR 49,790 for the previous consecutive 12 calendar months. Voluntary registration is also possible. Upon VAT registration, all bank accounts used for business purposes related to Slovak VAT registration have to be announced to the Tax Office.

More taxable persons established in Slovakia (i.e. with a seat, place of business, or VAT establishment in Slovakia) can create a VAT group if certain conditions are met.

A VAT registration obligation in Slovakia arises for foreign persons (taxable persons without a seat or VAT establishment in Slovakia) before commencing activities subject to Slovak VAT where they could be liable to pay Slovak VAT, except import of goods. There is a list of supplies that foreign taxable persons can perform in Slovakia without a need to register for Slovak VAT, including mainly:

• Supplies subject to VAT reverse-charge.

• Supplies subject to triangulation simplification performed by the first customer in a chain.

• Intra-Community supplies of imported goods if represented by a tax representative.

• VAT-exempt transport and supplementary services related to export and import.

• VAT-exempt supplies without credit entitlement.

• Distance sales to non-taxable person using the One Stop Shop (OSS) scheme.

This list, among others, includes local supplies of goods and specific services to taxable persons established in Slovakia as such supplies are subject to local VAT reverse-charge mechanism (i.e. person liable to pay VAT on such supplies is the customer).

Foreign taxable persons registered for Slovak VAT are not entitled to deduct input VAT via Slovak VAT return if such input VAT relates only to supplies subject to VAT reverse-charge. Foreign companies are able to claim Slovak input VAT via the VAT refund procedure, provided they meet the stipulated conditions. If the foreign VAT payer that is entitled to a full VAT refund via a specific EU VAT refund application acquires goods in Slovakia from EU countries, its acquisition of goods in Slovakia from another member state is considered as VAT exempt.

Exempt supplies without credit entitlement include, among others, 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), and lottery services. There are also exempt taxable supplies with credit entitlement, for example financial and insurance services provided to the customer established outside of the European Union, supply of goods to other EU member states, certain import of goods, and export of goods and services.

A special regime for payment of VAT by a supplier based on receipt of payment for supplied goods or services (‘cash accounting’) is available in Slovakia in very specific cases. This regime postpones the obligation to pay VAT until the customer pays the supplier for the supply. This cash accounting scheme can only be used by Slovak-established entities (i.e. with a seat, place of business, or fixed establishment in Slovakia) provided they meet certain conditions.

Supplies of certain types of goods and services between two Slovak VAT payers are subject to local reverse-charge. Such supplies, among others, include supplies of real estate, metal waste and scrap metal, agricultural crops, iron and steel, mobile phones and integrated circuit devices, etc. Local reverse-charge also applies to supply of construction works, supply of building or parts of buildings under construction, and some supplies of goods with assembly and installation. For such supplies, the supplier will not charge VAT on the issued invoice and the recipient must apply a reverse-charge.

Under specific conditions, VAT payers (creditors) can decrease the tax base and VAT if customers (debtors) fail to fully or partially pay for domestic supplies and the receivable becomes irrecoverable.

Slovakia implemented EU quick fix rules into the Slovak legislation and new EU rules for taxation of cross-border business-to-consumer (B2C) supplies of goods (e-commerce) and introduced One Stop Shop (OSS) and Import One Stop Shop (IOSS) schemes.