Taxation in Slovakia
In Slovakia, taxes are levied by the state and local governments. Tax revenue stood at 29.5% of the country's gross domestic product in 2013. The most important revenue sources for the state government are income tax, social security, value-added tax and corporate tax.
| Taxation |
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| An aspect of fiscal policy |
Income tax
The income tax in Slovakia is levied at two different rates of 19% on income below 35,022.31 euros and 25% above [1] A personal allowance of 3,803.33 euros apply, which is phased out when yearly income hits the 25% income tax bracket. In case of a non-working spouse a further allowance can be claimed.
Social Security contributions
All employment income is mandated to pay into various social funds by law. In 2016 the rate for the employee is 13.4% and the employer contribution 35.2% of corresponding salary. Maximum monthly income base is 4,290 euros.[2]
| Insurance policy | Max. monthly ceiling | Employee % | Employer % |
|---|---|---|---|
| State Pension Insurance | €4,290 | 4.0% | 14.0% |
| Disability Insurance | €4,290 | 3.0% | 3.0% |
| Incapacity Insurance | €4,290 | 1.4% | 1.4% |
| Unemployment Insurance | €4,290 | 1.0% | 1.0% |
| Contribution into Reserve fund of the SIC | €4,290 | 0.0% | 4.75% |
| Guaranty Insurance | €4,290 | 0.0% | 0.25% |
| Injury Insurance | no limit | 0.0% | 0.8% |
| Health care Insurance | €4,290 | 4.0% | 10.0% |
| Total in % | 13.4% | 35.2% |
Value-added tax
Value added tax in Slovakia is provided by the Act No. 227/2007 Coll. on the value added tax and other amendments. This legal framework is based on the Sixth Council Directive 77/388/EEC and other European legal acts.[3] The value added tax rate is 20% in its standard rate and 10% when it is in the reduced rate. Reduced VAT rate stands for goods such as pharmaceutical health products, important groceries like bread and milk etc.
Since 2009, domestic businesses have to register for value added tax if their turnover for the past 12 months have reached 49,790 Euro. Foreign businesses have to register before starting their activities that will be accounted in the value added tax. There are cases where the obligation of value added taxes is passed to a domestic purchaser and in this form the registration of this business entity is avoided. Considering long distance exchanges, the business must register for the value added tax in the case that the value of goods supplied is more than 35000 Euro for a year.
VAT Refund
A foreign entity that is not registered in the VAT system in Slovak Republic can ask for a refund of VAT paid on services or goods provided by VAT payer in the territory of the country. VAT returns is important to be filed within 25 days from the last day of the taxable period. Value Added Tax returns must be filed every month. When the turnover does not exceed 100’000 Euro, tax can also be filed once in 3 months(quarterly based). In the scenario of an excess Value added tax , the refund is performed by tax authorities within 30 days from the deadline for the VAT return.
Corporate tax
The corporate tax in Slovakia stood at 22% for 2014.[4] Resident companies are those which have their legal seat or place of effective management in the Slovak Republic.
Corporate Income Tax
Corporate income tax stands at a rate of 21%. This is the final tax on 2019 profits of a corporate because dividends paid in 2019 are not taxed to shareholder if the shareholders are corporate.[5]
When setting up a business, there are some points that should be ensured: -Prepare the registration for company income tax -Record accounting -Prepare company tax return for income tax -Meet the payments deadline for income tax -Meet the deadline for filing company tax return.
Speaking of taxable profits of a corporate, there are included: -Money that come from doing business or any other activity -Money that come from selling assets for a higher price than their costs. -Money that come from other utilization of the property of the company.
• If the corporate is based in Slovakia Republic, the object of taxation is the income coming from the sources within the country and from the sources out of the country. In the case the corporate is not based in Slovakia Republic, the object of taxation is only the income coming from the sources within the country.
Property Tax
Property or real estate tax [6] is imposed on individuals or companies that are owners of a building, flat, land and non-residential spaces. According to the type of property there are classified 3 kind of taxes: tax on land (land tax), tax on building (building tax) and tax on apartment (apartment tax). The amount of annual property tax is mainly dependent on the area of the occupied land(measured in sq. meters), purpose of the property, number of floors etc. The amount of annual tax rate is highly effected by the specific tax rates that are set by municipal authorities. The property tax is compensated by the legal registered owner. In the case that this registered owner is not determined, the burden of the tax falls to the person who uses the property. The property tax is under the rule of “Act on Local Taxes”.
Tax reform after the Soviet era
The time after the collapse of the soviet, a long range of range of reforms have been made, to bring the country from a government run economy to a free market economy. A large tax reform was enacted in the year 2003. It included a long range of reforms including abolishing most deductions on the income tax, and bringing it down to a flat rate of 19% instead of a progressive rate from 10% to 38%. The corporate tax fell from 25% to 19%. Furthermore, the two rates of VAT 14% and 20% were merged into one band of 19%. All inheritance and gift taxes were also abolished.[7]
Road tax and toll
Road tax and toll payment in Slovakia is compulsory. These are paid for with vignettes, purchased for between one week to one year periods. Cost is determined by the weight of the vehicle. Additional costs are incurred for trailers attached to vehicles.
Vehicles below 3.5 tons
Persons travelling on a highway or speedway in Slovakia with a vehicle with maximum permissible total weight below 3.5 tons, are obliged to pay road tax by buying vignette. There is a traffic sign on each border crossing informing about this obligation but no further reference within the country.
Types of vignettes
On 1 December 2015 the Slovak Republic commissioned the electronic system of vignette payment collection and records (hereinafter referred to only as the “electronic vignette system”) for the use of the specified sections of motorways and expressways (hereinafter referred to as the "specified road sections"). Switching the system of vignette payment collection and records into electronic form meant a change in the vignette form - the physical motorway stickers were replaced by vignettes in electronic form.
Currently, there are 3 types of electronic vignettes:
- 1-year vignette - valid from 1 January of the relevant calendar year (or the day of payment for the vignette by the customer in the relevant calendar year) until 31 January of the following calendar year
- 30-day vignette - valid for 30 days (including the day of starting date) from the date specified by the customer
- 10-day vignette - valid for 10 days (including the day of starting date) from the date specified by the customer
If a trailer category O1 or O2 is attached (to a tractor vehicle within the vehicle categories M1, N1 or N1G, and the maximum permissible weight of the vehicle and trailer exceed 3.5 tons, drivers have to buy additional vignette for heavy vehicle combinations.
Prices
From 2015 the prices (including VAT) are the following:
- 1-year vignette - EUR 50
- 30-day vignette - EUR 14
- 10-day vignette - EUR 10
Vehicles over 3.5 tons
Since January 1, 2010 all vehicles above 3.5 tons maximum permissible total weight (including busses) must pay electronic toll when driving in Slovakia. Information about this obligation is stated by a traffic sign on each border crossing. Generally all main corridors (national roads) and highways are toll liable. A company named SkyToll A.S., runs a system based on a combination of GPS, GSM and DSRC technology. Each driver has to stop at one of the distribution points located on each border crossing used by heavy traffic and register the vehicle. The driver obtains an electronic on-board unit.
References
- "KPMG". Income tax rates. Check date values in:
|date=(help) - "KPMG" (PDF). Tax Card 2013. Check date values in:
|date=(help) - • VAT in Slovakia | ADEA Tax Bratislava, Slovakia. (n.d.). Retrieved from https://adea.sk/en/vat-in-slovakia/
- "KPMG". Corporate tax rate 2014. Check date values in:
|date=(help) - Slovakia. (2018, September 10). Retrieved from https://europa.eu/youreurope/business/taxation/business-tax/company-tax-eu/slovakia/index_en.htm
- Affidata.co.uk. (2014). Property Taxes in Slovakia. [online] Available at: https://www.affidata.co.uk/sh/property-for-sale/property-taxes-slovakia [Accessed 2 Apr. 2019].
- "Visegradrevue". Tax reform Slovakia. Check date values in:
|date=(help)