Taxation in Slovakia

• Corporate Tax
• Dividends

Administrative and Legal Information

Accounting and Financial Documentation Standards in Slovakia

Taxation in Slovakia

The Slovak tax system supports so-called progressive taxation on relatively favorable terms. Compared to other European countries, tax rates here are slightly lower than the average tax rates for European jurisdictions, which creates a favorable environment for business activity.

Corporate Tax

The corporate tax rate for a Slovak company is 15% of its annual profit if the annual turnover does not exceed 60,000 euros. If the annual turnover exceeds 60,000 euros , the corporate tax also increases to 21%.

Also, starting from 2024, the Slovakian government has introduced a minimum payable amount of the corporate tax, which has the following rates:

• If the annual revenue of the company ranges from 0 to 50 000 €, the minimum payable corporate tax amount is 340 €
• If the annual revenue of the company exceeds 50 000, but does not reach 250 000 €, the minimum payable corporate tax amount is 960 €
• If the annual revenue of the company exceeds from 250 000 , but does not reach 500 000 €, the minimum payable corporate tax amount is 1 920 €
• If the annual revenue of the company exceeds 500 000 €, the minimum payable corporate tax amount is 3 840 €

In the case of SROs (limited liability companies), which are not required to pay corporate tax in advance, payment is due when filing the annual tax return – by March 31 of the year following the current one. Beginning with the filing of the annual tax return package, payment must also be made by March 31st.

Dividends

At emerging necessity dividends’ distribution, it is necessary to consider following taxes and aspects :

• Slovak bid tax on dividends is 7% until the year 2023, regardless from amounts output.
  Starting from 2024, the bid tax on dividends is 10%
• Dividends distribution, with this also the dividends tax payment can enroll at any moment after accounting obligations and the payment of corporate tax (or at least the amount allocation is done by accountants) are made.
• In Slovakia it impossible to distribute dividends in advance

VAT

Standard VAT Rates, Terms of Return

Basic VAT rate in Slovakia is 20%.

Preferential tax rates are set at 10% and 5% and mainly apply to the pharmaceutical sector and the public catering segment; in some cases, temporary benefits apply.

By default, after registration, all Slovak companies (s.r.o.) are not subject to VAT, i.e. they cannot take into account VAT either domestically or abroad.

If you have an active EC VAT tax number, VAT returns must be filed monthly by default, and VAT refunds can also be claimed monthly. The return process is usually completed after 3 months.

Conditions of a Slovak Company’s VAT-Free Activity within the EU Community

By default, a VAT-free Ltd. Registered in Slovakia, respectively may release invoices with zero VAT, meaning without accounting VAT tax, toward natural persons across the world and toward legal entities in Slovakia.

For limited cooperation with partners (legal entities) from other EU member states it is required to register limited community VAT tax number in accordance with § 7 of the VAT Law segment.

According to § 4, the company must be registered as European VAT subject for full-scale activities excluding VAT within EU territory.

The request for a community tax number can be made voluntarily by submitting an application to the tax office, of course stating and justifying the reason for requesting a community tax number, as well as presenting the business plan and budget of the activity, in support of which pre-contracts/contracts concluded with existing/future partners should be presented.

In addition, it will be mandatory to re-register under the Community tax code or full VAT if the turnover of invoices issued within the framework of the domestic or limited Community tax code in the last 12 months exceeds EUR 49,750.

Administrative and Legal Information

Methods of Remote Document Authentication in the Case of Company Establishment Carried out by Distance

In the case of Slovakia, our Clients can only act in accordance with one type of remote document certification method when ordering the formation of a company, namely using authentication and further legalization of registration documents through the Slovak consulate of the Client’s country of residence, which is equivalent to notarization.

Certification of Signature through a Consul

• The Client will receive the complete set of founding documents by e-mail, and the Slovak consul himself will certify it against a certain fee.
  The amount required by the consulate for this purpose varies for each document, on average it is determined between 25 and 60 EUR.
• In addition to the above, the Client must independently ensure the time of the visit to the embassy, and sign documents in the presence of the Consul , in accordance with the description given to him by our responsible colleagues.
• It is also important to note that all shareholders and directors of the company must be present during the signature and legalization. Otherwise, the signing of documents such as the charter will not have a legitimate basis.

Personal Conditions for the Formation and Operation of a Slovak company, as well as the Publication of its Data:

• The owner/shareholder of a Slovak company can be a citizen of any country.
• The managing director of the company can only be a citizen of Slovakia or another EU country, as well as a citizen of a third country who has a residence permit or permanent residence in Slovakia.
• The managing director of a company can work officially, without a monthly salary, on the basis of a power of attorney.
• The maximum possible number of directors in the structure of one Slovak legal entity: 50 people.
• In the case of the director a police clearance certificate is required to prove his clean background.

The active status of the company can also be checked on the website of the Ministry of Justice of Slovakia. Link to the portal: https://www.orsr.sk/Default.asp?lan=en

Access to Slovak Government Services – Client Portals ZEP and Slovensko.sk

Maintaining transparent and simplified communication with local governmental institutions plays a key role in the life of any business.

In Slovakia, there is a specialized access through which, apart from Intrastat and statistical returns, all returns must be submitted to the tax office. The assigned key is named: Zaručený Elektronický Podpis (ZEP). The so-called ZEP access is indispensable in the life of every company.
Interface link: https://www.mfsr.sk/sk/dane-cla-uctovnictvo/financna-sprava

In addition to the tax authority interface, there is also a platform called Slovensko.sk (https://www.slovensko.sk/en/title), which concentrates the whole communication between a natural person or business and government bodies.

The Exact Role of Financnasprava.sk and ZEP, as well as their Registration Methods

financnasprava.sk, together with the assigned ZEP key, provides stable access to the client accounts, through which all reports are sent to the Tax Authority on behalf of the company, with the exception of Intrastat and statistical reports.

Accordingly, the functionality of the interface is as follows:

• submission of declarations prepared by an accountant or manager to the competent government body – the Tax Authority.
• To gain access, the Client undergoes personal verification, as a result of which he/she receives a ZEP key (personal data contained on a flash drive or in a digital signature), which can be used to access the financnasprava.sk interface.
• Using the interface, company reports are filed on behalf of the company director.

Registration on this state portal is possible only in one way – by personally visiting one of the local Slovak municipalities.

Documents required for registration: (foreign) passport, residential address or identity card.

In case of any difficulties, our employees can also accompany you to successfully complete this task.

Slovensko.sk – Purpose and Method of Registration

From the point of view of economic activity, maintaining an account on the state portal slovensko.sk ( https://www.slovensko.sk/en/title ) is mandatory, since it assumes several key functions:

• submission of any official request or statement to government bodies by you or your representatives in digital format;
• Any notifications from local Slovak state organs are being introduced through portal slovensko.sk, therefore we recommend regularly check cabinet on availability of incoming correspondence.

Registration on the portal is possible in two known ways – (1) through a power of attorney issued to our local employee, as a result of which all registration processes are carried out on the territory of Slovakia, and (2) by personally visiting one of the local Slovak municipalities.

Documents required for registration: (foreign) passport, personal address, identity card.

IMPORTANT: only Slovak or EU citizens can register on the slovensko.sk interface in person, with documents proving Slovak residence.

In case of any difficulty, our staff can guide you through the process to successfully complete the task.

Residence Permit – Questions and Answers

This section is currently under development.

Accounting and Financial Documentation Standards in Slovakia

Accounting – introductory information on Slovakia
One of the most important elements of the company’s work is the preparation of accompanying documents, including financial documentation, which serves to present the results of its activities included in the reports, demonstrating the effectiveness of the company’s work to the tax authorities and other local authorities.

In order for our Clients to receive the most accurate information possible about the main processes, records and accounting standards, as well as the main types of documentation submitted for processing to the Slovak licensed accountant, we will try to answer the most frequently asked questions about the need to ensure the appropriate key point of the company’s work.

Accounting – introduction

What reports are filed according to the standards in Slovakia, and what are their final submission dates?

In Slovakia there are several default standard reports submitted monthly:

• VAT report with its corresponding details, as well as a report on foreign sales, submitted by the 25th day of the month following the reporting month;
• statistical report submitted by an accountant to the Central Statistical Office (Štatistický Úrad) until the 17th day of the month following the reporting month;
• Intrastat declaration by the 20th day of the month following the reporting month (for sales revenue of EUR 500,000 of higher);
• If employees are present, 3 declarations are added, which in total cover social contributions and tax reporting obligations (eg social contribution tax, health insurance). The deadline for filing declarations is the same as the deadline for paying wages.

Each year, a package is submitted consisting of additional consolidated balance sheet statements submitted by March 31 of the year following the current one (the deadlines are postponed in the event of a local or global pandemic):

• Annual balance – until March 31 of the year following the reporting year.
• Personnel summary report – April 30 of the year following the reporting year.
• Summarizing statistical report – usually April 30 – May 31 of the year following the reporting year.
• In the case of real estate or movable property, vehicle declaration and/or property tax declaration – January 31 of the year following the reporting year.

In terms of time frame, what is the latest time for submitting all documentation for my company?

According to our accounting contract, we must receive the entire package of primary documentation from you by the 5th day of the month following the reporting month.

To submit the annual declaration package before March 31st , we must receive all missing documents by a maximum of January 25th the year following the reporting year.

If the above deadlines are not met, our company is not responsible for late submitted declarations.

By whom and how are the above reports submitted?

All reports are submitted digitally by a licensed accountant, through the state web resource (hereinafter referred to as the “state portal”), using ZEP access.

In the case of dormant companies, zero declarations must also be submitted to the responsible authorities in full.

What documentation must be provided to the accounting department to successfully prepare and submit monthly and annual declarations?

• Incoming invoices – Slovak or English versions are always welcome;
• Outgoing invoices – we draw your attention to Slovak invoicing standards, as per the latest orders of the Slovak Tax Service on their standardization;
• Contracts supporting the subject of invoices, if any;
• Complete documentation confirming the completion of a specific delivery or service transaction (for example, CMR, packing list, delivery note, acceptance certificate);
• Bank statements for each of your corporate accounts for the most recent reporting month. To view step-by-step instructions for obtaining the correct account statement format, find the appropriate section of the menu.

What happens if for some reason any of the monthly reports are not submitted on time?

In case of a one-time, short-term delay, the company may be charged a penalty by the Tax Authority, but rather low amounts are charged (10-60 euros).

In case of a longer period of non-fulfillment of obligations (e.g. in case of a delay of 2 months or more), the tax office may suspend the company’s activities by canceling its tax number, which can only be restored as part of a new procedure.

In case of regular violation of deadlines, even if they are insignificant, the Tax Service may impose more and more fines due to the incorrect format of documentary support for activities.

Standards for drafting contracts and invoicing

The relatively optimized, sufficiently centralized and strict registration standards of the Slovak jurisdiction differ from those of most European countries.

In this section, we examine exactly how these standards are enforced.

Contents and desired format of contracts

From an accounting point of view, contracts used in Slovakia must contain aspects similar to international standards:

• Type of agreement: agency, trade, service, subcontract, partnership, framework, loan agreements;
• the subject of the agreement, which determines the type of cooperation and a specific description of the case (trade, service, IT development, subcontracting, loan/lending, etc.);
• Conditions for fulfilling the contract (delivery conditions, service performance criteria, conditions for subcontracting work);
• settlement mechanism (settlement tariff, payment stages, if possible, total contract value, payment restraint conditions, etc.);
• Duration of the contract, conditions and time frame for its termination.

Each of the contracts submitted to the accounting department must contain Slovak or at least the English version.

If this or that agreement is drawn up and signed in any other languages, they are subject to translation into Slovak language.

Invoice Contents

According to Slovak standards, each invoice must contain the following information:

1. Supplier details
   1. Company name;
   2. (Company registration number);
   3. VAT number;
   4. Legal address/address for issuing invoices (street, house number, postal code, country);
   5. Bank details for making a transfer (Bank Name, IBAN, SWIFT/BIC)
2. Buyer details:
   1. Company name;
   2. (Company registration number);
   3. VAT;
   4. Legal address / billing address (street, house number, postal code, country);
   5. Delivery address, if necessary (street, house number, postal code, country).
3. Details of the contents of the invoice:
   1. A unique invoice number;
   2. Product/service name;
   3. Measure;
   4. Quantity;
   5. Price;
   6. Date of creation;
   7. service completion date/delivery date
   8. Maturity;
   9. Date of the tax event;
   10. Percentage (%) VAT;
   11. Currency;
   12. Link to the relevant VAT law, namely:
       • “Trojstranny obchod” / in case tripartite deals, so called DPH Law § 45;
       • “Dodanie tovara do EU” / in case of delivering goods inside EU Economic zone, the so called DPH Law §43;
       • “Dodanie service do EU” / in case providing services inside EU Economic zone – so called law about Reverse Gathering (Reverse charge);
       • “Dodanie tovara do tretých lakni” / legislative link on goods sold _ behind outside the EU in the third country , is mentioned in article 14 of the DPH Law (VAT).

Data synchronization – common practice and trends in Slovakia

In Slovakia there are currently no legal requirements for the automated data provision.

While the Tax Authority is actively testing automated data submissions, under local accounting law, issuing invoices in Excel format, for example, is still possible.

Although invoices in Excel format are still allowed, we generally recommend a so-called billing platform called Superfaktura (www.superfaktura.sk) as this portal provides full functionality for convenient invoicing and data submission not only in Slovak, but also in English language.

For detailed information about our services, contact us through any communication channel convenient for you!

Additional provisions related to the issuance of invoices on behalf of the Slovak companies

• The main language of accounting, and therefore of issued invoices, is Slovak, maybe English;
• All invoices can be issued in local currency (Euros) or in US dollars (in which case the documents themselves must always have the Euro equivalent in accordance with the exchange rate of the Slovak National Bank on that day). The previous day’s exchange rate quoted by the Slovak National Bank (Národná Banka Slovenska , www.nbs.sk ) should always be used as a basis.
• According to Slovak accounting standards (Accounting Act), incoming and outgoing items must be converted into euros at the exchange rate of the Slovak National Bank (NBS.sk). Consequently, the necessary payments, taxes, etc. reports and notifications are sent to Clients in EUR .

Primary documentation required for reporting

International transactions (EU + non-EU)

When conducting transactions with companies registered in EU member states and outside the European Union, the following must be submitted in writing:

• contract;
• proforma invoice, if any;
• invoice;
• accompanying documents for the cargo, which record the fact that the cargo has crossed the borders of member states of the European Union;
• costs for the transportation of goods;
• storage/warehouse costs, if any;
• parking cost, if any;
• customs declarations, if any;
• invoices for other overhead expenses.

Tripartite deals

In the case of three-way transactions, the following are sent:

• a tripartite agreement between companies participating in transactions or a chain of contracts confirming the order of movement of goods;
• invoice for each transaction;
• storage/warehouse costs;
• transport documents
  Important information: in accordance with the EU tripartite transaction regulations, only the Supplier or Seller can pay the cost of transport, in no case the Buyer;
• other expenses.

What documentation must be provided to the accounting department to successfully prepare and submit monthly and annual returns?

• Incoming invoices – Slovak or English versions are always welcome;
• Outgoing invoices
• Contracts supporting the subject of invoices, if any;
• Complete documentation confirming the completion of a specific delivery or service transaction (for example, CMR, packing list, delivery note, acceptance and delivery certificates);
• Bank statements of each of the corporate accounts for the agreed reporting month.
  If you have any questions about methods for downloading bank statements, please read the section on bank statements or contact your responsible manager!
• Annual warehouse registry
  In the case of loans taken by your company from legal entities or banks, the relevant contracts must be sent to the accountant immediately after their conclusion by email.
  Note: These contracts are by default subject to translation into Slovak.

Bank statements

Of all the types of primary documentation provided to the accountant for processing, bank statements play a key role for the Tax Service when reconciling transactions with accompanying documents.

What are bank statements used for?

In addition to their purely practical role in reconciling incoming and outgoing payments with the documentation received from the Client, bank statements for each account are a mandatory element of the package of documents provided to the tax office during monthly reports.

In other words, the accountant will not be able to close a given reporting month or year without the corresponding bank statements for the allotted period of time.

In addition, to successfully begin the accounting processes, the accountant needs a financial services agreement concluded with the bank, otherwise known as a bank account agreement, to be registered in the register of the local tax authority, and documentation and data regarding the termination of the bank account service must also be provided to the tax office.

We draw your attention to the need to provide statements for absolutely each of the bank accounts registered in the name of your legal entity.

What exactly should a bank statement contain and in what format?

• Balance of funds at the beginning (pening) of the reporting month;
• Balance of funds at the end (closing) of the reporting month;
• The name of the document must be “Account Statement” or “Bank Statement”;
• The document format must be PDF;
• Details of the Client’s company;
• Current account number;
• Name of the bank;

The bank statement should also show every incoming and outgoing transaction on the account, and only the beginning and closing should show the total in the form of balances.

How can I request and receive bank statements?

There are three ways to receive statements:

1. You sign and send a bank power of attorney to the address of the local executor, giving him the right to receive bank statements from the bank.
   This option has gained additional popularity during the pandemic or in the event of unilateral termination of the contract for securing bank accounts, and the subsequent closure of access.
2. You can also download bank statements through your Internet banking access, which is the most practical method in the standard case.
3. Slovak banks usually provide a simpler version of the statement service, according to which the bank sends bank account statements in pdf format as attachments to a message sent to the email specified by the Client.

Basic payroll mechanism in Slovakia

In this section you can familiarize yourself with the basic provisions for determining wages, as well as the mechanism for their calculation.

Legislative aspects and conceptual mechanism of payroll calculations in Slovakia

The basis for calculating wages is the gross component of the hourly or monthly salary.

Full and part-time work is possible (half or quarter full-time in a part-time format), however please note that the part-time option is only available to those with a Slovak address. For those with a foreign address, only full-time work (8 hours per day) is allowed.

By default, the Slovak payroll consists of taxes and contributions paid from gross wages at the expense of the employee and contributions assessed at the expense of the employer.

Payroll taxation consists of the following elements:

The Health Insurance Law also defines additional percentages:

In Slovakia, the influencing factor is the tax-free minimum wage resulting from the guaranteed subsistence level, which currently amounts to EUR 470.57 .

Additional income tax is also deducted from the amount cleared from the items above, and there are two types of rates:

• rate 19% if taxable income does not exceed 1/12 of the monthly annual amounts of 38,553.01 euros, which is 3,212.75 euros.
• The rate is 25% if the taxable income exceeds 1/12 of the annual monthly amount of 38,553.01 euros, that is, it will be more than 3,212.75 euros.
  

Payroll example

If the gross salary per month is 1,000 EUR, the structure is as follows:

Taxes paid from gross salary behind check employee :

• Medical Insurance Fund – 1.40%
• Pension insurance – 4%
• Disability insurance – 3%
• Unemployment insurance – 1%
• Medical insurance – 4%

Intermediate result: 1000 euros – 134 euros = 866 EUR .

• Taking into account the tax benefit from the subsistence level, we deduct from the above-mentioned balance the cost of the subsistence level (866 – 470,57 EUR), as well as…
• from the balance we subtract the amount of income tax, in this case 19%, since the monthly salary does not exceed the gross salary of 3,212.75 euros.
  Thus, the tax amount is: (866-470,57)*0.19 = ~75,13 euros.

Total tax withheld from the employee’s monthly salary: 134 euros + 75,13 euros = 209,13 euros.
Employee’s net monthly income: 1000 euros – 209,13 euros = 790.87 euros.

Types of taxes paid by the Employer based on the monthly gross salary and their rates:

• Medical Insurance Fund – 1.4%
• Pension insurance – 14%
• Disability insurance – 3%
• Unemployment insurance – 1%
• Warranty insurance – 0.25%
• Accident insurance – 0.8%
• Reserve Fund – 4.75%
• Medical insurance – 11%

Total tax levied on the employer: 36.20% = 362 euros.

Total budget:
Total tax withheld from the employee’s monthly salary: 134 euros + 75,13 euros = 209,13 euros.
Employee’s net monthly income: 1000 euros – 209,13 euros = 790.87 euros.
Total tax levied on the employer: 36.20% = 362 euros.
Total monthly employer expenses for the given employee ( super gross ): €1,362.

Minimum wage in Slovakia

According to the current rules, in 2024 the minimum wage for an employee corresponds to a gross amount of 750 euros, which usually applies to jobs that do not require qualifications.

In Slovakia, positions with different statuses are subject to different minimum wages, the calculation of which depends on the degree of complexity and the coefficient assigned to the basic minimum wage for each category.

The following table outlines the minimum wage expectations in the Slovak state for certain types of jobs with a certain status:
Level difficulties Coefficient allowances Minimum monthly salary Minimum hourly payment

Job Difficulty Level 1: Involves basic material handling or prep work performed in accordance with specific procedures or supervisor instructions. The first tier includes most jobs for which employers apply a minimum wage.
Examples: cleaner, production operator.

Job Complexity Level 2: This includes work that involves day-to-day professional or financial responsibility. We can also include simple crafts or healthcare jobs.
Examples: administrative worker, cashier.

Job difficulty level 3: We also include less complex tasks here. This also includes various creative activities. The third degree also includes jobs in which you are responsible for the health of others, or jobs that require increased physical effort.
Example: nurse, accountant.

Job Difficulty Level 4: This includes various professional tasks and jobs that require increased mental effort. This includes jobs that provide healthcare. The 4th degree of work complexity also includes management and coordinating functions.
Examples: regional manager, chief accountant.

Work difficulty level 5: this includes conceptual, creative and methodological work that requires increased psychological endurance. Level 5 corresponds to very demanding processes that require complex procedures.
Example: production manager, general practitioner for adults.

Difficulty level of work 6: Creative tasks that need to be solved in a non-standard way are listed here. They require a high degree of responsibility, which can have a significant impact on the company.
Examples: managing director, general director.

Descriptions and examples are for informational purposes only. Each specific job has a certain load, so it is extremely difficult to determine 100% what level of complexity it belongs to.