Personal taxation in Bratislava
Effective personal income tax rate
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Slovak residents are taxed on worldwide income; nonresidents are taxed only on Slovak-source income.
An individual is resident if he/she has a permanent address in Slovakia or spends more than 183 days during a calendar year in the country.
Individuals must file separate tax returns; joint filing is not permitted.
The individual income tax rate is 19% up to a tax base of EUR 35,022.31 (adjusted on an annual basis), and 25% on the excess.
Deductions and allowances
Subject to certain restrictions, deductions are granted for compulsory health and social contributions, up to specific limits. Personal allowances are available to the taxpayer and his/her spouse, children and dependents if certain requirements are met.
Employment income, including most employment benefits, is taxable. Profits derived from the carrying on of a trade or profession generally are taxed in the same way as profits derived by companies. Investment income in the form of dividends is not subject to Slovak tax.
Capital gains generally are included in the aggregate income, although gains from the sale of assets used to generate income or to carry on a business or independent profession are treated as business and independent professional income.
Other taxes on individuals
Real property tax
Tax is levied by the municipal authorities on the ownership and occupation of real property.
The social security system consists of social security and health insurance contributions. If an individual is on the Slovak payroll, the employer withholds social security on a monthly basis. A self-employed individual also must make pay-related insurance contributions, with the amount based on the individual’s "salary."
Compliance for individuals
Penalties apply for failure to comply with filing and/or payment obligations. The percentage of the fine depends on the form of assessment of the additional tax (e.g. whether the additional tax is levied during a tax audit or as a result of the filing of an additional tax return).
Filing and payment
Tax on employment income is withheld by the employer and remitted to the tax authorities. In general, income other than employment income is self-assessed. Individuals must file a tax return and make monthly or quarterly prepayments of tax during the calendar year.
Corporate taxation in Bratislava
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Residents are taxed on worldwide income; nonresidents are taxed on Slovak-source income only. Foreign-source income derived by residents is subject to corporate income tax in the same way as Slovak-source income. Branches are taxed the same as subsidiaries.
Taxation of dividends
Dividends paid/received are not generally subject to tax in Slovakia. However, as from 1 January 2016, dividend income made out of profits generated after 1 January 2004 are exempt from tax in the extent in which it has not been tax deductible at the level of the payer of the dividends (i.e. hybrid finance instruments).
A company is resident if its seat or place of effective management is in Slovakia.
Tax losses declared after 1 January 2014 may be carried forward and deducted equally from the tax base over four years. Losses may not be carried back.
Investment incentives may be available to start new production or the provision of services, to expand or modernize production or the provision of services, or for R&D. These incentives are subject to special rules in the State Aid Act and the Investment Stimulus Act.
Alternative minimum tax
Yes, ranging from EUR 480 to EUR 2,880.
Corporate income tax is imposed on a company’s accounting profits adjusted for deductible, nondeductible and nontaxable items. Normal business expenses may be deducted in computing the tax base.
Capital gains are taxed at 22%. In some cases, capital losses are nondeductible.
Other taxes on corporations
Real property tax
The municipal authorities levy rates on the ownership/ occupation of real property. Rates are deductible in calculating the corporate income tax liability.
The employer is required to make pay-related insurance contributions at 35.2% of an employee’s gross salary. The insurance contributions are capped.
Compliance for corporations
Consolidated tax returns are not permitted; each company must file a separate return.
Penalties for noncompliance with the tax law fall into two main categories: (1) late payment interest on outstanding tax liabilities, which is calculated as an annual percentage on the outstanding amount; and (2) fines, usually up to EUR 32,000 or calculated as a percentage of the underpaid tax. As from 1 January 2016, penalties for noncompliance depend on the length of time that has passed since the tax return was filed. The percentage of the fine depends on the form of the assessment of the additional tax (e.g. whether the additional tax is levied during a tax audit or is the result of the filing of an additional tax return).
Advance pricing agreements are possible only in limited cases (i.e. in respect of a transfer pricing methodology and the method for determining the tax base for permanent establishments). Agreements are valid for up to five taxable years. Binding rulings may be issued only in limited cases.
The tax year generally coincides with the calendar year, although the taxpayer can elect a different fiscal year. The tax period may be shorter, for example, if the company moves from a calendar year to a fiscal year.
Slovakia operates a self-assessment regime. In general, corporate income tax prepayments are due in monthly or quarterly installments. Income tax is assessed on the basis of annual returns, which must be filed within three months following the end of the tax period. The deadline for filing can be extended by three months if a written request is submitted to the tax authorities, or by six months if a taxpayer derived foreign-source income taxable in another jurisdiction and the written request is submitted. However, the taxpayer must pay any tax due by the filing date.
Other taxation in Bratislava
Value added tax
Filing and payment
The standard assessment period is the calendar month. A registered person can apply for a calendar quarter assessment period if its turnover is less than EUR 100,000 in the preceding 12 consecutive months and the person has been registered for VAT for at least one calendar year.
The standard rate is 20% , with a reduced rate of 10% applying to certain pharmaceutical and medical products and certain groceries (e.g. meat, bread, etc.). Certain supplies (e.g. financial and insurance services) are exempt.
VAT is imposed on the sale of goods and the provision of services, and on imports.
All individuals or legal entities that carry out economic activities in Slovakia are regarded as taxable persons. The registration threshold for VAT purposes is taxable turnover of EUR 49,790 within the preceding 12 consecutive calendar months. Taxable persons below the threshold can apply for voluntary registration. Nonresidents that make taxable supplies of goods or services in Slovakia must register before the supply is made, unless the reverse-charge mechanism is applied by the recipient of the supply.
Slovakia’s transfer pricing rules generally follow OECD guidelines. The transfer pricing rules were extended in 2015 to apply to transactions between domestic related parties, as well as those between a Slovak resident and a nonresident related party. Taxpayers must prepare contemporaneous documentation to substantiate the transfer pricing methodology used in determining transfer prices in related party transactions.
Thin capitalization rules restrict the maximum amount of tax deductible interest on related party (foreign and domestic) loans (new and old) to 25% of the taxpayer’s EBITDA.
Foreign exchange control
No restrictions are imposed on the import or export of capital, and repatriation payments may be made in any currency. Both residents and nonresidents can hold bank accounts in any currency.
Accounting principles/financial statements
Slovak Accounting Standards/IFRS apply for large companies, banks and insurance companies. Financial statements must be prepared annually.
Principal business entities
These are the limited liability company, joint stock company, general partnership, limited partnership, cooperative, sole proprietorship and branch of a foreign corporation.
Slovakia does not impose withholding tax on dividends.
Interest paid to a nonresident is subject to a 19% withholding tax, unless the rate is reduced under a tax treaty or exempt under the EU interest and royalties directive. A 35% rate applies where the payment is made to a resident of a “listed” jurisdiction (usually a tax haven).
Royalties paid to a nonresident are subject to a 19% withholding tax, unless the rate is reduced under a tax treaty or exempt under the EU interest and royalties directive. A 35% rate applies where the payment is made to a resident of a “listed” jurisdiction (usually a tax haven).
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