Business Environment

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In this page: Accounting Rules | Tax Rates | Intellectual Property | Legal Framework | Standards | Business Practices

 

Accounting Rules

Tax Year
The fiscal year begins on 1 January and ends on 31 December of the same 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.
Accounting Standards
As a EU member, Slovakia complies with European Commission (EC) Regulation No. 1606/2002, which requires the adoption and application of EC-endorsed IFRS for the preparation of consolidated financial statements of European companies whose securities trade on a regulated securities market. Slovakia chose to extend the scope of application of EC-endorsed IFRS to other companies by requiring their use in both the preparation of consolidated and individual financial statements of public interest entities (PIEs). In addition, EU-endorsed IFRS are required in the consolidated financial statements of companies whose securities do not trade in a public market. On the other hand, SMEs need to follow standards laid ouy by accounting law No. 431/2002 and related decrees of Ministry of Finance.
Accounting Regulation Bodies
Ministry of Finance
Accounting Reports
Businessmen and all commercial companies in Slovakia have to keep and prepare annually certain accounting documents:
- the balance sheet
- the profit and loss account
- the notes to the accounts
The structure of accounts as well as the balance sheet and the profit and loss account are inspired by the French model. European companies listed on the Stock Exchange must draw up their consolidated annual accounts on the basis of the IFRS standards.
Publication Requirements
Accounts are published annually.
Two schemas of publication for financial information are possible :
- A complete document for companies which are obliged to be audited by an independent auditor. These are companies listed on the Stock Exchange and companies which correspond to two of the following three criteria: total assets greater than EUR 1,000,000; net turnover of more than EUR 2,000,000; and average number of employees exceeding 30.
- An abbreviated document for executives and companies which do not have to audit their accounts.
Professional Accountancy Bodies
SKAU , Slovak Chamber of Auditors
SAF , Slovak association of Corporate Treasurers
Certification and Auditing
The Law on Accounting lays out conditions under which companies are required to have their financial statements audited by a certified auditor. Companies classified as public interest entities (PIEs), cooperatives, and other companies that are created with share capital and that trade on a regulated market, or meet two out of three criteria (total assets greater than EUR 1,000,000; net turnover of more than EUR 2,000,000; and average number of employees exceeding 30) are subject to statutory audit. The National Bank of Slovakia has the authority to stipulate certain financial reporting requirements for entities that fall within its purview in addition to the obligations outlined in the Accounting and Auditing Acts.
You can contact an external auditor: KPMG, Deloitte, Cascaya Slovakia, Ernst&Young, PricewaterhouseCoopers.
Accounting News

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Tax Rates

Consumption Taxes

Nature of the Tax
Dan z pridanej hodnoty (DPH) - Value Added Tax (VAT)
Tax Rate
20%
Reduced Tax Rate
A reduced rate of VAT of 10% applies to basic foodstuffs (such as meat, fish, milk and bread, certain types of vegetables); some pharmaceutical products; some medical equipment for disabled persons; books (excluding e-books); certain goods and services related to social welfare; hotel and accommodation.

Certain supplies and services are exempt without credit entitlement (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), services related to sports and physical education; social welfare and lottery services); others are exempt but give the right to credit ("zero-rated" - financial and insurance services provided to extra EU customer, supply of goods to other EU member states, certain import of goods, and export of goods and services).

Other Consumption Taxes
Excise duties are levied on tobacco products, wine, spirits, beer, mineral oil, electricity, coal, and natural gas.

A vehicle tax applies to vehicles that are registered in the country and used for business purposes. The taxpayer is the entity that uses the vehicle for business purposes. The tax rate varies according to engine capacity, vehicle size, etc.

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Corporate Taxes

Company Tax
21%
Tax Rate For Foreign Companies
Resident companies are taxed on their worldwide income. Non-resident companies are only taxed on their income earned in Slovakia, at the same rate as resident companies.
An entity is considered tax resident in the Slovak Republic if it has its registered seat or effective place of management in the country.
Capital Gains Taxation
Capital gains are included in the CIT base and are taxed at 21% (or 15% for micro-taxpayers). The tax treatment of capital losses depends on the type of asset on which they arose, and in some cases, capital losses cannot be deducted.
Income from the sale of shares in joint-stock companies, ownership interests in limited liability companies, or limited partnerships may be exempt from corporate income tax purposes if the sale of the participation arises no earlier than 24 months after the acquisition date of at least a 10% direct interest in the registered capital.
Main Allowable Deductions and Tax Credits
Expenses are generally tax-deductible if incurred to generate, secure, and maintain the entity’s taxable income. However, certain costs are explicitly not tax-deductible, including entertainment costs, various provisions (e.g. provisions for tangible and intangible assets, certain bad debt provisions), and various expenses in excess of statutory limits (e.g. employee travel expenses and meal allowances).

Road tax, real estate tax, and most other such taxes are tax-deductible. Social security contributions paid by an employer with respect to employees are also tax-deductible. VAT charged to profit and loss is tax-deductible only if certain conditions are met. Contributions to supplementary pension savings made by the Slovak employer on behalf of the employee are tax-deductible (capped at 6% of the employee's gross salary). Start-up expenses are tax-deductible in the period when incurred.
In general, interest expenses incurred in order to generate taxable income can be treated as tax-deductible, subject to thin capitalisation rules.
Charitable contributions are treated as gifts, hence are not tax-deductible. Subject to conditions, expenses incurred by the employer on transporting employees to and from work can be deducted.
Certain expenses for practical education provided to students can be deducted (capped at EUR 3,200/student/year).

Tax losses can be carried forward in equal amounts over a period of four years. The carryback of losses is not permitted. From 1 January 2020, a company or branch may carry forward and utilise a tax loss equally over a period of five years following the year in which the tax loss arose, capped at half of the tax base in the respective tax period. From 1 January 2021, micro-taxpayers (total income or revenues up to EUR 100,000) may carry forward and utilise a tax loss equally over a period of five years following the year in which the tax loss arose up to the amount of the tax base in the respective tax period.

Other Corporate Taxes

Other taxes include:

  • immovable property tax, which is divided into land tax, building tax, and tax on apartments, calculated based on the area of the real estate, its location, and its type, as well as the tax rate of each self-governing region (between EUR 0.89 and 9 per square metre)
  • social security contribution: employer’s health insurance and social security contributions total 35.2% of employee remuneration (capped at EUR 7.931 per month). Employers also contribute 0.8% of salary for work injury insurance. The minimum monthly social security contribution for self-employed is set at EUR 180.99 in 2022
  • a special tax from activities of entities in regulated industries (e.g. energy, insurance and reinsurance, public healthcare insurance, electronic communications, pharmaceuticals, postal services, railway transport, public water distribution and sewerage, air transport). The tax is calculated as a multiple of the tax base, coefficient, and tax rate. The liability to pay this special tax arises in case the accounting profit exceeds EUR 3 million. The current effective rate is set at 4.356% per year in 2022
  • an insurance premium tax (IPT) of 8% applies to non-life insurance premiums in Slovakia and is payable by insurance companies
  • a motor vehicle tax calculated according to parameters like engine capacity, vehicle size, etc.
Other Domestic Resources
Slovak Fiscal Administration
Consult Doing Business Website, to obtain a summary of the taxes and mandatory contributions.
 

Country Comparison For Corporate Taxation

  Slovakia Eastern Europe & Central Asia United States Germany
Number of Payments of Taxes per Year 8.0 13.9 10.6 9.0
Time Taken For Administrative Formalities (Hours) 192.0 226.2 175.0 218.0
Total Share of Taxes (% of Profit) 49.7 36.5 36.6 48.8

Source: Doing Business - Latest available data.

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Individual Taxes

Tax Rate

Income Tax From 19% to 25%
From EUR 0 to EUR 38,553.01 (176.8 times the subsistence level) 19%
Above EUR 38,553.01 25%
Self-employed individuals and micro-taxpayers (income up to EUR 49,790) 15% (if above the threshold, the standard rates apply)
Income from capital 19%
Dividend income arising from profits before 2004 and after 1 January 2017 7% (35% if dividends are from foreign sources of non-cooperating state)
Allowable Deductions and Tax Credits
No deduction is available for income from employment, except for statutory health and social insurance contributions. Sums received by way of reimbursement of expenses incurred in connection with employment are exempt from tax, unless they exceed the statutory limits and are aimed for private use.
An annual deduction of up to EUR 500 is available from certain types of income from capital, including gains on the sale of shares, and rental income from real estate. Individuals between 18 and 35 whose average monthly income is up to 1.3 times the average monthly salary may deduct 50% of the interest paid on mortgage during five years (capped at EUR 400 monthly and from a maximum base of EUR 50,000 per property). Tax bonus is replacing the current state aid for young people, which is provided by a 3% reduction of the interest rate (2% reduction subsidised by the state, 1% by a bank).

The personal allowance of 21 times the minimum subsistence amount - announced each year on 1 January - is available to all individuals whose annual tax base does not exceed a certain limit (EUR 38,553.01 in 2022). If the tax base of a taxpayer exceeds EUR 20,235.97 (2022), the personal allowance is reduced to nil progressively, based on a specific formula.
Slovak tax residents with permanent residency in Slovakia can also claim a dependent spouse allowance, provided the aggregated net active income of that taxpayer does not exceed certain limits (EUR 38,553.01 in 2022).
For 2022, tax bonuses are available for dependent children, as follows:

  • EUR 47.14 per month for each dependent child younger than 6 years,
  • EUR 43.60 per month for each dependent child in the age from 6 years up to 15 years,
  • EUR 23.57 per month for each dependent child older than 15 years.

Private entrepreneurs may deduct ordinary business expenses incurred to maintain, secure, and generate business income, provided they keep accounts recording their income and costs. The costs should be recorded in the sequential order for rental income. Alternatively, an entrepreneur (apart from a person having just rental income) who is not a Slovak VAT payer can opt to deduct lump-sum expenses. The lump-sum expenses can be up to 60% of income (capped at EUR 20,000 per annum) in order to determine the taxable income (actual business expenses or rental costs are not tax-deductible if the taxpayer opts for the lump-sum deduction).

Special Expatriate Tax Regime
A tax resident of the Slovak Republic is subject to tax on worldwide income, while a non-resident is liable to tax on Slovak-source income only.
A Slovak tax non-resident can the claim spouse allowance only if 90% of one’s worldwide income is from Slovak sources.
An individual living in Slovakia for at least 183 days in a calendar year (whether continuously or not) is considered resident, the same as those who have a permanent residence in the country.

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Double Taxation Treaties

Countries With Whom a Double Taxation Treaty Have Been Signed
See the list of double taxation treaties signed by Slovakia
Withholding Taxes
Dividends: 0 (distributed by a Slovak-resident entity out of profits generated from 2017 onwards to another Slovak-resident entity)/35% (for residents of countries that have not concluded a tax treaty or exchange of information agreement with Slovakia), 7% (for dividends distributed to individuals by a Slovak-resident entity out of profits generated from 2017 onwards);
Interest: 0 (under the EU interest and royalties directive and on loans and borrowings paid to a resident)/19% (standard rate)/35% (payment made to a resident of a non-treaty state);
Royalties: 0 (under the EU interest and royalties directive; paid to residents)/19% (non-residents)/35% (payment made to a resident of a non-treaty state).

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Sources of Fiscal Information

Tax Authorities
Overview of Slovakia's tax measures in response to Covid-19
Slovak Fiscal Administration
Other Domestic Resources
Slovakia Tax System

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Intellectual Property

National Organisations
Patents are granted by the Office of industrial property (the period of validity varies and may go up to 20 years). The AOC name exists in Slovakia and comes under the same Office. The Slovak organization for the protection of copyright is the Copyright Office which is dependent on the Ministry of Culture.
Regional Organisations
Slovakia is a member of the European Patents Office (EPO) and of the Office of Harmonization for the Internal Market (OHMI).
International Membership
Member of the WIPO (World Intellectual Property Organization)
Signatory to the Paris Convention For the Protection of Intellectual Property
Membership to the TRIPS agreement - Trade-Related Aspects of Intellectual Property Rights (TRIPS)
 

National Regulation and International Agreements

 
Type of property and law Validity International Agreements Signed
Patent
 
Patent Act (Act no435/2001)
20 years Patent Cooperation Treaty (PCT)
Trademark
 
Act No. 506/2009 Coll. on Trade marks
10 years, renewable for a successive period of 10 years. Trademark Law Treaty
Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks
Design
 
Law on Inventions, Industrial Designs and Rationalization Proposals (No. 527 of November 27, 1990) and law n°444/2002 on designs.
5 years, renewable for four further 5-year periods with a maximum of 25 years.  
Copyright
 
Law on copyright (law n°618/2003 of 4 December 2003)
During the author's life and 70 years after his death. Berne convention For the Protection of Literary and Artistic Works
Convention for the Protection of Producers of Phonograms Against Unauthorized Duplication of Their Phonograms
Rome ConventionFor the Protection of Performers, Producers of Phonograms and Broadcasting Organizations
WIPO Copyright Treaty
WIPO Performances and Phonograms Treaty
Industrial Models
 
Law on Inventions, Industrial Designs and Rationalization Proposals (No. 527 of November 27, 1990)
When the validity of the registration expires or if the owner of the industrial model renounces his rights.  

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Legal Framework

Independence of Justice
Slovakia has an independent judiciary, though there has been concern about judicial corruption and backlog of cases.
Equal Treatment of Nationals and Foreigners
Foreign nationals can expect an impartial trial from the country’s judicial system.
The Language of Justice
The judicial language used in the country is Slovak.
Recourse to an Interpreter
Having an interpreter is possible.
Sources of the Law and Legal Similarities
The main source of the law is the constitution of 1992 (amended in 1998 & 2001). The country’s civil law system is based on Austro-Hungarian codes. The legal code was modified to comply with the obligations of the Organization on Security and Cooperation in Europe (OSCE) and to expunge Marxist-Leninist legal theory. Slovakia accepts compulsory ICJ jurisdiction but with reservations. Being a member of the European Union, the national law in Slovakia needs to comply with the conditions of the Community legislation.
Checking National Laws Online
The Slovak Constitution (in English)
Lexadin (in English)

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Standards

National Standards Organisations
Slovak office for standards, metrology and testing (UNMS)
Slovak institute for technical standards (SUTN)
Integration in the International Standards Network
At the European level:
- Member of the European Committee for Standardization (CEN)
- Member of the European Committee for Electrotechnical Standardization (CENELEC),
- Member of the European Telecommunications Standards Institute (ETSI)  

At the international level:
- Member of the International Standard Organization (ISO)
- Member of the International Electrotechnical Commission (IEC),
- Member of the International Telecommunication Union  (ITU),

Classification of Standards
STN is the Slovak certification mark.
CE is the European certification mark. It is obligatory so that a product can be sold in the country.
Online Consultation of Standards
The STN catalog
The catalog of European standards
The ISO catalog
Certification Organisations
Slovak National Accreditation Service

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Business Practices

General Information
Commisceo Global, Guide of Slovakia
Passport to trade, Business etiquette in Slovakia
Opening Hours and Days
Closed in the week between 4 pm and 6 pm.
Closed on Saturday and Sunday. Some shops and hypermarkets are open on Saturday, or even Sunday.
 

Public Holidays

New Year and Independence Day of the Slovak Republic 1 January
Epiphany and Orthodox Christians' Christmas 6 January
Good Friday the Friday before Easter (March/April)
Easter Monday March/April
Labor Day 1 May
Liberation of the Republic 8 May
St Cyril and St Methodius 5 July
Anniversary of the Slovak National Uprising 29 August
Slovak Constitution Day 1 September
Our Lady of Sorrows 15 September
All Saints' Day 1 November
Fight for Freedom and Democracy Day 17 November
Christmas Day 25 December
St Stephen 26 December
 
Holiday Compensation
No
 

Periods When Companies Usually Close

End of year holidays Between 25 December and 6 January
Easter From Easter Friday to Monday
 

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Latest Update: November 2022