Slovakia has a tax system similar not only to neighboring countries but also to EU countries. The tax system has several specifics that either simplify the whole system or, on the contrary, slightly complicate it. However, from the point of view of the whole of Europe, Slovakia has a standard tax system. Since 2020, conditions have improved, especially for small business men, the so-called micro-entrepreneurs. Reliefs such as lower 15% tax, faster depreciation and unrestricted application of tax loss should help simplify and improve tax discipline. The most significant change for all is the increase in the deduction for science and research to up to 200% of eligible expenditure. The positive phenomenon are also better conditions for deducting tax loss, the possibility of refunding withholding tax on royalties and interest and the abolition of deductions for payments in the field of health care. The area of VAT focuses on the support of healthy eating by including vegetables and fruits in the reduced 10% VAT rate.
In the following article, specialists from REAL DEAL + s. r. o. company will present you basic information about taxes, easements of taxation, tax rates as well as subjects of taxation.
Taxes in Slovakia have different rates, whether it is income tax or value added tax. The rate is different, for example, for natural persons and different for legal persons. In most cases, there is separate income tax law or legislation for each type of tax, with a general distinction being made between direct and indirect taxes. Direct taxes are mainly taxes on income and wealth, while indirect taxes are those that are already included in the price of goods, such as excise duties.
Income tax
Within income tax, we distinguish between personal income tax and corporate income tax. Paying income tax applies to any citizen who, during the tax period, which is usually a calendar year, has achieved taxable income above a certain limit.
Personal income tax
The rates of personal income tax are different and are based on multiples of the amount of the subsistence minimum valid in a given year.
Corporate income tax
How the corporate income tax should be calculated and paid depends on whether the income tax advance payments have been applied. Tax advance payments depend on the amount of the last known tax liability.
Income tax on the sale of real estate
The sale of real estate is subject to income tax on the transfer of ownership of real estate. The sale of real estate is taxable income, in which case the basic rate of income tax, i.e. 19% tax, applies. This tax is payable on the difference between the amount of income from the sale of real estate and the claim expenses. Real estate sales tax applies to the sale of a house, apartment and building land. However, this income tax also has certain exceptions.
The law provides for several exemptions from income tax when selling real estate, for example, if 5 years have elapsed between the sale and the acquisition of real estate.
Real estate rental income tax
Income tax also applies to the rental of an apartment, house or other real estate, while it applies to citizens if it is not a rental performed on the basis of a trade license. The taxpayer is obliged to file a declaration of income tax and a tax return in the event that such an obligation arises from the total amounts of taxable income for a calendar year. The law also provides for an exemption from income tax in the case of rental property.
In the case of rental income, demonstrable expenses necessary to achieve,
secure and maintain rental income can be claimed; in the case of rental income,
it is not possible to declare a tax loss.
Value added tax
Taxes in Slovakia also include value added tax (VAT), which is applied to goods as well as services. The tax directly affects mainly business entities, but also indirectly all other natural and legal persons, because it is already included in the selling price of almost all goods and services. As far as non-business citizens are concerned, they are also subject to the obligation to pay VAT when selling real estate, renting real estate and buying a new means of transport. Every entrepreneur must register for VAT in the case of well-defined situations, but most often in situations where the amount of turnover achieved in the last 12 consecutive calendar months exceeds a specified limit. Before reaching this mentioned turnover limit, voluntary registration of the entrepreneur as a VAT payer is also possible, but it is necessary to meet the conditions stipulated by law.
Vehicle tax
Motor vehicle taxes mainly refers to businesses and entrepreneurs.
The subject of the tax are vehicles used for business according to the Commercial Code or for achieving income from business and other self-employed activities, which are registered in the Slovak Republic (cars, motorcycles, motorcycles, quads, tricycles, buses, trucks and trailers)
The tax base is determined for electric vehicles according to engine power in kW, for passenger cars according to engine cylinder capacity in cm cubic and for commercial vehicles according to the maximum permissible total weight or total weight in tons and the number of axles according to vehicle documents. The annual tax rate is determined each year by an annex to the law.
Consumption tax
As the name suggests, these taxes tax consumption, and are indirect taxes of a
selective nature which apply only to a certain type of goods. These taxes are
single-stage, i.e. they are collected only at one stage and in principle when
the goods are removed from the manufacturer. The goods become taxable already
by their production, or during transport or import into the territory of the
Slovak Republic. Tax revenue belongs to the state, i.e. it is state taxes.
These taxes are not paid by natural or legal persons directly, but indirectly,
because they are already included in the sale price. Excise duties in Slovakia
are regulated by specific laws on consumption tax and apply to tobacco products
and tobacco raw materials, alcoholic beverages, electricity, coal, natural gas,
and mineral oils. These taxes are administered by the customs authorities and
not by the tax authorities. For each consumption tax, different tax bases,
conditions of taxation, specific rates, conditions of exemption from excise
duty and tax obligations apply. Consumption taxes have a regulatory function,
with the state regularly approaching changes in tax rates.
Local taxes
Local taxes are local taxes that fall under local governments, i.e. municipalities and cities. Local taxes include, for example, real estate tax, dog tax, accommodation tax, etc.
Taxpayers are residents of a given municipality or city or other citizens who visit a given place and need for example, accommodation.
One of the most important things for companies and people who want to pay taxes in Slovakia is predictable business environment and the ability to orientate themselves in key areas. We believe that thanks to the professionals from REAL DEAL + s. r. o. company, you will save the most precious things that active people are looking for – your time.