TAXES AND SOCIAL SECURITY 1
TAX SYSTEM IN THE SLOVAK REPUBLIC Who is liable to pay taxes Any legal entity seated in Slovakia, or with management seated in the Slovak Republic is considered a resident and is therefore liable to pay Slovak corporate income tax. Individuals with permanent residence in Slovakia, or those that stay at least 183 days in a calendar year in Slovakia, are also considered as resident persons. Registration Any taxpayer is required to register with the Tax Authorities within 30 days after obtaining permission to conduct business in Slovakia. Registration changes should be communicated to the Tax Authorities within 15 days after the changes occurred. A taxpayer is also obliged to notify the tax authorities within 30 days of first earning taxable income. Tax reform Goals of the tax reform made in 2004 were to: create a business and investment friendly environment for both individuals and companies eliminate existing weaknesses and inefficiencies in the tax law achieve the highest possible degree of tax fairness by taxing all types and all amounts of income equally shift the tax burden from direct to indirect taxes In order to achieve goals mentioned above and to eliminate forms of double taxation the following taxes were abolished with effect from 1 January 2004 dividend tax gift tax inheritance tax With effect from 1 January 2005 real estate transfer tax road tax was replaced by motor vehicle tax Slovakia s current tax system consists of following taxes: 1. Direct taxes a. personal income tax b. corporate income tax c. local taxes: c 1.real estate tax, dog tax, tax on the use of public space, accommodation tax, vending machine tax, non- gainful (entertaining) slot-machine tax, tax on the entry into and parking of a motor vehicle in a historical part of the city, nuclear facility tax c 2. taxes for municipal waste and small construction waste c 3. motor vehicle tax 2. Indirect taxes a. value added tax b. excise taxes 2
1. DIRECT TAXES a) PERSONAL INCOME TAX Personal income tax rate is currently 19% (FLAT). Tax liability of an individual is derived from the taxable income. Slovak tax residents are liable to personal income tax on their worldwide income, subject to provisions under applicable double taxation treaties. Slovak tax nonresidents are taxed only on income from Slovak sources, including Slovak sourced salaries, rent, interest or dividends (to the extent such dividends arise from profits earned prior to 1 January 2004). TAX ALLOWANCES: Personal tax allowances The personal tax allowance legislation has been modified for the years 2009 2010, in order to reduce the effects of the financial crisis. These changes are only valid for these two years, with the previous model to be applied once again in 2011: If tax base of individual in the relevant tax period is a) equal or less than 86 times the living minimum in force as of January 1 st of the relevant tax period (for 2009 it is 15 387,12 EUR) all individuals are entitled for personal allowance of 22,5 times the living minimum in force (for 2009 it means 4025,7 EUR) b) more than 86 times the living minimum in force (for 2009 it is 15 387,12 EUR) tax allowance corresponds to the difference between 44,2 (7 872,48 EUR) times the living minimum in force and ¼ of tax base; if the sum is less than 0 personal tax allowance is 0. In the years 2011 and on, personal tax allowance will be calculated with the following method: If tax base of individual in the relevant tax period is a) equal or less than 100 times the living minimum in force as of January 1 st of the relevant tax period all individuals are entitled for personal allowance of 19,2 times the living minimum in force b) more than 100 times the living minimum in force tax allowance corresponds to the difference between 44,2 times the living minimum in force and ¼ of tax base; if the sum is less than 0 personal tax allowance is 0. Dependent spouse allowance If tax base of individual in the relevant tax period is a) equal or less than 176,8 times the living minimum in force as of January 1 st of the relevant tax period (for 2009 it is 31 633 EUR) and his/her spouse 1. has no income, tax allowance corresponds to 19.2 times the living minimum in force (for 2009 it means 4025,7 EUR) 2. has income lower than 19.2 times the living minimum, tax allowance corresponds to the difference between 19.2 times the living minimum and spouse s income 3. has income higher than 19.2 times the living minimum, tax allowance is 0 b) more than 176,8 times the living minimum in force as of January 1 st of the relevant tax period (for 2009 it is 31 633 EUR) and his/her spouse 1. has no income, tax allowance corresponds to the difference between 63,4 times the living minimum in force and ¼ of tax base; if the sum is less than 0 personal tax allowance is 0. 2. has income, tax allowance is 63,4 times the living minimum in force minus ¼ of tax base minus spouse s income; if the sum is less than 0 personal tax allowance is 0. 3
Additional allowances Pension insurance allowance, specific purpose savings allowance and/or specific life insurance of max. 398,33 EUR per annum per tax payer. Tax bonus 231.84 EUR for each dependent child per year deductible from the final tax liabilcontributions to social security system: Besides personal income tax, both individuals and companies make contributions to health and social security system. The obligatory contributions paid by employee and employer are listed in the table below: Social Security Contributions Since the accession of Slovakia into the EU on 1 May 2004, the EU Social Security Regulation has been applicable in Slovakia. As a result, social security rules, including Council Regulation (EEC) No 1408/71 on the application of the social security schemes of employed and self-employed persons moving within the Community, apply, unless any transitional arrangements have been agreed between Slovakia and other member states. Contributions % of gross monthly salary Max computation base Maximum contribution EUR Employee Employer Employee Employer Sickness 1,4 1,4 1,5 times the average monthly salary 14 14 Retirement 4 14 4 times the average monthly salary 106.90 374.40 Permanent 4 times the average 3 3 disability monthly salary 80.20 80.20 Unemployment 1 1 4 times the average monthly salary 26.70 26.70 Health 4 10 3 times the average monthly salary 80.24 200.61 Guaranteed fund - 0,25 1,5 times the average monthly salary - 2.5 Reserve fund - 4,75 4 times the average monthly salary - 127 Total 13,4 34,4 308.04 825.41 Furthermore, the employer must contribute to employee s accident insurance. The rate of accident insurance is 0.8% of the relevant computation base the average salary of the employee. Note: Minimum computation base for health contribution for the year 2009 is minimum monthly wage as of January 1 st 2009, 295.50 EUR. Maximum computation base for health contribution for the year 2009 is 3 times the average monthly salary in Slovakia in 2007 60 438 SKK converted to EUR and rounded up to 2 006,17 EUR. Minimum computation base for sickness, guaranteed fund, retirement, permanent disability, unemployment, and reserve fund is the minimum monthly wage as of January 1 st 2009, 295.50 EUR. Maximum computation base for sickness and guaranteed fund is from 1 st July 2008 30 219 SKK, converted to EUR and rounded up to 1 000,09 EUR. Maximum computation base for the other contributions (retirement, permanent disability, unemployment, and reserve fund) is from 1 st July 2008 80 584 SKK, converted to EUR and rounded up to 2 674,90 EUR. 4
This Regulation states, subject to specific exceptions, that the law of the state where the employment is exercised should apply. This means that an employee assigned from another member state to perform work for a Slovak company becomes, in principle, subject to the Slovak social system. However, the EU Regulation includes exemptions allowing an assigned employee to remain in his/her home social security system. There is a specific exemption available if the assignment is not expected to exceed 12 months. An exemption can also apply if the assignment period is extended by an additional 12 months, provided the specific conditions of the Regulation are met and the competent authorities grant approval. The EU Regulation is not applicable to individuals who are not subject to the social security scheme in some of the the EU, EEA states or Switzerland. Such foreigners who are employed in Slovakia by a Slovak entity must contribute to the Slovak social security system. Sick leave benefits of employees: To fight the abuse of sick leave benefits the Slovak Government introduced the obligation of the employer to pay the sick leave benefits (see below). On the other hand the maximum computation base was reduced to 1,5 times the average monthly salary and the average sickness absence rate has been reduced from 5,117% in 2003 to 3,382% in 2008(lowest in the region), hence saving about 2% of the working time and it is still decreasing. Period of Absence Paid by Employer Paid by Social Insurance Co. Day 1 to 3 25% of salary - Day 4 to 10 55% of salary - Day 11 onwards - 55% of salary (Source: Social Insurance Company Sociálna poisťovňa ) Central Europe comparison of personal income and social security contributions Country Czech Republic Hungary Poland Slovakia PIT Top rate 32% 40%* 40% 19% Applied on income > 11 716 26 500 21 930 flat tax rate Soc Sec Paid by E ER(capped in PL and SR) 35% 33,50% 19,71% - 22,41% 35,20% Maximum annual contribution no limit no limit Partially limited: 3 272 +3,45%- 6,15% uncapped on gross Limit 5 970 + 0,8% on gross income Average salary 8 490 7 080 7 583 (p.a.) 6 170 Source: Deloitte & Touche Slovak Republic, 2007 Note: Figures are for illustration purposes only. The actual numbers may slightly differ due to rounding and exchange rate fluctuations. * Including supplemental tax of 4% ( solidarity tax ) 5
Total Employment Costs & Net Income for Expatriate with 100 000 Yearly Income Czech Republic Hungary Poland Slovakia Soc. Sec paid by E'ER (cap in PL and SR) 35% 33,50% 19,71% - 22,41% 35,20% Gross Income 100 000 100 000 100 000 100 000 Soc. Security paid by Employer 35 000 33 500 6 722 9 422 6 770 Total Costs of employment 135 000 133 500 106 722-109 422 106 770 Gross Income 100 000 100 000 100 000 100 000 EE deduction: tax + social contribution 38 662 46 608 40 914 20 828 Net Income 61 338 53 392 59 086 79 172 Source: Delloite & Touche Slovak Republic, 2007 Note: Figures are for illustration purposes. The actual numbers may slightly differ due to rounding and exchange rate fluctuations. Inheritance and Gift Tax Both taxes were abolished with effect from 1 January 2004. b) CORPORATE INCOME TAX Corporate income tax rate is currently 19% (FLAT). Corporate income tax is levied on legal entities and on entities not qualifying as natural persons when their seat or their place of effective management is located in Slovakia. They are then liable to pay tax on income derived from Slovak sources and also on income derived from sources abroad (the place of effective management is specified as the place where managerial and business decisions of statutory and supervisory bodies of such an entity are adopted). Other legal entities are liable to pay Slovak corporate income tax only on income derived from Slovak sources. There is no tax on dividends, regardless of whether received from a resident or a non-resident company. Tax base and rate Corporate income tax is computed by reference to the "tax base". The tax base is generally gross income of the entity less related expenses, modified by a number of adjusting items. The general tax rate is 19% of the tax base. Examples of income, not subject to tax shares in profit after tax, e.g., in the form of dividends paid to shareholders, other persons who participate on the share capital of the entity or members of the statutory bodies distributing dividends from profit after tax (unless the distributed profit was generated prior to 1 January 2004) dividends paid after 1 April 2004 by a Slovak subsidiary to an EU Parent Company (as well as from an EU Subsidiary to a Slovak Parent company) even if such dividends relate to profits earned before 1 January 2004; the receiving (parent) company needs to directly possess a holding of at least 25% of capital at the time of distribution income received from inheritance or donations, and payments related to liquidation surpluses and settlement amounts to which the shareholders became entitled from 1 January 2004. 6
Tax deductible and non-deductible expenses As a general rule, expenses for generating, ensuring and maintaining taxable income booked in the records of the taxpayer are tax deductible, unless they are specifically listed as tax non-deductible items Documentation should be kept on file to support deductibility. Certain expenses, e.g., contractual penalties, have to be paid (i.e. not only accrued) in order to qualify as tax deductible costs. Correspondingly, a taxpayer receiving such payments should tax the income in the tax period when the invoiced amount is received. Examples of tax deductible items: tax depreciation costs tax residual value of depreciable assets sold obligatory social security contributions paid by an employer expenses incurred for the provision of health and social facilities for employees operational expenses of facilities used for protecting the environment taxes and fees, other than those listed as non-deductible items (see below) expenses incurred by the founder of a permanent establishment (PE) for the purpose of this PE, including management and administration expenses, regardless of the place where they were incurred, provided specific conditions in the Act are fulfilled advertising costs, with the exception of representation and high value promotional expenses (see below). Advertising costs are costs incurred for the advertisement of the taxpayer's business activities, advertisement of goods, services, immovable property, trade name, trade mark, trade labeling of products, and other rights and liabilities related to the taxpayer's activities carried out with the intention to generate, maintain or increase his income interest paid on credits and loans (new thin capitalization rules effective from 1 January 2010) specific types of reserves and provisions, e.g. reserves created for supplies and services not yet charged; reserves for the audit of financial statements and preparation of tax return; and certain bad debt provisions (subject to limitations). The rules for creation and release of reserves and provisions are regulated directly by the Income Tax Act. Examples of tax non-deductible items: penalties and fines other than contractual (e.g. penalties/fines imposed by state or municipal authorities) accounting depreciation costs, which exceed tax depreciation costs individual and corporate income tax and taxes paid on behalf of another taxpayer expenses incurred in providing proper working, social and health care conditions foremployees exceeding limits set by law expenses for business trips above the allowable limit expenses for the generation of tax-free income shortages and damages exceeding the compensation received (shortages and damages qualify in certain cases as a tax deductible expense) representation expenses (with the exception of promotional items with a purchase price not exceeding SKK 500 (EUR 17) per item, which are marked by the business name or a registered trademark of the taxpayer) losses derived from the sale of receivables. Tax period/ Tax return filing The tax period is usually a calendar year. However, it is possible for companies (not individuals) to notify the tax authorities that a tax payer will use an accounting period that is not identical to a calendar year, i.e. a period of 12 consecutive calendar months (a so-called financial year). Such an accounting period then also becomes the tax period. A tax return should be filed with the respective Tax Authority within three months following the end of the tax period. It is possible to apply for an extension of the filing period but this is at the discretion of the Tax Authority. The application for the extension to submit the tax return should be filed no later than 15 days before the statutory filing deadline. There is no group taxation in Slovakia. All entities are taxed separately. There is a special tax treatment for partnerships which are in principle treated as wholly transparent (general partnerships) or partially transparent (limited partnerships). 7
Tax losses The losses from previous years may be transferred in the 5 following years starting with the first tax profit period. In contrast to rules which applied prior to 1 January 2004, the tax loss does not have to be carried forward in equal portions nor does a portion of the carried forward loss have to be reinvested in fixed assets. A company wound up without liquidation (e.g., on a merger), is allowed to transfer the right to carry forward its tax losses to its legal successor to set off against subsequent taxable profits. The legal successor may deduct the tax loss of the dissolved legal entity as long as the dissolved entity and its legal successor are liable to corporate income tax and at the same time as long as the purpose of the restructuring was not solely to decrease or avoid the tax liability. Each year's tax loss should be considered separately and can be carried forward over five consecutive tax periods. Tax Depreciation: Depreciation is a tax deductible expense and is calculated for tax purposes at statutory rates. Both straight-line and accelerated methods of depreciation are allowed (Table 1 and Table 2). Companies may have different depreciation rates for accounting and tax purposes. Intangible assets must be depreciated over a maximum of five years in accordance with accounting 47 regulations. As of 1 st January 2004 a taxpayer may depreciate assets which it leases under a financial lease. In such a case the leased asset may not be depreciated by the lessor. Depreciation rates: Straight-Line Method Type of Assets Useful Life Computers; Mechanical tools; Cars; Printers 4 years 1/4 Annual Depreciation Some machinery and equipment used for construction; Machinery for agriculture; assets not allocated to a specific group Some machinery and equipment; special technical equipment; air condition equipment; metal constructions placed on the ground 6 years 1/6 12 years 1/12 Pipe lines; buildings and electric and telecom networks 20 years 1/20 Source: Slovak Tax Authority Accelerated Method Coefficient Type of Assets First Year Subsequent Years For Increased Residual Value Computers; Mechanical tools; Cars; Printers 4 5 4 Some machinery and equipment used for construction; Machinery for agriculture; assets not allocated to a specific group 6 7 6 Some machinery and equipment; special technical equipment; air condition equipment; metal constructions placed on the ground 12 13 12 Pipe lines; buildings and electric and telecom 20 21 20 networks Source: Slovak Tax Authority 8
Depreciation costs are calculated as follows: First year: acquisition price/coefficient for the first year Subsequent years: 2 x residual value/coefficient for the subsequent years decreased by number representing amount of period during which the asset has been depreciated Note: Exact Classification of Tangible Assets into Depreciation Categories is listed in the first supplement of the Income Taxes Act - Act 595/2003 It is also important to compare the exclusion of certain expenses from tax deductible items. Non-Depreciable Tangible and Intangible Assets are listed in Section 23 of the Income Taxes Act Act 595/2003. Transfer Pricing Slovak tax law contains transfer pricing rules which are largely based on OECD principles (especially OECD Transfer Pricing Guidelines), and which permit the authorities to adjust prices charged between foreign related parties that are not in accordance with the arm's length principle (fair market value). Pricing methods (comparable uncontrolled price method, resale method and cost plus method) and profit methods (profit split method and transactional net margin method) are allowed on this basis. The transfer pricing rules for transactions between domestic entities have been abolished. With effect from 1 January 2009 special obligation to keep documentation on the transfer pricing method used between foreign related parties will apply. The rules for drafting and keeping the required transfer pricing documentation will be issued by the Ministry of Finance by means of secondary legislation. Leasing: Possible leasing objects (LO): Production facilities, Warehouses Office buildings Shopping malls Machinery & Cars Finance Leasing (accord. to Slovak accounting standards): The LO is activated and depreciated by the lessee Accelerated depreciation - 60% of the standard depreciation period (Real Estate standard depreciation period 20 years, by Finance Leasing 12 years) improves cash flow The lease installments are split into principal and interest, where interest is a tax deductible cost Lessee has the possibility to acquire the LO at the end of the lease period (usually 12 years for Real Estate) Can be used for both newly constructed objects and existing (used) objects Operate Leasing (accord. to IAS/USA-GAAP): Lessor bears the investment risk Rent is the object is the main priority No obligatory acquisition of the object at the end of the lease period Off-balance-transactions possible (due to local regulations) Sale & Lease Back Release of hidden reserves and additional liquidity On & Off balance models possible Recap of reasons for a Leasing financing in Slovakia 100% financing Tax reasons Improvement of the balance sheet optics (Off balance) Positive cash flow impacts Pay as you earn Administrative simplification of the investment 9
c) LOCAL TAXES REAL ESTATE TAX Real estate tax is a municipal tax paid by owners of buildings (including private and weekend houses), apartments and land, or by tenants of land, registered with the cadastral register, and is determined by the size, location and the type of buildings, flats and land. Real Estate Tax includes: Tax on land Tax on constructions (buildings) tax on apartments and non-residential premises in an apartment house Tax on land Tax on land rates: Owners of land, or in specific cases tenants, must pay real estate tax in respect of the land. The tax base of the land is the product of the area of the land and its official value per square meter. The base tax rate is 0.25% but the Municipal Authority may increase or decrease the rate and determine different rates for various types of land; the highest rate may not be higher than 20 times the lowest rate. For land where a nuclear facility is located, the rate may not exceed 100 times the base rate. Tax on land base: Tax base represents land area in square meters multiplied by the value of the land stated in the annex 1 and annex 2 of the Act on Local Taxes 582/2004. The value of the land stated in annex 1 and annex 2 can be in certain cases increased by concerned municipality. Taxable assets: arable land, hop yards, vineyards and fruit plantations, permanent lawns, gardens, forest land with forest plantations for business purposes, ponds with fish-breeding farms and other lakes used for business purposes, built-up areas and courtyards, building plots, other areas with the exception of building plots Tax on constructions Tax on constructions rates: The real estate tax on buildings is computed as the number of square meters constructed, multiplied by the respective tax rate. The base tax rate is EUR 0.03 per square meter but the Municipal Authority may increase or decrease the rate and determine different rates for various types of buildings; the highest rate may not be higher than 40 times the lowest rate. In addition, the Municipality may impose a surcharge of up to EUR 0.33 per each additional floor. Tax on constructions base: The construction-tax base is the size of the built-up area in square meters. The built-up area is the ground plan of the structure at the greatest extent of the above-ground part of the structure. Taxable assets: residential buildings and other buildings forming structural attachments to the main building buildings designated for agricultural production, greenhouses, structures used for the storage of own agricultural production and structures for water management, with the exception of structures for the storage of other than own agricultural production and administrative buildings leisure-time structures, garden sheds and cottages for individual leisure free-standing garages and autonomous garage compounds and structures designated or used for these purposes built ancillary to apartment houses 10
industrial buildings and structures serving power engineering, structures serving the construction industry with the exception of storage structures and administrative buildings structures for other entrepreneurial and revenue-generating activities, storage and administration other buildings The tax on constructions shall be levied on constructions with one or more above-ground or below-ground levels or parts thereof, which are connected to the ground by a fixed base, for which a final inspection decision was issued or, if no such decision was issued, those buildings or parts thereof, which are actually in use. If a final inspection decision was issued with respect to a certain building, for tax purposes it is irrelevant, whether the building is being used, or not. Town, Town district /m2 % Change Bánovce nad Bebravou 0,2124 60% Banská Bystrica 0,3983 0% Banská Štiavnica 0,1162 0% Bardejov 0,1766-37% Bratislava-Čuňovo 0,5377 0% Bratislava-Devín 0,5377 0% Bratislava-Devínska Nová Ves 0,5974 0% Bratislava-Dúbravka 0,5974 0% Bratislava-Lamač 0,5377 0% Bratislava-Petržalka 0,5974 0% Bratislava-Podunajské Biskupice 0,5974 0% Bratislava-Rača 0,5974 0% Bratislava-Rusovce 0,5377 0% Bratislava-Ružinov 0,5974 0% Bratislava-Staré Mesto 0,7169 0% Bratislava-Vajnory 0,5377 0% Bratislava-Vrakuňa 0,5974 0% Bratislava-Záhorská Bystrica 0,5377 0% Brezno 0,2788 0% Bytča 0,0797 4% Čadca 0,2987 0% Detva 0,1441-9% Dolný Kubín 0,2376-1% Dunajská streda 0,1627 0% Galanta 0,2257 0% Gelnica 0,1162 0% Hlohovec 0,2257 0% Humenné 0,1162 0% Ilava 0,1301 0% Kežmarok 0,1626 0% Komárno 0,1673 0% Košice 0,5311 0% Krupina 0,1756 0% Kysucké Nové Mesto 0,1626 0% Levice 0,2602 0% Levoča 0,1859 0% Liptovský Mikuláš 0,2324 0% Lučenec 0,2556 10% Malacky 0,3346 0% Martin 0,2324 0% Medzilaborce 0,1162 0% Michalovce 0,2324 0% Myjava 0,2324 0% Source: The Business Alliance of Sloavakia (PAS), 2009 Town, Town district /m2 % Change Námestovo 0,2450 5% Nitra 0,1990 0% Nové Mesto nad Váhom 0,7900-1% Nové Zámky 0,2324 0% Partizánske 0,1766 6% Pezinok 0,4182 0% Piešťany 0,3253 40% Poltár 0,1534 0% Poprad 0,2324 0% Považská Bystrica 0,0929 0% Prešov 0,1062 0% Prievidza 0,2324 0% Púchov 0,5112 0% Revúca 0,1394 0% Rimavská Sobota 0,1859 0% Rožňava 0,3253 0% Ružomberok 0,2323 0% Sabinov 0,1534 0% Senec 0,2091 0% Senica 0,3718-63% Skalica 1,3278 0% Snina 0,2324 0% Sobrance 0,0531 0% Spišská Nová Ves 0,1952 5% Stará Ľubovňa 0,1859 0% Stropkov 0,1766 0% Svidník 0,3104 0% Šaľa 0,2324 0% Topoľčany 0,2602 0% Trebišov 0,1626 0% Trenčín 0,3187-85% Trnava 0,3665 0% Turčianske Teplice 0,1487 0% Tvrdošín 0,0511-4% Veľký Krtíš 0,2324 0% Vranov nad Topľou 0,1766 0% Zlaté Moravce 0,1534 0% Zvolen 0,2788 0% Žarnovica 0,1255 0% Žiar nad Hronom 0,2788 0% Žilina 0,3187 0% 11
Tax on apartments Tax on apartments rates: The annual tax rate is 0,03 EUR per square meter. The tax rate can be increased or decreased by the concerned municipality, with effect from January 1 st of the corresponding taxation period. Tax on apartments base: The base for the apartment tax is the size of the floor area of the apartment or non-residential premise in square meters. MOTOR VEHICLE TAX Motor vehicle tax shall be levied only on specified road motor vehicles and trailer vehicles used for or in connection with business activities. The tax also applies to those taxable persons who use motor vehicles for both private and business purposes. Motor vehicle tax is a local tax determined by the self-governing regions and it is almost identical in every region. For personal cars the road tax is determined by the capacity of an engine volume in cubic centimeters: From 900 cm 3 3 000 cm 3 it is 56,43 209,12 EUR For buses and utility vehicles it s determined by number of axles and weight in tons: 1-2 axles: 59,75 EUR for weight less than 1t and up to 2 401,58 EUR for more than 30t 3 axles: 491,93 EUR for less then 15t and up to 2 702,65 EUR for more than 40t 4 axles: 647,28 EUR for less then 23t and up to 2 304 EUR for more than 40t OTHER MUNICIPAL TAXES Other taxes which may be imposed by Municipal Authorities include Dog Tax, Public Area Usage Tax, Accommodation Tax, Vending Machines Tax, Gaming Machines Tax, Tax on Entry and Stay of a Motor Vehicle in Historical Parts of Towns, Nuclear Facility Tax. There is also an obligatory Local Fee on Communal Waste and Minor Construction Waste. taxes for municipal waste and small construction waste A local fee for municipal waste and minor construction waste is paid for municipal waste with the exception of electro-waste and minor construction waste originating on the territory of the municipality. The tax rate: a) at least 0,003 EUR and at most 0,05 EUR per one liter or dm 3 of municipal waste or minor construction waste or at least 0,006 EUR and at most 0,14 EUR per one kilogram of municipal waste or minor construction waste b) at least 0,006 EUR and at most 0,11 EUR per person and calendar year, in the event that no quantity collection is established in the municipality Source: SARIO 12
2. INDIRECT TAXES a) VAT The Slovak VAT Act complies with Directive 2006/112/EC. From Slovakia's accession to the European Union on 1 May 2004, the Slovak VAT Act has complied with the EU 6th Directive. Value Added Tax in the Slovak Republic includes one tax rate of 19% applied for almost all taxable supplies except of those stated in the annex 7 of the Act on VAT tax 222/2004. Supplies listed in the annex 7 include some medical products and medical equipment as well as books, brochures and leaflets (except of those where advertisements represent more than 50 % of their content). They are taxed at 10%. Registration Slovak taxable entities, with their seat, place of business or establishment in Slovakia, must register for VAT if their cumulative turnover within the previous maximum of twelve calendar months exceeded EUR 35,000. Registration for VAT purposes is also obligatory for: a legal entity or individual, which acquires a business or part of a business through a contract of sale of business a foreign entity performing economic activities in Slovakia that are subject to VAT a foreign entity which makes distance sales in Slovakia to persons who are not registered for Slovak VAT purposes, and the total value of the supplied goods exceeded EUR 35,000 a foreign entity, which makes distance sales of goods to individuals for personal consumption, and these goods are subject to excise duties an entity that is not registered for VAT purposes, but acquires goods from another EU Member State at a value exceeding EUR 14,000 in a calendar year. Voluntary registration is also possible; a request for VAT registration should be filed with the tax authorities. It is also possible for group of companies to register as a single VAT entity. Persons are regarded as taxable from the date of their registration. De-registration De-registration for VAT can be applied for as a result of the following situations: a taxpayer who has ceased to perform economic activities that are subject to VAT a taxpayer whose taxable turnover did not reach EUR 50,000 in the last twelve calendar months a foreign entity making distance sales if the total value of the supplied goods did not reach EUR 50,000 in the relevant calendar year and also did not reach EUR 50,000 in the previous calendar year an entity, registered for the acquisition of goods from another EU Member State, which did not acquire goods from another EU Member State at a total value of EUR 14,000 in the relevant calendar year and also did not reach that threshold in the previous calendar year. Recovery A taxpayer is entitled to deduct VAT from transactions used by the taxpayer for the supply of goods and services as a VAT payer. In general, the taxpayer can recover the VAT provided: a VAT liability arose to the supplier from the supply of goods or services, in the case of import of goods the import VAT was paid the taxpayer has a valid VAT document (invoice). The following specific situations should be noted: VAT liable supplies with no entitlement to VAT recovery: for example this applies to a selection of supplies, including acquisition and rental of personal cars, catering exemption from VAT with entitlement to VAT recovery: this applies to export of goods, supply of goods to another EU Member State and certain services, the transfer or use of rights abroad, international transportation exemption from VAT with no entitlement to VAT recovery: this applies to postal services, broadcasting and television, financial and insurance services, education and science, health care services, lotteries and other similar games, transfer and leasing of real estate (in the event an 13
option to tax is not applied), the sale of a business under certain conditions. The specification of such services is in accordance with the 6th EU Directive. Refunds Taxpayers with a VAT registration in Slovakia The excess input VAT claim should be carried forward and offset against future VAT liability in the following taxable period. The excess input VAT claim which could not be offset against the VAT liability declared in the following taxable period should be refunded to the VAT payer within 30 days after the VAT return for the following period was filed (i.e. excess input VAT can in Slovakia be recovered within approximately three months if a tax audit did not extend this period). Foreign persons A foreign person who is registered for VAT abroad, or is registered as a payer of a similar general consumption tax abroad, is entitled to claim a refund of Slovak VAT paid upon the delivery of certain goods or the provision of certain services, if the following conditions are met: The person did not have any seat, a place of business, a fixed establishment or residence in Slovakia during the period for which the VAT refund request was filed. During the period for which they filed a VAT refund request, they did not supply any goods or provide any services in Slovakia (except certain specifically stated supplies). The VAT refund can be claimed by submitting a request to the Tax Office Bratislava I. The minimum amount of VAT which can be claimed is EUR 33 in one calendar year and the request must be submitted within six months of the end of the relevant calendar year. The request can also be submitted before the end of the calendar year if the request covers at least three consecutive months and the VAT amount exceeds EUR 266. The request for a VAT refund must be filed using a form which is available from the tax authorities. If the tax authorities approve the request, the VAT amount should be paid to the foreign company within six months of the day of filing the request. Slovak VAT should be refunded in this manner to all VAT payers from EU countries. It is also refunded to those from non-eu countries based on reciprocity. Individuals An individual with no residence permit in any EU country exporting goods (except fuel for personal purposes) from EU countries can file a request for a VAT refund. Individuals can submit a request for a VAT refund if: the amount of the goods exported outside the EU stated on the invoice or receipt exceeds EUR 166. they posses a document on purchase of goods issued by taxpayer; export of goods is carried out within three months of the day the goods are purchased and the Customs Office of any EU country certifies the export of goods. b) EXCISE TAXES Excise taxes consist of the following: Excise duty on beer Excise duty on wine Excise duty on spirits Excise duty on tobacco products Excise duty on mineral oil Excise duty on liquid petroleum gas and methane Excise duty on natural gas Excise duty on electricity Excise duty on coal SHORT LIST OF BASIC LEGAL REGULATIONS WITHIN TAX LAW 14
Act No. 595/2003 on Income Tax Act No. 582/2004 on Local Taxes and Local Fees for Municipal Waste and Minor Construction Waste Act No. 222/2004 on VAT Tax Act No. 98/2004 on the Excise Duty on Mineral Oil Act No. 104/2004 on the Excise Duty on Wine Act No. 105/2004 on the Excise Duty on Spirit Act No. 106/2004 on the Excise Duty on Tobacco products Act No. 107/2004 on the Excise Duty on Beer You can find the Acts in English on the web site of the Ministry of finance of the Slovak republic: http://www.finance.gov.sk/en/default.aspx?catid=52 15
Slovak Investment and Trade Development Agency Martinčekova 17 821 01 Bratislava Slovak republic Tel: +421 2 58 260 100 Fax: +421 2 58 260 109 e-mail: sario@sario.sk 16