The Slovak Republic has proposed changes in the tax legislation including corporate income tax, personal income tax and value added tax. The amendments should come into force from 1st January 2016. The changes are summarized below:

Corporate income tax

In connection with the recent changes to the European Union (EU) Parent-Subsidiary Directive, the following proposals have been announced:.

  • If a taxpayer is allocating profits and the profit distribution or a portion of it is tax deductible, then the corresponding part of the dividend income has to be included in the recipient’s tax base.
  • If a transaction or transactions are undertaken without adequate business reasons, or if the main aim or one of the main aims is to gain a tax advantage then dividends received should be subject to taxation in Slovakia.
  • In respect of a “service permanent establishment”, the specified period of more than 6 months will be changed to a period of more than 183 days.

New legislation would introduce specific provisions defining the tax input values of financial assets. The capital gain or loss calculations regarding the sale of financial assets would also be affected.

Personal income tax

A new tax base in respect of capital gains has been proposed with the aim of establishing similar taxation treatment of Slovak and overseas source income. Under article 4 of the Income Tax Act (ITA), the income from capital gains would not be incorporated in the tax base, but will create a separate tax base with a 19% tax rate.

VAT

A VAT scheme entitled “cash-accounting” is being introduced for VAT payers with a limited turnover. Taxpayers whose annual turnover does not exceed €75,000, may use the scheme. They can then declare output VAT only after receipt of customer payments, i.e. on a cash basis. The same applies to the input VAT deduction that can be claimed only after the taxpayer has paid for a supply.

A “de-minimis” threshold for tax underpayments is being introduced.

Tax Code

There is a suggested change to the penalty system for additional tax assessment. The new system will scrap the flat penalty and is to be computed as a multiple of the basic interest rate of the European Central Bank. At the start of a tax audit, an option to submit a supplementary tax return within 15 days will be introduced.