Slovak government published draft consolidation package

UPDATE
On 18 September 2024, the Slovak Government approved with comments draft amendments that regulate the consolidation measures. The relevant amendments will be discussed by the Parliament in the shortened legislative procedure. On 19 September 2024, the Slovak Government presented changes in the proposed measures, which, however, are still the subject of discussions. We will provide you with more detailed information once the wording of the relevant legislation as submitted to the Parliament is available.

The Minister of Finance of the Slovak Republic presented the following proposed measures in the tax area:

1. Taxation of high-income groups

• increase in the special levy for energy companies;
• introduction of a special levy for refineries;
• increase in the special levy for mobile operators;
• increase in the corporate income tax rate from current 21 % to 22 % for taxpayers whose taxable income exceeds EUR 5 mil;
• increase of maximal assessment bases for social contributions of employees from current 7-times to 11-times of the average monthly wage;

2. VAT

• increase in standard VAT rate from 20 % to 23 %;
• change in reduced VAT rates from original 5 and 10 % to 5 and 19 %;
• changes in goods and services to which reduced VAT rates will apply;

3. Amount and calculation of tax bonus

• changes in the amount of tax bonus for a dependent child, which will also decrease with increasing income and after reaching a monthly income of EUR 3,632, the right to a tax bonus will be zero;

4. Taxation of small businesses and self-employed individuals

• reduction of corporate income tax rate from 15 % to 10 % for those taxpayers whose taxable income does not exceed EUR 100,000;
• increase of threshold of taxable income for application of 15 % personal income tax rate to EUR 100,000;
• reduction of withholding tax on dividends from current 10 % to 7 %;

5. Assignation of tax

• introduction of the option to assign, in addition to 2 % of tax to the non-profit sector, also an additional 2 + 2 % of tax to parents as compensation for the currently paid parental pension (assignation of tax to parents will be possible for the first time for the tax period of 2025);

6. Tax on financial transactions

• introduction of a tax on transactions carried out by legal entities and individuals – entrepreneurs - from 1 April 2025;
• this tax should in general apply to bank transfers (0.35%, maximum EUR 30 per transaction), cash withdrawals in a bank or from an ATM (0.7%), use of company payment cards (annual fee EUR 2), purchases of securities, loan interest payments, commissions and fees;
• the tax payers will be banks providing transfers of funds, on a monthly basis (with the exception of the first quarter);
• this tax will not apply i. a. to tax and social security contributions payments, payments between the taxpayer's own accounts in the same bank, payments at the post office;
• Social Insurance Agency and the public sector (e. g. municipalities) will not pay this tax;
• introduction of the obligation to keep a business account;

7. Measures in the field of transport

• increase in the toll for trucks with effect from 1 July 2025;
• reduction of motor vehicle tax for trucks to the level of minimum rates;
• increase in motor vehicle tax for personal vehicles of entrepreneurs;
• increase in the price of the annual and daily highway stamp.

We will keep you informed about the next steps in the legislative process.