Slovakia: Draft Tax Measures for 2024

| Image Credits: Slovak Prime Minister Robert Fico during the press conference, by MGlen

On September 18, 2024, the Government of the Slovak Republic approved a series of draft tax reforms aimed at increasing revenue and addressing fiscal consolidation. These measures, which are set to take effect in 2024, include significant changes to corporate tax rates, VAT rates, and other tax policies. Key provisions include:

• VAT Rate Changes: The standard VAT rate will increase from 20% to 23%, while the reduced VAT rate will rise from 10% to 19%. The 5% reduced VAT rate will remain unchanged, though the government will revise the list of goods and services eligible for the reduced rates.

• Corporate Tax Adjustments: The corporate tax rate will increase from 21% to 22% for businesses with taxable income exceeding EUR 5 million. Small taxpayers, however, will benefit from a reduced corporate tax rate, which will decrease from 15% to 10%, and the income threshold for this reduced rate will rise from EUR 60,000 to EUR 100,000.

• Special Levies on Key Sectors: Higher levies will be imposed on energy companies, refineries, and telecommunications operators. These industries will face increased taxes to contribute to the government’s fiscal goals.

• Introduction of a Financial Transactions Tax: A new tax on financial transactions will be introduced, with rates ranging from 0.35% to 0.8%, depending on the transaction type. Some transactions will have a cap on the tax amount.

• Social Security Contributions: The maximum contribution basis for employee social security contributions will be increased from 7 times the average minimum wage to 11 times.

• Withholding Tax Reduction: The withholding tax rate on dividends paid to individuals will be lowered from 10% to 7%, providing some relief to individual taxpayers.

The Slovak government aims to generate between €2.6 billion and €2.7 billion through these measures in the next year, although only two-thirds of this revenue will be directed toward reducing the national debt. The government has not clarified how the remaining funds will be allocated.

Despite initial reluctance, the government also plans to introduce a tax on financial transactions and will reduce funding for cities and municipalities. Meanwhile, the increased tax burden on energy, telecommunications, and accommodation sectors, as well as on companies with taxable income over EUR 1 million, is expected to raise significant revenue. Finance Minister Ladislav Kamenický has indicated that the VAT hike will be somewhat offset by lower VAT rates on basic food items, though this will only minimally mitigate the impact on household costs.

Further tax increases and fees could also be introduced in the future to meet the government’s fiscal goals.

SOURCE/RECOMMENDED READ:

• https://www.aktuality.sk/clanok/PjYoVli/robert-fico-si-nechal-na-rozdavanie-nie-vsetko-co-vyberie-od-ludi-a-firiem-pojde-na-splatenie-dlhu-rozhovor/