mailingLeitner Slovakia | Overview of Tax News for 2025

Dear clients and partners,

In connection with the consolidation package, we continue to summarize the significant changes that will take effect from 1 January 2025. This time we will focus on changes in the area of income tax. We will also summarize the new tax and financial statement obligations that we have already informed you about in our previous mailings:

• Value added tax;
• Financial transaction tax;
• 2 % of taxes paid;
• Global minimum tax;
• Report on income tax information;
• ESG reporting.

We would be happy to assist if you need more information.

We for you,

Anna Fábryová & Hana Mičová

***

Corporate income tax rates

The most significant change is the adjustment of the corporate income tax rates. The limit of taxable income (revenue), up to which a lower tax rate can be applied, has been increased from EUR 60,000 to EUR 100,000 and the applicable tax rate has been reduced from 15 % to 10 %. Therefore, in the tax period beginning after 1 January 2025, a legal entity with taxable income (revenue) up to EUR 100,000 will be taxed at a more favorable tax rate of 10 %. Legal entities with taxable income (revenue) of more than EUR 5 million, on the other hand, will be taxed at the higher tax rate of 24 %. For other companies, the tax rate of 21 % continues to apply.

Minimum corporate taxation

We would like to remind you that from 1 January 2024, any legal entity that has reported a loss or whose tax liability is below the minimum tax, must pay the minimum corporate income tax. The amount depends on the amount of taxable income (revenue) earned for a given tax period, as follows:

Withholding tax on dividends

The withholding tax on dividends distributed from profits reported for periods beginning after 1 January 2025 was originally reduced to 7 %. Therefore, the higher rate of 10 % applies only to dividends paid out from profits reported for periods beginning after 1 January 2024.

Personal income tax and social contributions

The consolidation package brought significant changes in the area of personal income tax for entrepreneurs. The limit of taxable income (revenue) for the application of the reduced tax rate of 15 % was increased from EUR 60,000 to EUR 100,000. The standard rates of 19 % and 25 % apply to taxable income (revenue) that exceeds this limit. This change applies to tax periods beginning after 1 January 2025.

The limit of the maximum monthly assessment base for the payment of health, pension, unemployment and guarantee insurance, for the financing of support during short-time work and for the payment of insurance premiums to the Solidarity Reserve Fund will also be increased from 7 to 11 times the average monthly wage in the Slovak economy two years ago (i.e. an increase from EUR 9,128 to EUR 15,730). These changes will affect the self-employed as well as employees, employers and voluntarily insured persons.

Child support allowance

Another change concerns the child allowance. From January 2025, this tax bonus will only apply to children up to the age of 18. The amount will also change as follows:

• per child up to the age of 15: EUR 100 and
• per child from 15 to 18 years: EUR 50.

In addition, the percentage limit of the tax base is increased depending on the number of children. The amount of the tax bonus for high-income parents will also be limited. Taxpayers with an assessment base of more than EUR 25,740 must reduce the bonus by 1/10 of the difference between the tax base and EUR 25,740. Parents with a gross monthly salary of more than approx. EUR 3,600 will lose their bonus entitlement entirely.

In addition, from January 2025, the tax bonus will only be available to taxpayers whose taxable income from Slovak sources in the tax period amounts to at least 90 % of their total worldwide income. This change therefore limits Slovak residents working abroad.

Allowance for children’s sporting activities

From 2025, employers will be obliged to grant their employees an allowance for their child’s sporting activities. The maximum amount of the allowance is EUR 275 per year for all children. The conditions for granting this allowance are similar to those for the recreation allowance. An employer who has not fulfilled the conditions may also grant this allowance on a voluntary basis.

2% of taxes paid for a parent

From 2025, the parental pension will be abolished and replaced by the option to allocate 2% of taxes paid to each parent (4 % in total for both parents). One parent must be the recipient of a retirement, invalidity or disability pension and must reach retirement age. An individual can continue to donate 2 % of his taxes paid to a non-profit organisation. Read more about donating 2 % of taxes paid in our last newsletter.

Promotion of electromobility

To promote electromobility, several changes will be introduced from 1 January 2025. The taxation of employees’ income in kind from the use of electric vehicles for private purposes will be reduced from 1 % to 0.5 %. To simplify matters and provide legal certainty for taxpayers, a different method of documenting expenses for the fuel consumption of electric vehicles will be introduced. Additionally, electric buses are reclassified into a lower depreciation group, while electric scooters and bicycles will be categorised in depreciation group “0”.

Global minimum tax and Report on Income tax information

The Global Minimum Tax Act has also been amended to implement the administrative guidelines on the global model rules published by the OECD.

We would like to draw your attention to the fact that the entities concerned are obliged to calculate the top-up tax for the year 2024 and to submit the reports and tax returns by 30 June 2026. We recommend analyzing the conditions for the application of the temporary exemption from the calculation of the top-up tax on the basis of a qualified country-by-country report.

At EU level, the draft DAC 9 Directive has been adopted by the European Commission, which aims at easier compliance for companies with their obligations under Pillar II.

You can find out more about the global minimum tax in our mailing from the beginning of 2024.

Finally, we would like to remind you of the new reporting obligation, the Report on Income tax information, resulting from the Act on Accounting, as we informed you in our previous mailing.

During the course of the year, we also informed you about the new sustainability reporting obligations.

Double tax treaties

Slovakia signed four new double tax treaties in 2024 with Azerbaijan, Albania, New Zealand and Saudi Arabia. A multilateral convention was concluded with Romania and Finland.