Slovak Republic

Business combinations

The amendments to the Commercial Code from November 2017 have strengthened the legal and administrative requirements for carrying out mergers, fusions, and demergers of commercial companies (e.g. new obligation to submit a draft contract for a merger or demerger project to the tax authorities no later than 60 days before the date on which these transactions are to be approved by the company bodies).

In 2018, in-kind contributions, mergers, fusions, and demergers of commercial companies may only be performed for tax purposes in most cases at fair (market) values. Under this method, the taxpayer should value assets for tax purposes using their current market values, and the revaluation difference must be reflected in the appropriate company’s tax returns within seven years of the transaction.

The historical price method may only be applied for mergers, fusions, and demergers of commercial companies, in-kind contributions, or cross-border transactions if certain conditions are met.

Adoption of International Financial Reporting Standards (IFRS)

Slovakia has adopted most of the principles of IFRS in its accounting law. However, there are still some differences between IFRS and Slovak accounting standards.

Obligation to prepare statutory financial statements according to IFRS

Financial institutions (banks, insurance companies, etc.) must prepare their statutory financial statements according to IFRS. In addition, a company that fulfils two or more of the following conditions, in two consecutive accounting periods, must prepare its statutory financial statements according to IFRS:

• The total value of assets is more than EUR 170 million.
• Net turnover exceeds EUR 170 million.
• The average number of employees in the individual accounting period exceeds 2,000.

An entity may decide to prepare its financial statements under IFRS if certain conditions are met.

If the Slovak taxpayer is obligated to prepare its financial statements under IFRS, the tax base is derived from either:

• the profit before tax under IFRS, adjusted for tax purposes using the 'IFRS Tax Bridge' issued by the Slovak Ministry of Finance, or
• the profit before tax under Slovak statutory accounting standards.

Tax information exchange agreements (TIEAs)

This table highlights countries with which Slovakia has entered into a TIEA.

International agreements

The Slovak/United States (US) Intergovernmental Agreement (IGA) entered into force during 2015. However, financial institutions in the Slovak Republic were allowed to register on the Foreign Account Tax Compliance Act (FATCA) registration website consistent with the treatment of having an IGA in effect even earlier.

FATCA was implemented into Slovak legislation with effect from 1 January 2016, with a first reporting deadline of 30 June 2016.

The Common Reporting Standard (CRS) was also implemented into Slovak legislation with effect from 1 January 2016, and the first reporting deadline to the Slovak tax authorities was 30 June 2017.

EU Mandatory Disclosure Rules (DAC6)

Slovakia has recently implemented provisions of the EU Directive 2011/16/EU on administrative cooperation in the field of taxation (DAC6) into its local law, imposing reporting obligation on intermediaries or clients (in case intermediaries are subject to professional privilege) in respect to the cross-border reportable arrangement (i.e. arrangements involving more than one member state or a member state and a third country).

The cross-border arrangement is to be reportable, provided at least one of the hallmarks (generic or specific) from the list set by the act is met. Some of the hallmarks are also subject to the main benefit test (i.e. where tax benefit was the main or one of the main aims of cross-border arrangement).

The specific conditions set by the law should be checked on a case-by-case basis to confirm the related reporting obligations.