Corporate - Tax credits and incentivesLast reviewed - 04 December 2022
There are several types of investment incentives potentially available, including corporate tax credits, discounts on the price of publicly owned real estate, and financial support for creating jobs or for the acquisition of long-term assets. All of these are treated as state aid.
Various conditions must be met in order for a company to qualify for state aid. These include a minimum amount of investment in fixed assets, where the amount depends mainly on the type of project and where it is located, or a minimum number of newly created jobs.
Investment incentives (including tax credits) are potentially available for projects in the following areas:
- Technology centres.
- Shared services centres.
The granting of a tax relief is subject to approval of the Slovak authorities. If certain conditions are met, a taxpayer may apply tax relief in the ten subsequent years following the tax period in which the relief was granted.
As of 1 January 2022, taxpayers are eligible to apply a newly introduced additional investment deduction, according to which taxpayers may deduct the determined percentage of expense from depreciation from the investment, the amount of which depends on the planned percentage of reinvestment of the average value of investments and the value of reinvestment of this planned average value of investments stipulated in the investment plan as stated in the table below:
|Re-invested average value of investments||Investment deduction based on the value of the planned amount of reinvestment of the average value of investments|
|EUR 1 million to EUR 20 million||More than EUR 20 million to EUR 50 million||More than EUR 50 million|
|700% to 1,399.99%||15%||25%||50%|
|1,400% or more||20%||30%||55%|
The investment deduction shall be applied to the investments put into use during the investment plan and can be applied within the depreciation period of the assets up to a maximum of ten consecutive tax periods following the tax period in which the assets were put into use.
The new investment deduction aims to support higher added-value investments linked to Industry 4.0. An investment means, for example, an investment in a manufacturing and logistics system consisting of mechanisms, machines, ancillary devices, automation and communication technology, including software for managing the manufacturing and logistics process, able to exchange, process, and archive digitised data in real time to optimise this process.
Research and development (R&D) super deduction
Taxpayers who perform R&D activities may apply for a special form of support, the super-deduction of R&D costs. The total of the following items may be deducted from the tax base adjusted by the tax loss deduction:
- 100% of R&D costs incurred in the taxable period for which the tax return is filed.
- 100% of positive difference between the average of the total R&D costs incurred:
- in the taxable period for which the taxpayer applies super-deduction, and in the immediately preceding taxable period, and
- in the two immediately preceding taxable periods.
According to the amendments to the Slovak ITA valid from 1 January 2020, the total of the following items may be deducted from the tax base adjusted by the tax loss deduction:
- For the financial year starting on or after 1 January 2019: 150% of R&D costs incurred in the taxable period for which the tax return is filed.
- For financial years starting on or after 1 January 2020: 200% of R&D costs incurred in the taxable period for which the tax return is filed.
If a tax loss is recorded or if the tax base after the tax loss deduction is lower than the available deduction, the deduction may be applied in the next taxable period in which the taxpayer reports a positive tax base; however, this may not exceed five taxable periods immediately following the period in which the entitlement to make a deduction arose.
Tax exemption for intangible assets (Patent box)
The amendment of ITA valid since 1 January 2018 introduced a tax exemption of 50% for income from considerations for granting a right to use, or for using, a protected patent, utility model, or software created by the taxpayer (basic patent box). Tax exemption refers only to assets created by own activities and applies to tax periods in which amortisation of an intangible asset is included in tax expenses.
A similar exemption also applies to a certain part of income from selling goods that were manufactured on the basis of a protected patent or a utility model (extended patent box). Tax exemption accounts for 50% of income attributed to the sales price, less related costs and less profit margin.
If intangible research results acquired from another person are used to develop intangible assets, the tax exemption is reduced by a coefficient.
Entities applying this tax exemption are entered in a public register kept by the Financial Directorate of the Slovak Republic.
Foreign tax credit
Foreign tax credits are available if allotted under an applicable DTT.