Slovak Republic

As a member state of the Organisation for Economic Co-operation and Development (OECD), the Slovak Republic’s (Slovakia's) system of corporate taxation generally follows OECD guidelines and principles.

The corporate income tax (CIT) applies to the profits generated by all companies, including branches of foreign companies.

Slovak tax residents are taxed on their worldwide income. Slovak tax residents may utilise a method of elimination of double taxation if their income is taxed abroad. The exemption or credit method can be used to eliminate the double taxation, depending on the relevant double tax treaty (DTT) and the type of income.

Slovak tax non-residents are taxable in Slovakia on their Slovak-source income only. Slovak-source income is defined by local tax law and includes, inter alia, the business income of permanent establishments (PEs) and passive types of income, such as royalties, interest, and income from disposal of assets.

The standard CIT rate for 2024 was 21%. The reduced CIT rate for 2024 at 15% is applicable for corporate taxpayers and entrepreneurs and self-employed individuals that achieve taxable income (revenues) up to 60,000 euros (EUR) (previously EUR 49,790) for the relevant tax period.

From 1 January 2025, the following CIT rates apply to legal entities:

• A 10% CIT rate (instead of the previous 15%) applies to legal entities whose taxable income does not exceed EUR 100,000 in the tax period.
• A 21% CIT rate applies to legal entities whose taxable income is in the range from EUR 100,000 to EUR 5 million.
• A 24% CIT rate applies to legal entities whose taxable income exceeds EUR 5 million.

Also, legal entities are required to pay a minimum CIT, regardless of actual results. Annual minimum required CIT amount are prescribed as follows:

• EUR 340 for legal entities with taxable income up to EUR 50,000.
• EUR 940 for legal entities with taxable income from EUR 50,000 to EUR 250,000.
• EUR 1,920 for legal entities with taxable income from EUR 250,000 to EUR 500,000.
• EUR 3,840 for legal entities with taxable income exceeding EUR 500,00.

Entrepreneurs and self-employed individuals who achieve taxable income (revenues) up to EUR 100,000 (previously EUR 60,000) will keep the 15% tax rate for 2025.

A 10% WHT rate that applies to certain taxable dividend payments to individuals from 1 January 2025 reduced to the previously applicable 7% WHT rate.

Further, some income, such as interest or royalties, may be subject to a 19% WHT rate. A specific 35% WHT rate applies for payments to taxpayers from non-cooperative jurisdictions (i.e. where no DTT or tax information exchange agreement [TIEA] exists, the taxpayer is from a jurisdiction that is listed in the EU's List of Non-Cooperating Countries or a state that does not apply CIT, or a zero CIT rate applies) or where the beneficial owners of the income cannot be identified, including payments of taxable dividends.

EU Directive on a global minimum tax - Pillar Two

The EU Directive on a global minimum level of taxation (so-called Pillar Two initiative of OECD) was transposed to the Slovak legislation in the end of 2023. According to the approved adopted legislation, the Law on minimum Slovak top-up tax for multinational enterprise groups and large-scale domestic groups (’The Top-up Tax Act‘) is effective from 1 January 2024.

Given the specific position of the Slovak Republic, where only a very low number of parent entities are headquartered, the option to suspend the Income Inclusion Rule (IIR) and Undertaxed Profits Rule (UTPR) was utilised. On the other hand, considering the higher number of subsidiary entities that are Slovak tax residents, the Top-up Tax Act introduces a qualified domestic minimum top-up tax (QDMTT) to prevent the taxation of these entities abroad due to the application of mandatory IIR/UTPR rules by parent or other entities headquartered abroad.

The Top-up Tax Act will apply to those Slovak entities, including Slovak PEs of non-resident taxpayers, that are part of a multinational group of enterprises or a large-scale domestic group (hereinafter referred to as the ’group‘) if the consolidated annual revenues of this group, as reported by the ultimate parent entity (hereinafter referred to as the ’parent entity‘) in its consolidated financial statements, reach at least EUR 750 million in at least two of the four fiscal periods preceding the analysed fiscal period.

Under the Top-up Tax Act, Slovakia imposes a top-up tax on Slovak entities falling within the scope of law if their income has been taxed below the effective tax rate of 15%.

The top-up tax is based on three fundamental elements: the calculation of qualifying income (or qualifying loss), the calculation of adjusted covered taxes, and the calculation of the effective tax rate. The Top-up Tax Act generally follows the Directive.

The basic rule for calculating the effective tax rate and the top-up tax is that it will be calculated collectively for all constituent entities of the group located in the Slovak Republic.

Exceptions

The law also prescribes some exceptions to the calculation of the top-up tax. For instance, the filing entity may decide that the top-up tax for the relevant accounting period is zero. This applies in cases where the average revenues of all constituent entities in the jurisdiction are less than EUR 10 million and the average income (profit) or loss of all constituent entities is less than EUR 1 million.

Under the Top-up Tax Act, it is possible to reduce the net qualifying income by the amount of excluded income based on economic substance, which equals the sum of excluded payroll costs and the sum of excluded tangible assets.

In the first year of the Top-up Tax Act’s application, constituent entities can reduce their net qualifying income by up to 9.8% of recognised payroll costs for recognised employees and by 7.8% of the book value of recognised tangible assets located in the Slovak Republic. The percentages will decrease each year until 2033, when they will reach a final level of 5% and 5%, respectively.

Tax administration

The Slovak entities falling under the Top-up Tax Act will submit a tax return for the top-up tax and a notification containing the information required by law for determination of this tax within 15 months after the end of the relevant tax period.

The tax period of the top-up tax is the accounting period for which the main ultimate parent entity of a multinational group of enterprises or a large-scale national group of enterprises prepares consolidated financial statements.

It is not possible to extend the deadline for submitting a notification to determine the top-up tax and the deadline for submitting a tax return, nor to excuse its omission. If the tax subject fails to submit a tax return or tax notification within the prescribed period, the tax administrator will impose a fine of between EUR 1,500 and EUR 50,000, even repeatedly. 

The right to impose the top-up tax and the right to enforce the collection of tax arrears expire after the lapse of four tax periods immediately following the tax period in which the top-up tax was due.

In case the tax period is a transitional year (it is the first accounting period in which a multinational group of companies or a large-scale domestic group falls within the scope of this law), the deadline for filing is extended by three calendar months. This means that the first reporting obligations, calculation, and remittance of the top-up tax will need to be completed by 30 June 2026 for the year 2024.

For more detailed information and the most recent updates, please visit PwC’s Pillar Two Country Tracker.

Local income taxes

Slovakia does not have local, state, or provincial CIT.