Slovakia country profile | KPMG | GLOBAL

Slovakia country profile

Slovakia country profile

Key tax factors for efficient cross-border business and investment involving Slovakia.

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EU Member State

Yes

Double Tax Treaties

With: 

Armenia Denmark 
Israel 
Moldova 
Spain 
Australia
Egypt Italy 
Mongolia 
Sri Lanka 
Austria 
Estonia 
Japan 
Montenegro 
Sweden 
Belarus 
France 
Kazakhstan
Netherlands 
Switzerland 
Belgium 
France 
Rep. of Korea
Nigeria 
Syria 
Bosnia & Herzegovina
Georgia 
Kuwait 
Norway 
Taiwan  
Brazil 
Germany 
Latvia 
Poland 
Tunisia 
Bulgaria 
Greece 
Libya 
Portugal 
Turkey 
Canada 
Hungary 
Lithuania 
Romania 
Turkmenistan 
China 
Iceland 
Luxembourg 
Russia 
UK 
Croatia 
India 
Macedonia 
Serbia 
Ukraine 
Cyprus 
Indonesia 
Malaysia  Singapore  US 
Czech Republic
Iran 
Malta 
Slovenia 
Uzbekistan 
  Rep. of Ireland 
Mexico 
South Africa
Vietnam 

 

Notes: (a) Treaty signed but not yet in force

Most important forms of doing business

Limited liability company (s.r.o.), joint-stock company (a.s.).

Legal entity capital requirements

Limited liability company (s.r.o.): at least EUR 5,000,
joint-stock company (a.s.): at least EUR 25,000.

Residence and tax system

A company is resident if it has been incorporated in Slovakia or if its place of effective management is in Slovakia.

Resident companies are taxed on their worldwide income. Non-resident companies are taxed on their Slovak source income only.

Compliance requirements for CIT purposes

The corporate income tax return must be filed within 3 months from the end of the respective taxable period (usually the calendar year, but can be changed to a different financial year). However, based on the written notification submitted to the relevant tax authorities by the date prescribed for the filing of the tax return, the deadline for filing can be extended:

  1. up to 3 calendar months; or
  2. up to 6 calendar months (if a taxable income of taxpayer also originates from sources abroad).

Corporate income tax rate

The standard corporate income tax rate is 21 percent.

Withholding tax rates

On dividends paid to non-resident companies

Generally 19 percent, but exemption for interest paid to EU-associated companies (due to the domestic law implementing the EU Interest and Royalties Directive):

  • Associated companies: direct holding of 25 percent of the share capital;
  • Minimum holding period: 24 consecutive months before the payment date


The rate may also be reduced under DTTs.
35 percent on interest paid to taxpayer in non-tax treaty state.

 

On interest paid to non-resident companies

Generally 19 percent, but exemption for interest paid to EU-associated companies (due to the domestic law implementing the EU Interest and Royalties Directive):

  • Associated companies: direct holding of 25 percent of the share capital;
  • Minimum holding period: 24 consecutive months before the payment date The rate may also be reduced under DTTs.

35 percent on interest paid to taxpayer in non-tax treaty state.

On patent royalties and certain copyright royalties paid to non-resident companies

Generally 19 percent, but exception for royalties paid to EU-associated companies (due to the domestic law implementing the EU Interest and Royalties Directive):

  • Associated companies: direct holding of 25 percent of the share capital;
  • Minimum holding period: 24 consecutive months before the payment date.

The rate may also be reduced under DTTs.

35 percent on royalties paid to taxpayer in non-tax treaty state.

On fees for technical services

Generally 19 percent on fees for technical advisory services provided by nonresidents in the territory of the Slovak Republic. Benefit from DTT may be sought.

On other payments

Withholding tax must be applied on specified categories of income originating from sources in the territory of the Slovak Republic.

Branch withholding taxes

No

Holding rules

Dividend received from resident/non-resident subsidiaries

Exemption, except for distributions of profits generated before 2004.

For dividends distributed by an EU resident subsidiary whose share capital is directly held as to 25 percent, the exemption applies regardless of the year in which the profit was earned (due to the domestic law implementing the EU Parent-Subsidiary Directive).

In accordance with the amendment of the EU Parent-Subsidiary Directive, in order to avoid the tax evasion related to hybrid instruments, the profit shares (e.g. dividends) are not subject to tax only to the extent that they are not a tax expense of the distributor of the profit share.

Dividends received from non-treaty states are subject to tax at the rate of 35 percent if distributed out of profits for taxable periods starting on and after January 1, 2017.

Capital gains obtained from resident/non-resident subsidiaries

In principle, taxable as ordinary income:

  • Taxation of capital gains from Slovak sources, on the sale of moveable assets of a PE, shares and securities in a Slovak entity if sold by a non-resident to a Slovak entity or if the non-resident company owns real estate in Slovakia with an accounting value totaling more than 50 percent of the company's equity (may be reduced/exempted by application of DTT).

Tax losses

As of January 1, 2014 tax losses can be carried forward in equal parts over 4 years. Provisional conditions to the Income Tax Act stipulate that any tax losses reported from 2010 to 2013 not utilized until January 1, 2014 can only be carried forward in four equal portions

Tax consolidation rules/Group relief rules

No

Registration duties

No, only minimal stamp duties when a company is being registered or changes to registration in the Commercial Register.

Transfer duties

On the transfer of shares

No 

On the transfer of land and buildings

No

Stamp duties

Yes

Real estate taxes

The real estate tax consists of three different types of taxes:

  1. Land tax,
  2. Property tax on buildings and
  3. Apartment tax.

The tax return for real estate tax must be filed before January 31 of the year for which this tax return is filed. 

Controlled Foreign Company rules

No

Transfer pricing rules

OECD Transfer Pricing Guidelines apply. Very broad definition of 'related parties'. As of January 1, 2015 transfer pricing rules apply also between Slovak entities.

Documentation requirement

As of January 1, 2009, there is an obligation for foreign-related parties to keep specific transfer pricing documentation. Detailed requirements for such documentation were issued by the Ministry of Finance.

As of 2014 the taxpayer is obliged to submit local transfer pricing documentation to the tax authorities upon request (i.e. not only during the course of a tax audit), within 15 days of receiving the request.

As of January 1, 2015, domestic related parties are also required to maintain transfer pricing documentation.

Thin capitalization rules

Earning stripping rules: In the tax periods commencing on or after January 1, 2015, interest and other expenses related to loans received from a related party exceeding 25 percent of an amount in principle corresponding to EBITDA will be tax non-deductible. The rules apply to related parties - in line with the definition of related parties for transfer pricing purposes, i.e. to foreign and domestic related parties. These rules do not apply to certain financial institutions, e.g. banks, insurance companies, re-insurance companies.

General Anti-Avoidance rules (GAAR)

No General Anti-Avoidance provisions except for the transfer pricing and
substance over form rules. 

Specific Anti-Avoidance rules/Anti Treaty Shopping Provisions

No  

Advance Ruling system

Tax authorities may issue binding advance rulings on transfer pricing issues and for the determination of the taxable base of a PE only.

As of September 1, 2014, it is possible to request the Financial Directorate for a binding opinion regarding the application of tax laws in specific areas.

IP / R&D incentives

Yes. A company may file an application for R&D incentives after the Ministry of Education publishes a call for submissions. A successful application results in tax relief, which is computed as a proportional part of the tax due.

Other incentives

Investment incentives can be granted if the particular conditions and all the administrative requirements are met.

VAT

The standard rate is 20 percent and the reduced rate is 10 percent. VAT grouping is possible

Other relevant points of attention

In principle, 'substance over form' rule in the Tax Administration Act applies to any planning structure.

Contact us

Zuzana Blazejova

KPMG in Slovakia

T: +421259984331

E: zblazejova@kpmg.sk

EU Tax Centre

KPMG’s EU Tax Centre, working together with our network of EU tax law specialists throughout the European Union.

 
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