As the year draws to a close, it is common for various laws and amendments to be submitted to the National Council of Slovakia for consideration, and this year is no different. In this article, we will examine the approved changes to the Income Tax Act in Slovakia (act No. 595/2003), effective from January 1, 2025, as well as the proposed parliamentary amendments to this act that are still awaiting parliamentary debate.

Tax rate – individuals

As of January 1, 2025, the threshold for taxable income from business or other self-employment activities for applying the reduced tax rate of 15% will increase from €60,000 to €100,000.The tax rate on dividend payouts will decrease from 10% to 7%. Dividends from profits for the 2025 tax year will be subject to a 7% tax rate. The reduced tax rate will also apply to liquidation balances and settlement shares.

Tax rate – legal entities

For the tax period starting no earlier than January 1, 2025, legal entities will apply the following tax rates:

A taxable income is any income that is subject to tax and is not exempt from tax under the Income Tax Act in Slovakia neither an international treaty. This means that, for example, dividends paid from a business’s profit, which are not subject to tax, or income from the sale of shares, if the conditions from tax exemption under § 13c of the Income Tax Act in Slovakia are met, will not be included in the taxable income for the purpose of determining the tax rate.

Support for electromobility

The amount of non-monetary income of an employee, which consists of the provision of a company vehicle for private use, is calculated at 0.5% of the vehicle’s entry price in the case of electric vehicles, specifically “BEV” and “PHEV” vehicles classified in depreciation group 0. For commercial vehicles with internal combustion engines, the non-monetary income for the use of a company vehicle for private purposes will continue to be taxed at 1% of the vehicle’s entry price.

In order to simplify matter and provide legal certainty for taxpayers, another method of proving fuel expenses for electric vehicles is being introduced. If a taxpayer chooses, for home charging, they can claim expenses for consumed electric energy as fuel costs, based on the product of the average monthly price in the Slovak Republic, as declared by the Statistical Office of the Slovak Republic, for electric energy consumed during alternating current charging for home vehicle charging, and the amount of electric energy consumed according to the vehicle’s documentation in relation to the kilometers driven.

Similarly, in order to promote the development of electromobility in Slovakia, bicycles and scooters with auxiliary electric motors are being reclassified into depreciation group 0 with a depreciation period of 2 years. Trolleybuses and electric buses are being reclassified from depreciation group 2 to depreciation group 1 with a depreciation period of 4 years. Tax depreciation for the aforementioned types of assets, which were classified by the company

before January 1, 2025, is no longer subject to retroactive adjustment.

Tax bonus for dependent child

The amount of the tax bonus for a dependent child will change as of January 1, 2025, according to the income tax act in Slovakia, compared to the current state as follows:

The amount of tax bonus € 100 will be paid for child until the child reach the age of 15, with the last payment made in the month the child turns 15. The amount of € 50 will be paid for child until the child reach the age of 18, with the last payment made in the month the child turns 18.

The amount of the tax bonus for child will be limited to a percentage of the taxpayer’s partial tax base (“PTB”) from employment income or PTB from business or other self-employment income, or from the total of these PTBs, depending on the number of dependent children as follows:

From 2025, the percentage of the taxable base will increase, which will have a positive impact on families with very low incomes. At the same time, there is an additional limit for high-income parents with children. If the annual partial tax base (PTB) of a taxpayer claiming the tax bonus exceeds 18 times the average monthly wage as determined by the Statistical Office of the Slovak Republic from two years prior, the amount of the tax credit for each child will be reduced by 1/10 of the difference between the taxpayer’s PTB and 18 times the average monthly wage.

An important change is that both Slovak tax residents and Slovak tax non-residents will be entitled to the tax bonus on child only if the total of their taxable income from sources within Slovakia in the relevant tax period is at least 90% of their worldwide income (from sources within Slovakia + from foreign sources). This change will affect, for example, a parent (tax resident of Slovakia) whose income from foreign sources constitutes more than 10% of their worldwide income, thereby losing their entitlement to the tax bonus on children.

Assignation of tax to parents

From January 1, 2025, the parental pension paid by the Social Insurance Agency will be abolished. Taxpayers can donate 2% of the paid tax to each living parent receiving a retirement pension, meaning 2% of the tax for the mother and 2% for the father. The amount of the allocated tax must be at least 3 euros. For the first time, it will be possible to doane 2% of the tax to parents for the tax period of year 2025.

However, the option to donate 2% or 3% of the tax to the nonprofit sector remains in effect. To donate 2% or 3% of the paid tax, it is necessary to fill out the form Declaration for the Allocation of a Share of Personal Income Tax, if you have requested your employer to carry out the annual tax settlement, or directly in the personal income tax return if the individual is filing its own tax return.

Maximum assesment base for social contributions

In the area of social security contributions, from 2025, the maximum assessment base for paying social insurance contributions will increase from 7-times to 11-times the average monthly wage in the Slovak economy from 2 years prior. For example, for the year 2025, this means an increase in the maximum assessment base from €10,010 to €15,730. This change will mainly affect high-income employees and self-employed individuals.

The above-mentioned changes in the area of taxes and contributions were approved by the National Council of the Slovak Republic on October 3, 2024, as part of a consolidation package of measures to improve the state of public finances. For the law to take effect, it must still be signed by the President of the Slovak Republic and published in the Collection of Laws.

Parliamentary proposals for the amendment of the Income Tax Act in Slovakia

Parliamentary proposals regarding income tax have been submitted for discussion in the National Council of the Slovak Republic, and they are included in the agenda of the current sessions. However, their final validity is still uncertain. Below, we present some of these proposals:

• In the area of employee benefits, several advantages for employees are proposed, such as tax and social security contribution exemptions of up to €500 for the payment of a 13^th and 14^th salary in accordance with the Labor Code. Additionally, a tax and social security contribution exemption is proposed for tips of up to 20% of the employee’s monthly taxable income in the hospitality sector.
• According to the model of legal regulation in the Czech Republic, it is proposed to expand the exceptions under which income from the sale of real estate will be exempt from tax. It is suggested to tax the income of individuals from the sale of real estate based on whether they had permanent residence in it for more than 2 years immediately before the sale or less than 2 years.
• It is proposed to consider technical improvements (TI) and repairs of selected types of buildings as separate assets, which would be tax-depreciated separately from the building and classified into the second depreciation group with a depreciation period of 6 years. This includes:
  • TI and repairs of buildings providing accommodation services (e.g., hotels, hostels, dormitories, and others), where the value of the TI or repair is at least 10% of the purchase price of the building,
  • TI and repairs of buildings serving sports and sporting facilities (e.g., sports halls with spectator seating, sports fields, ski lifts, etc.), where the value of the technical improvement or repair is at least 10% of the purchase price of the building or facility.
• As part of supporting sports in Slovakia, it is proposed to ablish the cash basis rules for tax deductibilty of expenses related to sponsorship for the sponsor based on a sponsorship agreement in sports.
• It is further proposed to allow tax deductibility of expenses (costs) incurred by taxpayers to support sports, even if these costs (expenses) are not related to the taxpayer’s activities.
• At the same time, it is proposed to introduce a so-called super-deduction for expenses (costs) incurred in support of sports, subject to certain conditions, among other things.

For the changes in the Income Tax Act in Slovakia to take effect, they must be approved by the members of the National Council of the Slovak Republic, signed by the President of the Slovak Republic, and the amended text of the law must subsequently be published in the Collection of Laws of the Slovak Republic.

Marcela Tomajková

Senior Tax Consultant | Accace Slovakia

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Martina Paprčková

Tax Manager | Accace Slovakia

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