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As part of the consolidation package for restoring public finances, the Government of the Slovak Republic has introduced several changes, one of the most controversial being the introduction of a new tax on financial transactions in Slovakia, effective from January 1, 2025. This government proposal has not yet been approved by parliament, but it is highly likely that it will be passed either unchanged or with minimal adjustments. This new tax will affect the entire business environment.
A financial transaction refers to a payment service provided by a payment service provider, executed based on the taxpayer’s order or consent, or a similar payment service provided by a payment service provider located outside the territory of the Slovak Republic, executed based on the taxpayer’s order or consent.
Payment services include executing payment operations, including the transfer of funds from or to a payment account maintained by a payment service provider, through card payments or other means of payment, direct debits, executing payments from credit, issuing payment instruments, accepting payments, and transferring money. Payment services also include depositing, withdrawing, or transferring funds on behalf of or at the request of the payer or payee.
Taxpayers are required to carry out financial transactions using a so-called transaction account. A transaction account is considered any payment account of a taxpayer who is a legal entity or an organizational unit of a foreign entity, or for an individual entrepreneur, an account on which they conduct financial transactions related to their business activities.
A taxpayer who does not have a designated payment account by the effective date of the law, where only transactions related to their activities are carried out, must establish such an account by March 31, 2025.
The taxpayer is a self-employed individual, a legal entity, or an organizational unit of a foreign entity conducting business, who is also a client of a payment service provider. According to the Commercial Code, a businessperson is:
The law excludes from the taxpayer category the Social Insurance Agency, budgetary and contributory organizations as per the Public Finance Budgetary Rules Act, municipalities, and higher territorial units, and their budgetary and contributory organizations. Consequently, according to the current draft law, even non-profit entities, among others, will be subject to this tax.
The income payer is:
that executes financial transactions on the taxpayer’s transaction account (e.g., banks). Therefore, payment service providers will generally be responsible for paying the financial transaction tax, not businesses directly.
However, the taxpayer can also be an income payer if:
In these cases, the taxpayer also becomes the income payer and must fulfill the same obligations as any income payer. This means that businesses using foreign bank accounts for their operations in Slovakia must calculate and settle their financial transaction tax liabilities in Slovakia, including reporting and administrative duties.
The tax applies to financial transactions that involve debiting funds from a transaction account, using a payment card issued for a transaction account, and withdrawing cash from a transaction account.
The law also specifies over 20 exceptions to the subject of the tax, mainly concerning erroneous payment operations by a payment service provider, payment operations on a securities dealer’s account, payment operations within the State Treasury, payment operations under the Deposit Protection Act, and many others.
Some of the most significant exceptions include financial transactions between the taxpayer’s own accounts within the same payment service provider (intrabank transfers), group financing operations where the group members’ accounts are managed by the same provider (cash pooling), and the payment of taxes, contributions, and fees that constitute state budget income, Social Insurance contributions, and health insurance payments made to accounts in the State Treasury.
The tax base is the amount of funds debited from the taxpayer’s account, i.e., the debit payment amount. The tax base also includes the amount of funds demanded by a person who conducted transactions related to the taxpayer’s activities in Slovakia, such as employee salaries, energy costs, or payments to suppliers.
For payments in currencies other than the euro, the reference exchange rate determined and published by the ECB or NBS on the day of the financial transaction will be used for conversion.
The proposed tax rate depends on the subject of the tax as follows:
The tax is calculated as the product of the tax rate and the tax base, except for the payment card tax, which is a fixed amount. The minimum tax for a single transaction is set at 1 eurocent. If the tax exceeds the minimum amount, it is rounded to the nearest eurocent.
Generally, the tax period is the calendar month. Only for the payment card tax is the period the calendar year.
For recharging costs related to financial transactions conducted in Slovakia, the tax period is the month in which the costs were paid. Payment also includes offsetting receivables for this purpose.
The income payer (typically a bank) is responsible for calculating the tax, collecting it from the taxpayer, and remitting it to the tax authority by the end of the calendar month following the tax period. The income payer must also electronically submit a notification, considered a tax return. The tax is considered assessed upon the submission of the notification. The tax is due on the last day of the notification submission period. The income payer is responsible for the correct calculation, collection, and payment of the tax.
If the income payer does not collect or timely remit the tax, it will be collected from the income payer. Similarly, if the tax is not collected or remitted in the correct amount, the same process applies.
Taxpayers conducting financial transactions on non-transaction accounts or having costs related to financial transactions charged to them become income payers, meaning they must electronically file a notification and pay the tax by the due date.
The income payer must maintain records for each tax period and keep them until the deadline for the tax assessment expires, as per the Tax Code. The records must include mainly:
a) Name and business address, or trade name and address of the taxpayer’s registered office or branch,
b) Trade name and address of the income payer’s registered office or branch,
c) The taxpayer’s transaction account numbers,
d) The amount of the financial transaction,
e) The tax base,
f) The tax rate,
g) The tax amount,
h) The date of the first use of the payment card in the tax period under §9(2).
In case of doubt, the taxpayer has the right to request an explanation from the income payer within 12 calendar months from the date the tax was collected. The request should state the reasons for the doubt. The income payer must provide a written explanation within 30 days of receiving the request and correct any errors within the same timeframe. If the income payer fails to provide this explanation, the taxpayer can file a complaint with the tax authority.
Although the law will take effect on January 1, 2025, the first tax period will be April 2025. The tax for the periods of 04-06/2025 can be remitted until July 31, 2025. If the income payer collects the tax earlier, they must remit it by the end of the calendar month following the month in which the tax was collected and submit a notification to the tax authority.
If a taxpayer closes their transaction account between April 1 and May 31, 2025, they must calculate the tax and remit it to the tax authority for the periods during which the account was active and submit a notification by the end of the month following the month in which the account was closed.
Since the draft law has not yet been passed by parliament, the only change in the legislative process was the removal of the mandatory acceptance of card payments for entrepreneurs recording sales through the e-cash register system. The reasoning is that this measure will be incorporated into the Government’s Action Plan for Combatting Tax Evasion. Therefore, it is rational to expect that this proposal will be implemented in some form sooner or later.
If you believe your company may be subject to the tax on financial transactions in Slovakia from 2025 and would like more information, our tax experts are happy to provide consultation on this matter.
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