What follows is a brief outline of the major changesthat have been introduced in 2013 by the Amendment to Act on Income Tax and have negative impact on the Slovak tax payers:
Limit on the total amount of lump sum expenses
Starting with 2013 the monthly limit of 420 EUR has been introduced for the tax payers who apply the lump sum expenses. This limit applies to each month of business activity. This change will affect the tax payers with an average monthly income higher than 1,050 EUR. The lump sum expenses are applied by those tax payers who have income from business activity or other self-employment activity, and do not apply the provable tax expenses and are not VAT payers.
Instead of application of lump sum expenses, these taxpayers may consider the possibility to keep the accounting or tax evidence, if their provable tax expenses exceed the average monthly amount of 420 EUR.
Lump sum expenses by rental income
Since 2013 it is not possible to apply 40% lump sum expenses on the taxable income from rental. The tax payers will have to record and apply the provable tax expenses by keeping the books or tax evidence in accordance with §6 par. 11 Act on Income Tax (ITA).
This change will mostly affect the lessors of land (with no tax depreciation) by which the 40% of lump sum expenses generally highly exceeded their provable expenses.
This change has significant impact also on lessors of other “tax depreciation” real estates, which the lessors did not want to include into business property and depreciate. If these taxpayers applied their expenses in the form of lump sum expenses till the end of 2012, they had the right on tax exemption on income by property sale in accordance with §9 par. 1 ITA.
Tightening of conditions by claiming the tax bonus
Since 2013 it is possible to claim the tax bonus only if the taxpayer reaches the minimum income (6-times the minimum wage) and this only from so-called active income (e.g. income from business activity, income from employment or from other self-employment activity from which the taxpayer does not declare a tax loss). Till the end of 2012 it was possible to claim the tax bonus also from so-called passive income according to §6 ITA (such as rental income, income from use of work of art, income from artistic performance etc.).
Increase of the income tax rate
In accordance with the amendment to ITA effective from January 2013 two personal income rates were introduced depending on the tax base of an individual. By the tax base up to 176,8- times the subsistence amount (34 401,74 EUR in 2013) 19% PIT rate is applied, the same as in 2012. The income exceeding the the tax base will be subject to a newly introduced 25% PIT rate. The corporate income tax rate increased to 23%.