2024. január 10.

Amendments to Income Tax Act and VAT Act of Slovakia from 2024

Important changes to registration of taxpayers among others

From this year, significant changes will come into force in the VAT Act of Slovakia, as well as in the Slovakian Income Tax Act. The latest amendments of the VAT Act of Slovakia are not yet final, but are expected to come in force in 2024 – except for the provisions related to small businesses, which are proposed to take effect from 2025. The changes in the area of income tax are relevant for 2024 and for the preparation of tax returns for 2023. 

Registration of taxable person in Slovakia

In accordance with the proposed amendments to VAT Act of Slovakia, the rules for registration of both Slovakian and foreign taxable persons will undergo significant changes. A Slovakian taxable person will become a taxable person as soon as the prescribed criteria are met and not on the date specified in the tax administrator’s decision. The threshold for income above which a Slovakian taxable person is obliged to submit an application for registration, has been raised from EUR 49,790 to EUR 50,000 or 62,500. The time period for submitting an application for registration is also shortened, i.e. within 5 days from the day a reason for registration arises (i.e. exceeding the prescribed criteria). The tax administrator will issue a registration decision within 10 days.

The conditions for the registration of a foreign taxable person will also change according to the proposed amendments to the VAT Act of Slovakia. Now such a taxable person is obliged to submit an application for VAT registration without delay, and the tax administrator is obliged to register the taxable person immediately after receiving the application.

Financial leasing, reverse-charge on import of goods, late registration

The new rules in the VAT Act of Slovakia will also affect the treatment of financial lease contracts where, at the time of conclusion, the purchase at the end of the contract represents the only economically rational choice for the lessee. Such a transfer will constitute a supply of goods and not a service.

It is also planned to introduce a reverse-charge mechanism for import of goods for domestic taxpayers who have the status of an authorised economic operator in the Slovak Republic. As a further simplification, special taxation scheme for small businesses will be introduced, as well as the possibility to deduct tax on the basis of a document other than an invoice when acquiring goods from another Member State.

Another significant change in the VAT Act of Slovakia is the introduction of some relatively strict rules for late registration as a taxpayer. The new legislation proposes to submit individual monthly tax returns for this period, together with a control statement containing the transactions on which tax liability has arisen. Once the conditions have been met, the deduction of the related input tax will be allowed.

Further changes to the VAT Act of Slovakia

Finally, the amendment would also introduce a number of minor changes, namely:

  • The value of the simplified invoice is reduced to EUR 400;
  • The obligation to reimburse VAT in the event of theft will be extended to any case of theft or misappropriation;
  • It is proposed to change the place of supply of cultural, educational or entertainment services if they are supplied online/virtually to a non-taxable person.
Most important amendments to the Income Tax Act of Slovakia

One significant change that will affect the preparation of the 2023 tax returns in Slovakia is an amendment that will allow the deduction of employers’ expenses for the operation of their own kindergartens and childcare facilities for children up to three years of age. The employer must therefore be the founder of the facilities in question.

At the same time, the concept of ‘sports professional’ is introduced into the Slovakian law. The income of such a sports professional will be subject to withholding tax. As in the case of income from the creation and from the performance of an artistic work, the possibility will be introduced for the taxpayer to agree that no withholding tax will be levied and the sports professional will declare the income in the tax return.

The new rules will also affect the scope of taxation of incomes from non-state bond accruing to taxpayers with limited tax liability. The income in question will not be subject to tax since 2023.

With effect from April 2024, the range of buildings that are not treated as depreciable tangible asset is extended. In accordance with the new wording of the provision in question, small buildings for agricultural, forestry or hunting purposes and simple buildings for these purposes will not be regarded as depreciable tangible assets.

The amendment also introduces an exemption from taxation for in-kind income in the form of acquisition of shares by employees in start-ups.

Further changes to income taxation

Other amendments to the Slovakian Income Tax Act include the following:

  • Changes to the taxation of virtual currency;
  • Expansion of the range of tax-deductible expenses in the taxation of income from capital property;
  • Extension of the exemption to income from the sale of stocks;
  • Increase in the exemption limit for income from advertisements for charitable purposes;
  • Changes in the tax bonus;
  • Increase in the rate for dividends paid to an individual to 10%;
  • Introduction of a minimum tax for corporations;
  • Increase in the limit for the application of the reduced corporate income tax rate up to EUR 60,000.

If you want to know more about the 2024 changes to Income Tax Act and VAT Act of Slovakia or other tax issues in the country, we recommend you visit the website of Mandat Consulting, k.s. and contact the local WTS experts in Slovakia.

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