Insured persons will receive higher maximum amounts of four types of sickness benefits from Sociálna Poisťovňa. (source: TASR - Martin Baumann)
Parliament approved a number of tax-related changes last year, many of which will also affect foreigners living and working in Slovakia in 2023.
Firms will be impacted, too.
Here is a selection of legislative changes that are good to know about:
Cheaper gym entry, meal vouchers and more
VAT on restaurant and sports services has been permanently reduced from 20 per cent to 10 per cent. The lowered tax concerns the operation of ski lifts and cable cars, meals and drinks served at restaurants, entry to and activities at sports facilities, like gyms, ice-rinks, stadiums, golf courses, tennis courts, and swimming pools, but lowered VAT does not apply to food deliveries or takeaway food and drinks.
Excise tax on alcohol will increase by 30 per cent from April.
From February, the levy on online gambling will increase. The rate will rise from 22 per cent to 27 per cent.
Parliament has cancelled the licence fees (€4.64 a month) to the RTVS public broadcaster. The change should become effective from July 1, if parliament overrides a presidential veto in late January.
The car registration fee will be calculated according to a new formula from April. The formula will take how ecological a car is into consideration. The car's age will be dropped from the formula. The adjusted registration fee will make the purchase or import of an older used car more expensive.
The value of a meal voucher must be at least €5.10, while primarily, from 2023, the vouchers are to be issued electronically. A self-employed person can include €3.74 in their tax expenses for meals based on each day worked. From January, meal allowance rates for domestic business trips have also increased.
For every individual
Companies in agriculture, forestry, food industry, and tourism can employ workers for seasonal work after a new type of employment contract has been introduced to the Labour Code. It is more advantageous for the employer and the employee, as they will pay lower contributions to the Sociálna Poisťovňa social insurance agency. The employment agreement is limited to a duration of 8 months.
Tax bonus, a tax benefit intended for a taxpayer who takes care of a dependent child, increases to €50 per child that is over 18 years old and up to €140 per child that is younger than 18 years old. The current amounts should remain in place until December 2024. Parents who receive a meal benefit are not entitled to the bonus.
Insured persons will receive higher maximum amounts of four types of sickness benefits from Sociálna Poisťovňa: sickness (€43.80 a day), maternity (€59.70 a day), pregnancy (€11.90 a day) and caregiver (€43.80 a day; max. 14 days).
Unemployment benefits will not change in 2023 until July 1. Until then the amounts set from July 1, 2022 to June 30, 2023 apply. The maximum unemployment benefit is currently €1,234.30 (31 days). The benefit can be received for a maximum of six months.
After more than two years, extra payments for work at night or on the weekend will again be linked to the minimum wage, which is €700 this year. The extra bonuses will first increase in June.
The minimum monthly contribution of a self-employed person to Sociálna Poisťovňa is €200.72. The minimum contribution to a health insurance company for these persons is €84.77.
From 2023, a minimum health insurance contribution for employees has also been introduced. The employee must pay a minimum of €32.81 per month.
Sociálna Poisťovňa has increased pensions by 11.8 per cent automatically from January. Pensioners do not need to apply for anything. The amendment to the Social Insurance Act also introduces a new institution - the parental pension. The condition is that the child of such a pension recipient paid the pension insurance premium to Sociálna Poisťovňa in 2021.
Big and international
From February 1, it will be possible to establish a limited liability company or a company or the organizational unit of a foreign legal entity, which has its headquarters in one of the EU member states or in one of the contracting states of the European Economic Area Agreement in a simplified manner, provided that the legal conditions are met. In essence, it will be an online company registration process.
Digital platforms such as Booking, Airbnb or Uber are obliged to send tax authorities data on their clients and their income on these platforms. The exchange of information concerns both cross-border use and domestic platforms that offer the sale of goods, the rental of means of transport, the rental of real estate or the provision of accommodation or other services.
The European Union has agreed on an international minimum tax for large companies. Its aim is to prevent companies from shifting their profits to tax havens. International companies with a minimum annual turnover of €750 million must pay a tax of at least 15 per cent, regardless of where they are based. The directive should become part of international law by the end of 2023.
The government can tax the excess income of selected power plants. Each EU member state has introduced its own level of taxation. Slovakia has decided to use a rate of 90 per cent. However, the price ceiling is not fixed - it should be between €50 and €250 per MWh. Several exemptions apply.
Companies that generate at least 75 per cent of their turnover from economic activity in the oil, natural gas, coal and refinery sectors will pay a solidarity contribution from higher profits. The contribution stands at 55 per cent, and only their 2022 profits will be taxed. The plan was to keep the contribution in place until 2025.
Income
The obligation of entrepreneurs to register for income tax at the tax office has been abolished. If an entrepreneur obtains a licence to do business, the tax office itself will register them for income tax.
The obligation to tax interest on bonds paid abroad by Slovak residents has been reinstated in the Income Tax Act. The only exceptions are government bonds and government treasury bills, which are not taxed when interest is paid abroad. Already-issued bonds will also be taxed.
In the area of transfer pricing, a stricter assessment of the economic connection of companies is applied. The shares of related persons are added up and if their sum is at least 25 per cent, the persons or entities are considered to be economically connected. Transfer pricing rules no longer apply to transactions up to €10,000.
Due to the elimination of problems that arise in practice when translating transfer documentation, the procedure for submitting documentation has been changed. The documentation can first be submitted in a foreign language. Then, if the tax administrator requires the submission of documentation in Slovak, they have the opportunity to turn to the taxpayer for the Slovak version.
Insurance companies, financial institutions and companies, which provide services such as real estate rental exempt from VAT, no longer have to register for VAT if they exceed €49,790 in turnover. They can apply to cancel their tax registration.
If you would like to know more about the changes above, let us know at editorial@spectator.sk.
