Finance Minister Ladislav Kamenický. (source: SME/Marko Erd)
The European Commission has joined business leaders, economists, and opposition MPs in criticising Slovakia’s transaction tax, warning that it undermines the country’s competitiveness and investment climate, according to the Sme daily.
"So far, the consolidation package, approved in 2024, has heavily focused on increases in the value added tax (VAT), corporate income tax and the financial transaction tax. These increases risk putting a strain on consumption and reducing incentives to invest. Moreover, higher taxes can have an inflationary effect and further worsen competitiveness," states the 2025 European Semester report on Slovakia.
The report provides recommendations to EU member states on economic and fiscal policy.
Changed after two months in effect
Slovakia remains the only euro area country to impose a transaction tax. Hungary has a similar levy, but it is not part of the eurozone. Slovakia introduced the tax as part of its fiscal consolidation efforts.
"It is essential that consolidation measures preserve investment and ensure a growth-friendly budget composition, helping Slovakia remain attractive to investors," the report adds.
However, Sme notes that several multinational firms, including IBM and T-Systems — both major employers in Slovakia — have confirmed declining interest in expanding operations in the country. Rising costs have prompted some companies to shift roles abroad, where the balance between labour costs and workforce skills is more favourable.
Finance Minister Ladislav Kamenický (Smer) has defended the transaction tax, arguing it will raise €700 million in state revenue. He maintains it was necessary to prevent Slovakia from facing a debt crisis similar to Greece’s.
Recently, Kamenický and Interior Minister Matúš Šutaj Eštok have taken to calling the measure “the Matovič, Heger and Ódor tax”, blaming previous governments for its implementation.
The label gained traction after parliament approved exemptions for the self-employed and small businesses with an annual turnover under €100,000. Opposition parties have called this a tacit admission that the tax is harmful. The move came after problems for entrepreneurs surfaced and coalition party SNS began criticising the tax.
A better tax mix is possible
The Commission also criticised Slovakia’s current tax structure, saying it underuses property and environmental taxes, while placing a relatively high tax burden on low-income earners. Property tax, based on area rather than market value, disproportionately benefits owners of high-value real estate. According to the Commission, aligning property taxes with real market values would make the tax system fairer and more effective.
Despite the recent tax increases, the Commission notes that Slovakia’s public deficit and debt have continued to rise, citing increased government spending, including the introduction of a 13th pension payment, which alone costs nearly €1 billion a year.
The Budgetary Responsibility Council has suggested that the state should begin saving on measures such as the 13th pension or the child tax bonus. In the past, Prime Minister Fico rejected any proposals to scrap the pension.
