If approved, the announced transaction tax will apply to bank transfers from business accounts and the use of business account payment cards from next year. (source: Pixabay)
The government of Robert Fico (Smer) announced a new tax on financial transactions on Tuesday, September 17, and the cabinet approved it on Wednesday. If approved by parliament, this tax will affect businesses, companies, and sole traders.
It is expected to come into force in April 2025.
Compared to Tuesday’s announcement, the government managed to make changes to the tax on financial transactions, which, as part of the public finance consolidation package, will now generate €700 million for the state instead of €610 million. This change has been made due to a reduction in VAT for the restaurant sector to 5 percent, despite earlier plans to raise it to 23 percent. The shortfall of €110 million will be partially offset by the increased transaction tax.
1) How is the financial transaction tax structured?
The transaction tax will apply to bank transfers from business accounts and the use of business account payment cards. On Tuesday, Finance Minister Ladislav Kamenický (Smer) mentioned that businesses would pay 0.35 percent of the transferred amount, with a maximum charge of €30 for bank transfers. For ATM cash withdrawals, the rate would be 0.7 percent, and businesses would pay €2 annually for a payment card linked to a business account.
However, the government on Wednesday approved a bank transfer rate of 0.4 percent, with a maximum charge of €40. For example, if a business pays a supplier €5,000 via bank transfer, the tax would be €20. The rate for ATM withdrawals was set at 0.8 percent. So, if a business withdraws €100 from an ATM, it will pay €0.80 in tax.
The minimum tax for a financial transaction is set at €0.01, and it will be paid monthly.
Fico’s government was inspired by Hungary, which has had a similar tax since 2013, covering households as well. In Hungary, the current rates are 0.45 percent for bank transfers and card payments, and 0.9 percent for cash withdrawals, with a maximum charge of 20,000 forints (€50) for cashless payments. There is no cap for cash withdrawals.
