Tax changes arising from the consolidation package: Key measures to stabilise public finances

On 3 October 2024 the National Council of the Slovak Republic voted to approve a series of fiscal measures, which we collectively refer to as the “consolidation package”. Significant changes in tax legislation are expected, the goal of which is to stabilise and restore public finances.

Most of the changes will come into effect on 1 January 2025, while some, such as the financial transaction tax, take effect on 1 April 2025. Tax periods beginning on 1 January 2025 at the earliest will be affected by these changes. The new special levies will affect so-called high-profit industries such as refineries and mobile operators.

In the following text, we have prepared an overview of the measures that every Slovak entrepreneur must prepare for.

Financial transaction tax

From 1 April 2025 a new tax on financial transactions is being introduced in Slovakia. This tax will apply to banking transactions such as account payments, cash withdrawals and the use of payment cards. The aim of this tax is to increase the income of the state budget and contribute to the financial stability of the country. For the year 2025, a contribution to the state budget in the amount of EUR 600 million is expected.

The law stipulates that when paying this tax, the taxpayer is obliged to carry out financial transactions on the so-called transaction account. In the case of legal entities or organisational components of foreign persons, this refers to all corporate bank accounts. In the case of entrepreneurs who are natural persons, these are payment accounts on which financial transactions related to their business are carried out. Persons who are taxpayers of tax on financial transactions and do not have a business account are required to establish one by the end of March 2025.

Exceptions include:

• Social insurance company and budgetary organisations;
• Municipalities and higher territorial units and their budgetary and contributory organisations.

Financial transactions will be subject to the following tax rates:

• 0.40% for ordinary (debit) transactions with a maximum limit of EUR 40 per transaction (the taxpayer will incur a EUR 40 fee for a EUR 10,000 transaction);
• 0.80% for cash withdrawals (both at the ATM and at the branch), while no maximum tax limit will be set for withdrawals;
• A tax of EUR 2 is charged for using a payment card at least once per calendar year, regardless of the number of times the payment card is used during the year;
• 0.40% on over-billed costs from another person who made payments for the taxpayer related to the taxpayer’s activities in the territory of Slovakia.

Exceptions include:

• Payment operations on the accounts of securities traders carried out by the trader for the purpose of purchasing securities on behalf of its clients (this does not apply to payment operations related to the purchase of securities on its own behalf);
• The taxpayer’s financial transactions carried out between its own accounts within one payment service provider – so-called transfers within one bank, card payments (except cash withdrawals), payments of levies and taxes that are income to the state budget, and levies to the social insurance and health.

The tax period will last a calendar month, and the tax will be due by the end of the following month (the first tax period is April 2025). At the same time, however, it is possible to pay tax for the first three tax periods (April – June) until 31 July 2025. If the payer collects the tax for these tax periods earlier, it is obliged to remit it by the end of the calendar month following the month in which the payer collected the tax, and at the same time to deliver a notification to the tax administrator.

If the taxpayer cancels the transaction account from 1 April 2025 to 31 May 2025 it is obliged to calculate the tax itself and pay it to the tax administrator for the tax periods in which the account was established, and to deliver a notification to the tax administrator by the end of the month following the month in which it cancelled the transaction account.

The financial transaction tax will be considered a tax expense for income tax purposes.

Changes in income tax for self-employed persons and small businesses from January 2025

As part of the consolidation package, the limit of taxable income for legal entities is adjusted. Legal entities whose taxable income does not exceed EUR 100,000 (previously EUR 60,000) will pay income tax at only 10% instead of 15%. In the case of tradesmen (natural persons who are entrepreneurs), the income tax will remain at the level of 15%, but the income threshold will increase from EUR 60,000 to EUR 100,000.

Corporate income taxes for large companies from 1 January 2025

The aforementioned government measures will also include an increase in taxes and levies for “large companies”. Corporate income tax will increase even more significantly compared to the originally planned increase by 1% (to 22%). Specifically, to 24% for taxpayers whose taxable income (turnover) exceeds EUR 5 million.

Pharmaceutical sector

From 1 January 2025 pharmaceutical companies (mainly manufacturers and wholesale distributors of medicines) with a profit before tax of EUR 3 million and with a permit from the State Institute for Drug Control will be considered regulated persons. With this status, they will have various notification obligations and the obligation to pay a special levy.

Electronic communications industry (e.g. mobile operators)

A special rate for the calculation of the special levy is established from 0.00363 to 0.01576 (i.e. 18.912% per annum) for companies performing activities in the field of electronic communications, which also include mobile operators.

Refineries

With effect from 2025, the announced changes will also make companies that hold licenses for the production of oil products and oil chemical processing regulated. The new levy will apply to them if the profit before tax reaches the threshold of EUR 3 million.

The levy rate in the amount of 0.025.