Holding Slovak Real Estate
DIRECT HOLDING OF REAL ESTATE
This section shows the most important tax implications of direct holding of real estate. First, the impacts for resident and non-resident individuals are explained. Thereafter the impact for resident and non-resident companies are described.
Resident individuals
Personal income tax
Income derived from the real estate such as rental income is subject to individual income tax (at 19 % and/or 25 % tax rate).
Deductibility of costs, interest, and depreciation
The buildings of hotels, stores and office buildings are depreciated for tax purposes for 40 years. Other buildings are depreciated for tax purpose for 20 years. Land is not depreciated for tax purposes. For tax purposes taxpayers may choose to depreciate assets using the straight-line or the accelerated depreciation method.
Generally, tax depreciation, interest, maintenance, and operational costs (expenses incurred to generate, assure, and maintain the taxable income) reduce the rental income if general and special legal conditions are met.
Losses – carry back/forward
Generally, the tax losses can be carried forward for five subsequent periods. However, only individuals, generating losses as individual entrepreneurs can carry forward tax losses. Individual who are not entrepreneurs are not allowed to carry forward rental losses.
Non-resident individuals
Non-resident individuals are treated in the same way as resident individuals.
Resident companies
Corporate income tax
Business income including also rental income and capital gains are subject to 21 % (10%/24%) corporate income tax.
Deductibility of costs, interest, and depreciation
The buildings of hotels, stores and office buildings are depreciated for tax purposes for 40 years. Other buildings are depreciated for tax purpose for 20 years. Land is not depreciated for tax purposes. For tax purposes taxpayers may elect to depreciate assets using the straight-line or the accelerated depreciation method.
Generally, tax depreciation, interest, maintenance, and operational costs (expenses incurred to generate, assure and maintain the taxable income) reduce the rental income if general and special legal conditions are met.
Anti-tax avoidance directive
The anti-tax avoidance directive (ATAD) has already included in the Slovak tax legislation in minimalistic version of the general anti-avoidance rules.
Losses – carry back/forward
Generally, the tax losses can be carried forward for five subsequent periods. Rental losses can be offset against other generated taxable income.
Non-resident companies
Rental income from non-residents companies are treated in the same way as resident companies.
