Selling and Transferring Slovak Real Estate
DIRECT SALE OF REAL ESTATE
Resident individuals
Capital gains
Generally, capital gains on real estate transfer are subject to 19% and/or 25% personal income tax as part of a taxpayer’s annual income. Acquisition, repairment and improvements costs and costs connected with the sale property can be tax deductible if the conditions stipulated by the Slovak tax legislation are met.
Gains on the sale of real estate are exempt from the taxation if some specific conditions are met.
Losses
Losses from the sale of private real estate by individuals cannot be deducted from rental income and other income. If the transferred real estate had formed part of the business assets of the individual entrepreneur, the capital gain losses can be offset against other taxable income except the employment income.
Value added tax
The transfer of buildings within 5 years from their construction (issuance of first use approval/permit) are subject to 20% VAT. Transfers of real estate 5 years after their construction (issuance of first use approval/permit) are exempt from VAT. Right to deduct the paid input VAT in connection to residential properties is limited.
Transfer of land is VAT exempt except for building plots and land transferred together with building, which stands on the respective land.
Non-resident individual
Non-resident individuals are treated in the same way as resident individuals as income from the properly located in the Slovak Republic is income from the source of Slovak Republic. However, wording of the respective tax treaty must be considered.
Resident company
Capital gains
Profits of the sale of Slovak real estate is subject to Slovak corporate income tax as business income. Business income is taxed at 21% (15 %) tax rate.
Value added tax
The transfer of buildings within 5 years from their construction (issuance of first use approval/permit) are subject to 20 % VAT. Transfers of real estate 5 years after their construction (issuance of first use approval/permit) are exempt from VAT. Right to deduct the paid input VAT in connection to residential properties is limited.
Transfer of land is VAT exempt except for building plots and land transferred together with building, which stands on the respective land
Non-resident company
Non-resident companies are treated in the same way as resident companies as income generated from immovable property is taxed in Slovak Republic. However, wording of the respective tax treaty must be considered.
INDIRECT SALE
Resident individuals
Capital gains
Individuals who sells the shares of the Slovak company generate capital income that is subjected to personal income tax as a part of the yearly taxable income.
Capital gains from the sale of shares are exempt from Slovak personal income tax in very limited, specific cases.
Basis of tax
The tax base is calculated as the income from the sale of shares reduced by the purchase price of the shares and charges related to its acquisition. Specialised advice is required.
Losses
Losses from the sale of shares by individuals cannot be deducted from rental income and other income.
Non-resident individual
Non-resident individuals are treated in the same way as resident individuals as income from the sale of shares in the company located in the Slovak Republic is treated as income from the source of the Slovak Republic. However, wording of the respective tax treaty must be considered.
Resident company
Capital gains
Generally, the capital gain from the sale of the Slovak real estate company is subject to Slovak corporate income tax unless the conditions for tax exemption is met. Business profits are taxable with 21% (15%) tax rate. Tax losses from the selling of the shares in limited liability company is not tax deductible.
Transfer of shares on the Slovak real estate company is exempt from corporate income taxation if the seller holds at least 10 % of the shares for an uninterrupted period of at least 24 months.
Non-resident company
Non-resident companies are treated in the same way as resident companies as income from the sale of shares in the company located in the Slovak Republic is treated as income from the source in the Slovak Republic. However, wording of the respective tax treaty as well as EU Parent – Subsidiary directive must be considered.
DIRECT TRANSFER INTRA CONCERN
(SLOVAK REAL ESTATE TO SLOVAK COMPANY)
Resident Company
Capital gains
Capital gains from the sale of the Slovak real estate is subject to 21% (15%) Slovak corporate income tax. The tax base is calculated as income from the sale of real estate reduced by the tax net book value of real estate.
VAT
The transfer of buildings within 5 years from their construction (issuance of first use approval/permit) are subject to 20 % VAT. The supply of real estate is exempted after meeting the special conditions. These conditions are following: the supply is exempted after 5 years of issuing the occupancy permit of the real estate. If there is no occupancy permit to be issued, the supply is exempted after 5 years since the first usage of the real estate.
Transfer of land is VAT exempt except for building plots and land transferred together with building, which stands on the respective land
It may be possible to opt for VAT taxation. In this case, there would be the possibility to claim the input tax deduction.
Non-resident company
Capital gains
Non-resident companies are treated in the same way as resident companies because of income generated from the sale immovable property is taxable in Slovak Republic. Wording of the respective tax treaty must be considered.
VAT
Non-resident companies are treated in the same way as resident companies.
INDIRECT TRANSFER INTRA CONCERN
(SLOVAK REAL ESTATE TO SLOVAK Republic COMPANY)
Resident company
Capital gains
Generally, the capital gain from the sale of the Slovak real estate company is subject to Slovak corporate income tax unless the conditions for tax exemption is met. Business profits are taxable with 21% (15 %) tax rate. Tax loss from the selling of the shares in limited liability company is not tax deductible.
Transfer of shares on the Slovak real estate company is exempt from corporate income taxation if the seller holds at least 10 % of the shares for an uninterrupted period of at least 24 months.
VAT
Transfer of shares is not subject to Slovak VAT.
Non-resident company
Capital gains
Non-resident companies are treated in the same way as resident companies because of income generated from immovable property is taxable in Slovak Republic. Wording of the respective tax treaty must be considered.
VAT
Transfer of shares is not subject to Slovak VAT.
DIRECT TRANSFER INTRA CONCERN
(SLOVAK REAL ESTATE TO FOREIGN COMPANY (third country))
Resident company
Capital gains
Treated the same way as in the previous chapter “Slovak Republic real estate to Slovak company”.
VAT
The transfer of buildings within 5 years from their construction (issuance of first use approval/permit) are subject to 20 % VAT. The supply of real estate is exempted after meeting the special conditions. These conditions are following: the supply is exempted after 5 years of issuing the occupancy permit of the real estate. If there is no occupancy permit to be issued, the supply is exempted after 5 years since the first usage of the real estate.
Transfer of land is VAT exempt except for building plots and land transferred together with building, which stands on the respective land. It may be possible to opt for VAT taxation. In this case, there would be the possibility to claim the input tax deduction.
Non-resident company
Capital gains
Capital gains from the sale of the Slovak real estate is subject to 21% (15%) Slovak corporate income tax. The tax base is calculated as income from the sale of real estate reduced by the tax net book value of real estate.
VAT
The transfer of buildings within 5 years from their construction (issuance of first use approval/permit) are subject to 20 % VAT. The supply of real estate is exempted after meeting the special conditions. These conditions are following: the supply is exempted after 5 years of issuing the occupancy permit of the real estate. If there is no occupancy permit to be issued, the supply is exempted after 5 years since the first usage of the real estate.
Transfer of land is VAT exempt except for building plots and land transferred together with building, which stands on the respective land. It may be possible to opt for VAT taxation. In this case, there would be the possibility to claim the input tax deduction.
INDIRECT TRANSFER INTRA CONCERN
(SLOVAK REAL ESTATE TO FOREIGN COMPANY)
Resident company
Capital gains
The capital gain received from the sale of the Slovak real estate company is subject to Slovak corporate income tax unless the conditions for tax exemption is met. Business profits are taxable with 21% (15 %) tax rate. Tax loss from the selling of the shares in limited liability company is not tax deductible.
Transfer of shares on the Slovak real estate company is exempt from corporate income taxation if the seller holds at least 10 % of the shares for an uninterrupted period of at least 24 months. However, the tax treaty must be considered.
VAT
Transfer of shares is not subject to Slovak VAT.
Non-resident company
Capital gains
Non-resident companies are treated in the same way as resident companies.
VAT
Non-established companies are treated in the same way as Slovak-based companies.
