Tax on Financial Transactions

The National Council of the Slovak Republic introduced a new tax on financial transactions with effect from 1 January 2025. The tax will apply to financial transactions where funds are debited from a tax entity’s account, payment card use, cash withdrawal, and to the recharge of expenses related to the performance of a financial transaction.
Tax entities liable for this tax will include legal entities and organisational units of foreign entities; as regards natural persons, the tax will only apply to entrepreneurs who are clients of a payment service provider.
A taxpayer, primarily the payment service provider or its organisational unit with its registered office in Slovakia, will be required to calculate and pay the tax on financial transactions and file a notification on the tax amount to the tax administrator. If the payment service provider does not have a registered office or an organisational unit in the Slovak Republic, or if the tax entity does not make financial transactions via a transaction (business) account, or the expenses related to the performance of a financial transaction are only recharged to their account, the tax entity will be considered to be the taxpayer, thus preventing tax evasion by creating bank accounts abroad.

The tax base will be the amount of funds debited from the tax entity’s account. The applicable tax rates will be as follows:

1. 0.4% of a financial transaction amount for each debited financial transaction, up to a maximum of EUR 40 per transaction;
2. 0.8% of a cash withdrawal amount for a cash withdrawal from a business account (ATM or at the branch), with no maximum tax amount per transaction;
3. EUR 2 p.a. for the use of a payment card regardless of how many times the card was used during the year;
4. 0.4% of the recharged expenses for the recharge of expenses related to the performance of financial transactions which apply to domestic operations, with no maximum tax amount.

The payment of tax is subject to a number of exceptions, which include, inter alia, payment transactions related to the payment of tax and contributions, management of securities or other financial instruments, and payment transactions made between the tax entity’s accounts held with the same provider (e.g. a transfer from the tax entity’s business account to their personal account).

The ITA amendment

The ITA amendment primarily introduces the following changes to corporate taxation:

• Introduction of a new tax rate of 24% for legal entities with earned taxable income exceeding EUR 5 million for the respective taxation period;
• Reduction of the tax rate from 15% to 10% for legal entities with taxable income not exceeding EUR 100 thousand for the respective taxation period;
• Increase of the taxable income threshold from EUR 60 thousand to EUR 100 thousand to apply a reduced 15% tax rate for natural persons-entrepreneurs;
• Reduction of the withholding tax rate from 10% to the original 7% for dividends paid out to natural persons;
• Extension of the investment period from the current 4 years to 6 years as regards the application of a deduction of expenses (costs);

As regards the taxation of individuals, the ITA amendment restricts the possibility of claiming a child tax bonus to dependent children under 18 years and also limits the tax bonus amount for high-income groups of parents. In relation to the abolition of a parental pension, the ITA amendment also introduces (while retaining the use of the allocation of paid tax for non-profit organisations) the use of the allocation of paid tax for the tax entity’s parents.

The adopted draft act also amends other acts related to taxation, for example:

• Act on Value Added Tax – with effect from 1 January 2025, the base tax rate will be increased from 20% to 23%. The amendment also increases the currently applied reduced tax rate of 10% to 19% of the tax base. The reduced tax rate of 19% will primarily apply to the supply of food products for human consumption and electricity. The amendment retains a reduced tax rate of 5% of the tax base primarily for selected basic food products, medicinal products, books, restaurant and catering services, accommodation services, and admission to sporting events and gyms.
• Act on the Special Levy on Business in Regulated Industries – an additional industry will become a regulated industry under this Act, namely the manufacture of products from crude oil and its chemical processing. From 2025, companies operating in this industry will also be obliged to pay the special levy. For these companies the Act stipulates an increased levy rate of 0.025 (i.e. 30% p.a.). This Act also increases the levy rate to 0.01576 (i.e. 19% p.a.) for companies operating in the e-communication industry (including mobile operators).
• Act on a Solidarity Contribution from Activities in the Oil, Natural Gas, Coal and Refinery Industry – the amendment primarily changes the criteria for the determination of obliged persons subject to the contribution by deleting the reference to the Council Regulation (EU) which defined such entities in relation to the minimum turnover arising from the above industries.

The Act must be signed by the President of the Slovak Republic and published in the Collection of Laws of the Slovak Republic to become effective.