Effective 1 January 2025, the corporate tax rate is as follows:

10% for taxpayers with taxable income not exceeding EUR 100,000;
21% for taxpayers having taxable income between EUR 100,000 and EUR 5 million; and
24% for taxpayers having taxable income of more than EUR 5 million.

Prior to 1 January 2025, the standard corporate tax rate was 21% and a reduced corporate tax rate of 15% applied to companies with taxable income not exceeding EUR 60,000 during the year.

Pillar 2 Global Minimum Tax

The EU Global Minimum Tax (GMT) Directive entered into force on 23 December 2022, and EU Member States were required to enact laws, regulations, and administrative provisions necessary to comply with the EU GMT Directive by 31 December 2023.

Essentially, the EU GMT Directive provides for the implementation of an Income Inclusion Rule (IIR) and an Undertaxed Profits Rule (UTPR) with respect to in-scope MNEs, being those with annual consolidated revenues of EUR 750 million or more in at least two of the four fiscal years immediately preceding the tested fiscal year. The IIR and the UTPR are, in combination, referred to as the GloBE Rules. The Directive also allows Member States to opt for the adoption of a Qualified Domestic Minimum Top-Up Tax (QDMTT) for domestic low-taxed entities.

The Slovak Republic only implemented the Directive partially by adopting a QDMTT. The European Commission in a notice dated 12 December 2023, confirmed that the Slovak Republic has opted to postpone the implementation of the IIR and UTPR for six consecutive years beginning from 31 December 2023 (i.e., the IIR and UTPR will be implemented by 31 December 2029 in the Slovak Republic) as allowed under Article 50 of the Directive. However, this is not directly addressed in the domestic law on supplementary tax. Concurrently, on 8 December 2023, the Slovak Republic published the law implementing a "supplementary" domestic top-up tax (intended to be a QDMTT) effective 1 January 2024. The QDMTT achieves a minimum tax rate of 15% for the Slovak constituent entities of foreign-headquartered in-scope MNE groups with annual consolidated revenue of at least EUR 750 million in at least two of the previous four accounting periods.

The following entities are out of the scope of the EU GMT Directive:

Government entities, international organizations, non-profit organizations, and pension funds;
Investment funds and real estate investment vehicles but only when they are the ultimate parent entities (UPEs) of an MNE Group; and
Entities directly or indirectly owned by the above-mentioned entities.

Filing of Top-Up Tax Information Return

The notice with information for determining the additional tax (notification) must be submitted electronically to the tax authorities within 15 months (18 months in case of a transitional year) from the end of the relevant tax year. However, the obligation to file is waived if a constituent entity within the MNE group has filed the Top-up Tax Information Return in another jurisdiction, provided there exists a competent authority agreement between the EU Member State and that jurisdiction for the automatic exchange of annual Top-up Tax Information Returns. In such cases, the constituent entity located in the EU Member State must notify the tax authorities of the identity of the entity that has filed the Top-up Tax Information Return.

Further, a tax return (Top-up Tax Information Return) must be filed within 15 months (18 months in case of a transitional year) from the end of the relevant tax year.

Failure to submit the notification or tax return within the given timeline may attract penalties of EUR 1,500 to EUR 50,000.

Key Differences from the OECD Model Rules

As Slovakia is postponing the implementation of the IIR and UTPR and only implementing a QDMTT, the provisions of the Model GloBE rules that solely apply to the determination of IIR and UTPR are not included in the draft law.

As such, a number of GloBE elections are not included (including the GloBE loss election).

In addition, the special rules for UPEs subject to a deductible dividend regime, qualified /non-qualified refundable tax credits and the exemption for MNEs in the initial phase of their activity do not apply.

Claw Back Provisions

The EU GMT Directive further provides that where the current tax is not expected to be paid within three years following the end of the relevant fiscal year, the tax is clawed back and included in the top-up tax calculation for that fiscal year. This is an extension of Art. 4.1.3(e) of the OECD Model Rules that recaptures current tax not paid in a similar timeframe. The domestic legislation includes a similar provision to align with the EU GMT Directive.

Deferred Tax

A special transitional rule in Art. 9.1.2 of the OECD Model Rules applies effective 30 November 2021 to deferred tax assets arising from permanent differences that are included in calculating taxable income but are not GloBE income. The transitional rule is retained in the EU GMT Directive but applies effective 15 December 2021. The domestic legislation provides for a transitional date of 30 November 2021 to align with the OECD Model Rules

Dividends

Dividends received by a Slovak entity from Slovak or foreign sources benefit from a full participation exemption to the extent distributed out of profits generated after 1 January 2017. The participation exemption is disallowed and the dividends are subject to corporate tax at the rate of 35% (7% income tax if received by a natural person) if received from a person resident in a jurisdiction with which the Slovak Republic does not have a tax treaty or tax information exchange agreement in force or in a non-cooperative jurisdiction or a no tax jurisdiction (see Sec. 13.5).

Dividends received out of profits generated between 1 January 2004 and 31 December 2016 are not subject to tax, but those received from profits generated between 2013 and 2016 are subject to a health insurance contribution of 14%.

Capital Gains

Capital gains on the disposal of business assets are generally included in the corporate tax base. Gains on the disposal of participating interests in a legal entity are eligible for a full participation exemption provided all the following conditions are cumulatively met:

The seller controls an interest of at least 10% for at least 24 months in the capital of the entity whose shares are being disposed;
The seller is not a trader in securities;
The seller performs substantial functions in the Slovak Republic as evidenced by adequate human and material resources, and assumes and manages the risks associated with the participation; and
The company whose shares are being disposed is not in liquidation, bankruptcy or restructuring.

Solidarity Contribution on Fossil Fuel Sector and Electricity Producers (Windfall Tax)

Electricity Producers

On 6 December 2022, the Slovak Republic approved the law for introducing a windfall tax on electricity companies based on EU Council Regulation 2022/1854.

The windfall tax applies to domestic and foreign producers with an installed capacity exceeding 0.9 megawatts and to energy suppliers. The tax is levied on electricity generated in the Slovak Republic from 1 December 2022 until 31 December 2024. The tax applies at the rate of 90% on the price per megawatt hour exceeding a specified range of EUR 50 to EUR 250 per megawatt hour, depending on the type of source used to generate electricity.

Electricity producers using biomass and hydropower as their source are exempt.

Fossil Fuel Sector

On 22 December 2022, the Slovak Republic approved the law for introducing a solidarity contribution on surplus profits (windfall tax) in the fossil fuel sector based on EU Council Regulation 2022/1854 for addressing high energy prices.

The solidarity contribution applies for the tax periods 2022, 2023 and 2024 at the rate of 55% on taxable profits. Effective 1 May 2023, the rate is increased to 70% and applies to contribution calculations for the tax periods beginning in the calendar years 2023 and 2024.

The solidarity contribution applies to companies generating a part of their turnover from the extraction of oil and natural gas, auxiliary activities in oil extraction, production of refined petroleum products, or production of coke oven products.

Alternative Minimum Tax

Effective 1 January 2024, companies are subject to a minimum corporate tax based on annual taxable revenue as follows:

EUR 340 for taxable revenue up to EUR 50,000;
EUR 960 if taxable revenue exceeds EUR 50,000 but is less than EUR 250,000;
EUR 1,920 if taxable revenue exceeds EUR 250,000 EUR, but is less than EUR 500,000; and
EUR 3,840 if taxable revenue exceeds EUR 500,000.

The minimum tax is payable if a company has a tax loss, or their tax liability is lower than the above minimum tax amounts. For a tax period of less than 12 consecutive months, the tax is calculated in proportion according to the number of calendar months of the tax period.

The minimum tax is reduced by 50% if the average registered number of employees with disabilities for a tax period is at least 20% of the total average number of employees. Certain companies are exempt from the minimum tax requirements, including companies that are in the first year of establishment, bankrupt companies, companies under liquidation, companies that are not engaged in any business operations, and companies operating a sheltered workshop.

The minimum tax is payable by the deadline for filing the annual tax return. It is creditable against the final corporate tax liability and a tax credit is given for excess minimum tax paid over the final tax payable. The credit can be offset against the excess tax payable over the minimum tax paid in the following three consecutive tax periods.

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