Changes in tax laws from 1 January 2024

The healing process will not avoid taxes as a revenue policy tool. With effect from 1 January 2024, certain tax rates are increased, completely new taxes are introduced, or some measures approved in July 2023 by the still incumbent government are being repealed.

Dividend tax rate

The dividend tax rate is increased from 7% to 10%. This change will also affect the compensatory share, the share in the liquidation surplus, the share in the results of the business paid to the silent partner and the share in profits and assets of a member of a land community with legal personality. Taxation at a higher rate  will be applied to the payment of profit shares for tax periods starting no earlier than 1 January 2024. Similarly, it will be the case with the taxation of the liquidation balance, where the rate of 10% will be applied only if the company enters into liquidation on 1 January 2024 at the earliest. This will also be the case if the court decided to dissolve the company and the consequence of bankruptcy on 1 January 2024 at the earliest. The countervailing share will be taxed at 10% only if its amount is determined on the basis of the financial statements for the financial year beginning no earlier than 1 January 2024.

Turnover threshold for a micro taxpayer

The turnover threshold for a micro taxpayer moves from €49,790 to €60,000. If the taxpayer's taxable income does not exceed this threshold, (new € 60,000) his income will be taxed only 15% tax rate. This applies only to small entrepreneurs or self-employed persons. The 15% rate and other related concessions remain unchanged and apply as before. Only the threshold, which was previously linked to the threshold determining the obligation to register for VAT purposes, is changed.

Minimum business tax

The New Year brings a minimum business tax. In recent years, the income of a legal entity in the territory of the Slovak Republic has been subject to taxation only if the entity made a profit. Starting from 1 January 2024, business entities should pay income tax in the amount of € 340 to € 3,840 even if they have not made a profit. The amount of the tax levy will depend on income or revenues (see table). If a taxpayer is bankrupt, liquidated or operates a sheltered workshop, the minimum tax does not apply to him. Likewise, in the case of newly established entities in their first year of existence and entities that are not established for business and therefore do not aim to make a profit.

Tax bonus

The tax bonus on interest paid on mortgage will be easier to obtain and its maximum amount will increase. In order to receive the tax bonus "for the young", several conditions must be met. For example, the age between 18 and 35, or the average income amount. Most conditions remained unchanged. The only condition that has undergone a change is the amount of the salary ceiling for the possibility of claiming the bonus. Previously, it was necessary to achieve income below 1.3 times the average wage, and now it will be 1.6 times the wage. The new maximum amount of the tax bonus is € 1,200, which has increased 3 times from the original € 400. In addition, a bonus is being introduced to compensate for the increase in mortgage payments for people whose mortgage payments have increased in 2023 due  to rising interest rates.  It will be applicable at the rate of a 75% increase in the instalment, up to a maximum of EUR 150 per month.

Excise duties and VAT

Excise duties and VAT were also not avoided by the consolidation measure. From the 2024, alcoholic beverages served in catering establishments with an alcoholic strength of more than 0.5% will be exempt from goods subject to a reduced 10% VAT rate. They will now be taxed at the basic 20% VAT rate. In the case of alcohol, tax on alcohol has also been increased from 130% to 138%. The reduced rate of duty on alcohol shall be 50 %. The amount used to calculate excise duty on alcohol is € 1,080. Excise duty on tobacco and tobacco products has also been increased.

Health contributions

Employers and self-employed persons will pay more in health contributions. Self-employed and self-payers will pay 15% of the assessment base instead of the original 14%. Employers will also see an increase of 1 percentage point, from 10% to 11%. Health contributions related to disabled persons will be increased by 0.5 percentage points. Self-employed persons with severe disabilities will pay 7.5% and employers 5.5% per employee if they operate a sheltered workplace / workshop.

Social insurance contributions

Less will go to the second pillar. The amount of social insurance contributions does not change, unlike the structure. Currently, 5.5% of the assessment base has been paid to the second pillar. This proportion was originally supposed to increase over the years up to 6%. This is abolished by the amendment to the Act and 4% of income will be paid to the second pillar. So there will be a reduction.

Sale of securities and shares

The latest amendment also affected some measures drafted and adopted by the previous civil servant government. Income from the sale of  securities, income from the sale of shares in s.r.o. and income from the payment of unit certificates (under certain conditions) were supposed to be exempt from personal income tax from 1 January 2024, but they will not be. There will also be no announced changes in the field of virtual currencies and everything continues as usual. Nor will it be possible to claim expenses incurred by the natural person for the acquisition of financial assets that would be further used to generate income from capital assets in the form of interest. In July, a proposal for a new type of non-monetary benefit exempt from personal income tax in the form of a business share or shares to an employee or contractor was approved.  The latest amendment adds one condition for applying the exemption to acquired shares and shares, namely that the company may not pay dividends in previous periods.

The Equalization Tax Act

The minimum taxation of the income of multinational groups or large national groups will be ensured by an equalization tax. The Equalization Tax Act was passed by Parliament on 08/12/2023. The aim is to sufficiently tax consolidated groups with revenues greater than €750 million in at least two of the last 4 financial years. The equalization tax should serve as a tool against tax optimization. If such a group can optimize its effective tax rate so that its income tax amounts to less than 15% of profits, it will be taxed by equalization tax. This does not apply to companies such as non-profit organizations or other entities that operate for the public benefit.  This is an attempt to implement a European Union directive.