How the physical persons process the income from abroad and its taxation? Did you work abroad in 2023? Are you wondering if you need to file a tax return in Slovakia?
If your total taxable income (both foreign and Slovak) exceeded 2,461.41 EUR for the year 2023, you must file a tax return. You must also file it if your direct income did not exceed this limit, but a tax loss was reported. This obligation arises if you are a resident of the Slovak Republic.
In Slovakia, income from abroad is taxed only by citizens who are tax residents of the Slovak Republic. So, who is a taxpayer with unlimited tax liability, i.e. a resident of the Slovak Republic?
Pursuant to Selection 2 letter d) Act no. 595/2003 Call. on Income Tax as amended (hereinafter referred to as the Income Tax Act) a taxpayer with unlimited tax liability, i.e. a resident of the Slovak Republic is a natural person who has on the territory of the Slovak Republic:
- permanent residence, residence or habitually resides here, while
- a natural person resides in the territory of the Slovak Republic if he has the possibility of accommodation that is not only for occasional accommodation, and taking into account all related facts and circumstances, including the personal ties and economic ties of the natural person to the territory of the Slovak Republic, the intention of the natural person in this is obvious permanently delay residence,
- a natural person usually resides in the territory of the Slovak Republic, if he resides here for at least 183 days in the relevant calendar year, continuously or in several periods; every day of the stay, even the one started, is included in this period.
If a citizen received income from employment from a source abroad, he cannot choose which state will tax this income. A person that lives abroad, but has a permanent residence in Slovakia, shall have his tax residence determined by the tax office on the basis of a request sent to the tax office. However, this does not mean that if the income was taxed abroad, such a citizen no longer has any tax obligations on the territory of the Slovak Republic. The obligation of the tax resident of the Slovak Republic is to declare and tax worldwide in Slovakia income - the resident is therefore obliged to indicate income from abroad when filing the income tax return, regardless of whether or not this income was taxed abroad.
Natural persons declare and tax the following income from abroad in the Slovak Republic:
- Income from dependent activity performed abroad
- Income from the sale or rental of real estate abroad
- Prize or prize abroad
- Income in the form of interest from abroad
- Income in the form of dividends from abroad
- Income from the activity of an athlete or artist performed abroad
- Income in the form of license fees from abroad
- Family allowances, maternity allowance, parental allowance and tax bonus from abroad
- Retirement pension from abroad
Income from abroad, except for dependent activity and business, is taxed at a 19% tax rate, or 35% if it comes from non-contracting states, ie from states that are not on the list in the financial report.
Income from abroad can be taxed in different ways:
- Declaration of income in Slovakia – This method is used by citizens who prefer to tax their income from abroad in Slovakia. For example, a citizen who has a foreign employer but is settled in Slovakia.
- Tax collected by withholding tax - In this case the tax was settled, as it was already deducted in the state of the source of income. Thus, this income is no longer taxed in Slovakia, but natural persons must report it as worldwide income in their tax return. As an example, we can state interest from abroad, which will come to the account of a natural person already reduced by withholding tax.
- Exclusion of income or crediting of tax from abroad in the tax return in Slovakia – in case of proof that the income was taxed abroad. If a person can prove that his income from abroad has already been taxed abroad, he has the option of exempting it and no longer taxing it in Slovakia, or he can offset the amount of tax paid abroad and reduce the tax he will pay in Slovakia by this amount. The method to be used depends on the type of income and the double taxation treaty between the specific countries.
