Corporate taxation in Slovakia, including the new tax legislation of January 2017

Moderate changes, but in the right direction. This is how we can describe the recent updates to the Slovak Corporate Taxation Law, backdated to take effect from the 1st of January 2017 (Deloitte 2017). Most important changes revolve around lowering the corporate tax burden on companies and self-employed professionals. In brief, the changes are stated below:

• Corporate tax reduction: The corporate tax has been officially lowered to 21% starting from January 2017, and while this reduction is 1%, the corporate tax will begin to resemble other Central EU-countries, that were able to successfully attract foreign investment following significant tax reductions;
• Self-employed professionals: While there were no reductions in personal tax rate, there has been a significant increase in the amount of expenses that can be deducted from the taxable income, up to 60%, or equivalent to €20,000;
• Dividends taxation: Positively, the 14% health insurance on dividends has been removed completely, while zero dividend withholding tax is due to treaty countries;
• Social security: Negatively, there has been an increase of the cap of the social security contributions up to seven times the national wage, together with mandatory 14% health insurance based on total income;
• Minimal wage increase: A slight increase in the minimal country wage has been placed at a new fixed amount of €435.

In summary: while we observe positive trends in the fiscal policies in Slovakia, the country should maintain and further increase this course of reforms, further modernizing its taxation regime and attracting investments.

For further information on Slovakia's accounting and tax regime read more here.