Situated in the heart of Europe, Slovakia is known for its rich history, cultural heritage, and breathtaking landscapes. However, one aspect that sees a growing interest is Slovakia’s taxation system. There is a reason for Slovakia’s steady climb as a favorable place for business – its positive economic environment and competitive tax system.
Corporate Income Tax (CIT)
The standard Corporate Income Tax rate in Slovakia is 21%. In contrast to many other countries, Slovakia does not levy any regional or municipal income taxes. The tax base can be adjusted by deducting numerous items such as tax depreciation, received dividends, and other deductible items. It’s essential to highlight that there are some limitations on interest deductibility.
Individual Income Tax
People living in Slovakia are subject to a progressive income tax rate. For income up to €37,163, the tax rate is 19%, and for the income part exceeding this threshold, the tax rate is 25%.
VAT in Slovakia
The standard VAT rate in Slovakia is 20%, with a reduced VAT rate of 10% applied to certain goods and services. The reduced rate applies to goods like medicines, books including e-books, and specific medical aids and equipments. Businesses are required to register for VAT if the turnover exceeds €49,790 within twelve consecutive months.
Investment Incentives in Slovakia
The Slovak Government provides significant investment incentives, particularly for sectors such as manufacturing, technology centers, tourism, logistics, and shared service centers. These incentives may include tax credits, subsidies related to employment or training, or transfer of state property at costs below the market price.
Doing Business in Slovakia
Slovakia has a well-developed banking sector with an array of international banks offering different financial instruments. Furthermore, its strategic location not only indicates its geographical advantage but also illustrates its role as a significant gateway for trade between western Europe and the east. With a highly qualified and increasingly English-speaking workforce, companies are set to benefit from a market-ready talent pool.
In conclusion, taxation in Slovakia is quite competitive as compared to many other EU countries, which makes Slovakia an attractive place for business. However, it’s crucial for businesses to comprehend the nature of Slovak taxes and conduct due diligence to negotiate the business and tax environment successfully. Slovakia’s continuous growth and stability have strengthened confidence in its potential as a vibrant business hub.
Here are some related links about taxation in Slovakia: