Definition of micro-taxpayer
As of 1.1.2021 the amendment defines a micro-taxpayer as an individual or legal person whose income for one tax period did not exceed the amount EUR 49,790. The status of the micro-taxpayer includes favorable benefits such as depreciation of tangible assets, deduction of tax loss, creation of provisions and a tax rate of 15%.
The law stipulates that only taxable income is included in the amount of income (revenues), which is a condition for obtaining the status of a micro-taxpayer.
Reverse hybrid entities
The amendment to the Act implements the Council Directive (EU) rules regarding transparent entities and reverse hybrid structures. The law effects transparent companies (general partnership and limited partnership), which are not taxed at the level of the company, but only at the level of shareholders. This means that the new amendment allows the taxation of the income of a foreign partner of a general partnership at the level of the company in the same way as the income (revenues) of a limited partner of a limited partnership is taxed, which prevents the complete avoidance of tax.
Abolition of the exemption of the 13th and 14th salary
The new parliamentary amendment cancels the exemption from tax for the so-called 13th and 14th salary. The exemption shall be applied for the last time to income provided for Christmas holidays, which the employer pays not later than on 31 December 2020.
Abolition of the exemption of the spa care allowance
The new parliamentary amendment also cancels the spa care allowance. The allowance can be applied for the last time in 2020 with the condition that at the turn of the years 2020 and 2021 spa care was provided for at least one day in 2020.
Active labor policy contributions will be exempted from tax
Tax exempted income related to the active labor policy will be extended. Companies which have received contributions in the scope of projects for working place maintenance in relation to the declaration of an emergency, state of emergency or state of emergency under the Employment Services Act shall be tax exempt. This exemption also applies to individuals.
Reciprocally, costs incurred to obtain the aid should not be included in the tax base.
Obligation to settle tax prepayments
The new Amendment to the Income Tax Act cancels the obligation to settle tax prepayments for corporate income tax. Legal entities are no longer required to settle the difference that arise in respect to paid corporate income tax prepayments from the beginning of the tax period until the deadline for filling the tax return payment. These tax prepayments shall be settled with the tax due for the relevant tax period.
Legal entities residence determination
To determine the residence of a legal entity, the Amendment to the income tax Act adds a reference to the Commercial Code for the term “registered office” and subsequently stipulates the “place of effective management”. The place of effective management is considered to be the place where fundamental management and business decisions are made or taken for the legal person as a whole. Emphasis is no longer placed on those who make such decisions, such as managers, boards of directors and supervisory boards. The result can be the relocation of the company’s residence abroad or vice versa.
Decisions of an administrative nature are not to be considered essential for the legal entity as a whole.
Adjustment of the tax residence
Within the context of the application of double taxation treaties, the amendment particularizes the term “taxpayer with limited tax liability”. Foreign individuals who cross the borders of the Slovak Republic on a daily basis for the purpose of performing a dependent activity (commuter), is no longer automatically considered as a taxpayer with limited tax liability. Under the new jurisdiction, a person who comes to Slovakia for work will be considered a tax resident of Slovakia and also of the country where he has a permanent residence or domicile.
The taxation of the income shall be determined according to rules in the relevant double taxation treaty.
Reverse hybrid entities
The amendment to the Act implements the Council Directive (EU) rules regarding transparent entities and reverse hybrid structures. The law effects transparent companies (general partnership and limited partnership), which are not taxed at the level of the company, but only at the level of shareholders. This means that the new amendment allows the taxation of the income of a foreign partner of a general partnership at the level of the company in the same way as the income (revenues) of a limited partner of a limited partnership is taxed, which prevents the complete avoidance of tax.