Slovakia has a tax system that is similar to other European Union countries. This article will provide an overview of how taxation works in Slovakia, including double taxation agreements, the main taxes expats need to be aware of, tax breaks, how and when to file a tax return as an expat, and tax exit procedures.
The Taxation System in Slovakia
The taxation system in Slovakia is based on a flat income tax rate of 15%. This means that all income, regardless of the amount, is subject to the same tax rate. Residents are taxed on their worldwide income, while non-residents are only taxed on income earned in Slovakia.
In addition to income tax, there are several other taxes in Slovakia, including social security contributions, value-added tax (VAT), and real estate tax.
Double Taxation Agreements
Slovakia has entered into double taxation agreements (DTAs) with several countries, including major trading partners such as the United States, Canada, and the United Kingdom. DTAs are agreements between two countries that aim to eliminate double taxation of income earned in both countries. These agreements help to promote cross-border trade and investment and ensure that individuals and businesses are not taxed twice on the same income.
Under DTAs, residents of one country may be eligible for tax benefits, such as reduced withholding tax rates, when receiving income from the other country. Expatriates who are residents of a country that has a DTA with Slovakia may be able to take advantage of these benefits.
Main Taxes for Expats in Slovakia
As an expat working or doing business in Slovakia, there are several taxes that you need to be aware of. These include income tax, social security contributions, and value-added tax (VAT).
Income Tax
Expats are subject to income tax on their worldwide income if they are resident in Slovakia. The flat income tax rate is 15%.
Expats may be eligible for certain tax reliefs and allowances, such as deductions for contributions to Slovakian pension funds or health insurance premiums.
Social Security Contributions
Expats who are working in Slovakia are required to make social security contributions. The contributions are based on their income and are paid by both the employer and the employee.
Value-Added Tax (VAT)
VAT is a tax on goods and services that is levied at a standard rate of 20%. Certain goods and services, such as healthcare and education, are exempt from VAT.
Special Tax Breaks for Expats
Slovakia offers several tax breaks and incentives for expats. These include:
Research and Development Tax Relief
Expats who are working in research and development may be eligible for tax relief on their income earned from these activities.
Startup Tax Relief
Slovakia offers tax relief for startups that are engaged in innovative activities. This relief can include reduced tax rates or exemptions.
Filing Tax Returns
Expats in Slovakia are required to file a tax return annually, regardless of whether they are liable for tax. The deadline for filing the tax return is March 31st of the following year.
Expats can file their tax return online or by mail. They will need to provide their personal information, income earned in Slovakia and abroad, and any applicable tax reliefs or allowances.
Tax Exit Procedures
Expats who are leaving Slovakia to move abroad are required to complete tax exit procedures. This involves notifying the tax authorities of their departure and settling any outstanding tax liabilities.
Expats who are leaving Slovakia may also be eligible for certain tax refunds, such as a refund of any overpaid tax or a refund of any tax paid on income earned after leaving Slovakia. It is important to note that the tax exit procedures may differ depending on the expat’s circumstances, and it is advisable to consult with a tax professional to ensure compliance with all requirements.
Slovakia has a flat income tax rate of 15% and several other taxes, including social security contributions and value-added tax (VAT). Expats who are resident in Slovakia are subject to income tax on their worldwide income, while non-residents are only taxed on income earned in Slovakia. Slovakia has also entered into double taxation agreements with several countries to eliminate double taxation of income earned in both countries.
Expats in Slovakia may be eligible for certain tax reliefs and allowances, such as deductions for contributions to Slovakian pension funds or health insurance premiums, as well as tax breaks for startups and research and development activities.
Filing tax returns and completing tax exit procedures are important steps to ensure compliance with the law and avoid any potential legal issues. Expats should consult with a tax professional to ensure that they are meeting all tax requirements and taking advantage of any available tax benefits.