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On 18 September 2019, Slovak parliament passed an amendment to the Income Tax Act introducing a new 15% income tax for sole proprietors and legal entities.

Marcel 1

Ing. Marcel Muráni, Tax Advisor

In the article below we will answer some of  the questions associated with this amendment:

Since when does the reduced income tax rate apply?

Together with the amendment to the Act, a new paragraph 52zz is added, which specifies that the new corporate and personal income tax rate will be used for the first time in the tax period following January 1, 2020. Thus, for the first time, entrepreneurs can take advantage of a lower tax  when paying the taxes they will implement in 2021 for the tax year 2020.

Whom does the reduced tax apply to?

The new income tax rate will be available to entrepreneurs whose income (revenues) does not exceed 100,000 € for the taxation period.

What if a sole  proprietor or a company has an income of 101,000 €?

In this case, nothing will change for the sole proprietor or legal entity. The same tax level as before will apply.

The new tax rate does not guarantee a new tax rate for all transactions up to 100 000 €, but applies only to sole proprietors and entrepreneurs with a turnover up to 100 000 €.

Does the new tax level apply for more companies with the same owner but revenues lower than 100 000 €?

Yes, it does. The Act does not specify any limit on the number of legal entities owned by the same owner.

If an entrepreneur is inspired by this amendment of the law and he would like to create a new company to distribute the income so that each company is below the 100000 € threshold, we recommend to all entrepreneurs to have this procedure comprehensively assessed by a tax advisor in Slovakia.

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