Employers in Slovakia have several tax responsibilities, including income tax withholding and social security contributions.

Income Tax Withholding

Employers are required to withhold income tax from employee salaries each month. Slovakia uses a progressive tax system, with a 19% rate applied to taxable income up to €47,537.98 (for 2024), and a 25% rate applied to taxable income exceeding this amount. The withheld income tax must be submitted to the tax authority within 5 days after an employee's regular payday.

Social Security Contributions

Employers are also responsible for calculating, withholding, and remitting social security contributions on behalf of their employees. These contributions fund various benefits like healthcare, pensions, and unemployment insurance. The combined employer social security contribution rate is 35.2%, which breaks down into:

• Health Insurance: 10%
• Sickness Insurance: 1.4%
• Disability Insurance: 3%
• Retirement Insurance: 14%
• Guarantee Fund: 0.25%
• Accident Insurance: 0.8%
• Unemployment Insurance: 1%
• Reserve Fund: 4.75%

Social security contributions are due by the end of the month following the month in which the wages were paid.

Other Potential Taxes

Employers may also be liable for other taxes, such as Real Estate Tax if the employer owns property in Slovakia, and Road Tax if the employer owns and operates vehicles.

In Slovakia, there are several tax deductions available for employees.

Basic Tax Allowance

This is the primary tax deduction for Slovakian employees. All resident taxpayers are eligible. The basic tax allowance for 2024 is €4,714.20 annually. The allowance is reduced if an employee's income exceeds a specific threshold.

Social Security and Health Insurance Contributions

These are mandatory deductions for social security and health insurance benefits. All employees are subject to these deductions. Social Security deductions are calculated as 9.4% of gross salary (subject to a maximum monthly cap), while Health insurance deductions are calculated as 4% of gross salary.

Tax Bonus for Dependent Children

This is a tax credit for employees with dependent children. To be eligible, an employee must have a dependent child living in their household. The child must be under 25 years old or under 26 and studying full-time. The amount of the tax credit depends on the number of dependent children and the employee's income.

Limited Deductions for Specific Expenses

Specific deductions may be available for certain expenses, including mortgage interest (under specific conditions), life insurance premiums, and supplementary pension contributions. The eligibility criteria and calculation methods vary per deduction type.

In Slovakia, the standard VAT rate is 20%. This rate applies to most goods and services unless a reduced rate or an exemption applies.

Reduced VAT Rate

A reduced VAT rate of 10% applies to specifically defined services. These include certain foodstuffs, pharmaceutical products, accommodation services, and passenger transport.

VAT Exemptions

Certain services are exempt from VAT in Slovakia. These include financial services, insurance services, healthcare services, educational services, and postal services.

VAT Registration and Filing

Businesses that supply taxable services in Slovakia may need to register for VAT if their turnover exceeds a specific threshold. VAT returns are generally filed on a monthly or quarterly basis, depending on the taxpayer's turnover. The deadline for filing and payment of VAT is the 25th day of the month following the tax period.

Slovakia provides a variety of tax incentives to stimulate investment and economic activity. These incentives are designed to attract businesses to the country and encourage them to invest in research and development (R&D), regional development, and technological innovation.

Research and Development (R&D) Super Deduction

This is an income tax deduction for R&D expenses. Companies conducting R&D activities in Slovakia that meet specific criteria outlined in the Slovak Income Tax Act are eligible. The benefit is that companies can deduct 150% of qualified R&D costs from their taxable income, effectively reducing the corporate tax burden on R&D activities. Companies don't need pre-approval for the super deduction, but proper documentation and record keeping of R&D expenses are crucial for claiming the deduction during tax filing.

Regional Investment Aid

This aid comes in the form of cash grants, tax breaks, or other support for businesses investing in less developed regions. Businesses creating new jobs or investing in new assets in designated less developed regions are eligible, but specific minimum investment thresholds and job creation requirements apply. The level of support varies depending on the project and region and can include cash grants for acquiring assets, income tax relief, or support with employee training costs. Businesses must submit an application to the Ministry of Economy of the Slovak Republic, outlining the investment project and its expected benefits.

Investment Tax Relief

This is income tax relief for reinvested profits. Companies that reinvest a certain portion of their profits back into the business within a specific timeframe are eligible. The minimum reinvestment amount and timeframe vary depending on the total investment project value. The benefit is that companies receive a tax deduction on a portion of their reinvested profits.

Tax Credit for Technological Centers

This is a tax credit for companies operating in designated technological centers. Companies operating in approved technological centers (excluding the Bratislava region) and focusing on research, development, and innovation are eligible. The benefit is that these companies can claim a tax credit on a portion of their corporate income tax.