Changes in obligations for companies with employees

Many tax changes came into effect on January 1, 2026. Another wave of consolidation is coming into force, which will also affect companies.

Tax settings for income tax and value added tax are changing, which will again increase the burden on entrepreneurs. On the other hand, the state will exempt sole traders from transaction tax. However, this will do practically nothing to help the Slovak economy.

Legal entities

The significant increase in taxation of legal entities, which has been in effect since January 2025, was extended by changes approved by parliament in September. The Social Insurance Agency pays compensation for incapacity to work only after 14 days; until then, it is paid by the employer. This is an extension of this obligation on the part of employers, who originally reimbursed it for the first ten days. If an employee's incapacity for work began before January 1, 2026, and continues, it will still be assessed according to the old provisions.

Investment costs

The changes will also affect the deduction of expenses, i.e., investment costs. The period for which an investment plan can be drawn up is extended from six to nine years, with the last tax period extended from 2027 to 2030. Non-deductible value added tax on the use of motor vehicles in the period from January 1, 2026, to June 30, 2028, is not a tax expense. The price of the tax license is also increasing. A special, increased rate of minimum corporate income tax is being introduced, i.e., a tax license with taxable revenues above five million euros.

The wrong direction

Further burdening companies is a step in the wrong direction, which could have a very negative impact on the Slovak economy. Last year, the government introduced the highest corporate income tax rate in Central Europe at 24%, increased health insurance contributions, and disproportionately raised the minimum wage, which determines, for example, bonus payments. Slovakia has long had the second-highest tax and contribution burden on labor as a percentage of gross wages in the entire European Union after France, and the situation will continue to worsen in 2026. Higher costs of incapacity for work on the part of employers will further complicate the situation for companies. A more expensive tax license is just another negative addition that paints a bleak picture.

Economic growth

The Slovak economy is not in good shape, as evidenced by very low economic growth. If the government wants to change this, it should create conditions for investment inflows and business development. However, we do not see such measures; on the contrary, the burden on companies continues to grow year after year, and the outlook for the Slovak economy does not look good given the current business conditions.

Special changes for gambling

The tax rate on income earned by banks or branches of foreign banks from fees charged for payment transactions made by payment card is increased to 54 percent if the funds are credited to a gambling account, such as an account with an online betting office or casino.

Taxes for non-entrepreneurs

There are also changes in the area of personal income tax and non-entrepreneurial individuals. From January 2026, new progressive income tax brackets for individuals will be introduced. Income tax will increase by 30% for incomes above €60,000 and by 35% for incomes above €75,000. The adjusted rates apply to employees, freelancers, and royalties, income from real estate rentals, and other income under the Income Tax Act. This includes, for example, the sale of securities or business shares.

The adjusted rates also apply to entrepreneurs with incomes above €100,000. With an inadequate increase in the tax burden, there will be a general increase in efforts to find other ways to optimize one's overall tax burden. To prevent this trend, the Financial Administration would have to significantly increase its control capacities. These are two measures that run counter to each other. On the one hand, it wants to increase revenues to the state budget and, on the other hand, increase spending on public administration employees. If control capacity is not increased, the scope of optimization schemes and the gray economy will grow.

Value added tax

The flat-rate deduction for motor vehicles is also being reduced to 50%. A temporary 50% flat-rate entitlement to deduct value added tax on the purchase and operation of a motor vehicle is being introduced if it is used for both business and private purposes. The changes apply to motor vehicles in categories Ml, i.e., passenger cars, Lle, and L3e, i.e., motorcycles. The flat-rate value added tax deduction will apply if, in the period from January 1, 2026, to July 30, 2028, the taxpayer purchases the motor vehicle in question, uses a leased motor vehicle, other than for a short-term lease of up to 30 days, i.e., a long-term lease, financial leasing or operating leasing, or when they purchase goods and services in connection with this motor vehicle and are only entitled to a 50% value added tax deduction. This also applies to fuel costs, regular and unscheduled repairs, routine vehicle maintenance, and parking fees incurred in connection with its use.