QUESTIONS AND ANSWERS: TAXES AND CONTRIBUTIONS

This year brings consolidation measures that include several changes to taxes and contributions. An increased minimum corporate income tax rate and new progressive income tax brackets for natural persons are being introduced.

1. Tax brackets

Q: This year, another wave of consolidation came into effect, affecting companies, sole traders, and ordinary citizens. What tax changes await individuals?

SH: From January 2026, new progressive income tax brackets for individuals will be introduced: a 30% income tax for incomes above €60,000 and a 35% tax for incomes above €75,000. The adjusted rates apply to employees, freelancers and royalties, income from real estate rentals, other income under the Income Tax Act (such as the sale of securities, business shares, etc.) and entrepreneurs with income above €100,000.

 

2. Legal entities

Q: The increased taxation of legal entities, which has been in effect since January 2025, has been extended by further changes. So what is changing for companies?

SH: Sickness benefits are paid by the Social Insurance Agency only after 14 days; until then, the employer pays the sick leave. This is an extension of this obligation on the part of employers, who originally paid sick leave for the first ten days. If an employee's sick pay began before January 1, 2026, and continues, it will still be assessed according to the old provisions. The period for which an investment plan can be drawn up is extended from 6 to 9 years, with the last tax period extended from 2027 to 2030. The price of a tax license is increasing.

 

3. Tax license

Q: A special, increased minimum corporate income tax rate is being introduced for taxable income over €5 million. How much will it be?

SH: From 2026, the minimum tax for legal entities will be paid on taxable income as follows: For taxable revenues not exceeding €50,000, the tax license is €340; for revenues exceeding €50,000 and not exceeding €250,000, it is €960. If the income is more than €250,000 and less than €500,000, the minimum tax is €1,920. For income above half a million and below €5 million, you will pay €3,840, and for even higher income, up to €11,520.

 

4. Vehicle deduction

Q: For entrepreneurs, the flat-rate deduction for motor vehicles is reduced to 50%. Under what conditions?

BM: This is a temporary introduction of a flat-rate 50% entitlement to deduct VAT on the purchase and operation of a motor vehicle if it is used for both business and private purposes. The changes apply to motor vehicles in categories M1 (passenger cars) and L1e, L3e (motorcycles). The flat-rate VAT deduction will apply if, in the period from January 1, 2026, to June 30, 2028, the taxpayer purchases the motor vehicle in question; uses a leased motor vehicle (other than a short-term lease of up to 30 days) – this refers to long-term leases, financial leases, and operating leases. If they purchase goods and services in connection with this motor vehicle, they are also entitled to a VAT deduction of only 50% – this applies to fuel, repairs and maintenance of the vehicle, parking, and so forth.

 

5. Excluded vehicles

Q: Which cars used for business purposes are not affected?

BM: Those used for short-term rental (up to 30 days); transport of persons and their luggage, including taxi services; driving school operations – if the motor vehicle is used as a training vehicle; if it is a demonstration or test vehicle or a replacement vehicle provided to a customer during the repair and maintenance of their car. The above restrictions do not apply to vehicles used 100% for business purposes or commercial vehicles.

 

6. Owner's obligations

Q: If someone uses a car for business, what are their obligations to the tax authorities?

BM: The use of motor vehicles exclusively for business or for activities that are excluded must be reported to the tax administrator on a one-off basis. The taxpayer must keep detailed records of the use of the motor vehicle in electronic form for each vehicle separately – the records include, among other things, details of each trip, the time of its start and end, the kilometers traveled, the person who used it, the purpose of the trip, and the place of departure and arrival. Most of this information is provided by GPS records.

 

7. Form of records

Q: What would you recommend as the most advantageous in this regard?

It is up to the taxpayer to decide what electronic form of driving records to keep, whether in Excel, Word, or another format, and there is also no specified storage location for keeping driving records. The important thing is that it will be possible to make these records available to the tax office electronically. In order to claim a 100% VAT deduction on fuel and other expenses related to the operation of a car, proof of purchase (receipts, invoices) will continue to be required in addition to electronic driving records. In any case, the taxpayer must provide these records to the tax administrator upon request.

 

8. VAT rates

Q: What changes have been made to value added tax?

SH: Products with excessive salt and sugar content are excluded from the reduced VAT rate of 19%. This does not apply to salt and sugar themselves. From January 1, 2026, these products will be subjected to a 23% tax rate. The rules on reduced tax rates for certain newspapers and magazines are also being relaxed. From January, magazines and newspapers that are published less than four times a week will also be able to benefit from the reduced 5% VAT rate.

 

9. Transaction tax

Q: What is changing for sole traders in relation to the financial transaction tax?

SH: As of January 1, 2026, the financial transaction tax has changed significantly. Only legal entities are now subject to the financial transaction tax, namely those based in Slovakia, as well as foreign legal entities that carry out activities defined by law in Slovakia. The financial transaction tax will therefore no longer apply to natural persons who are entrepreneurs. These natural persons will no longer be required to carry out all business-related transactions on a business account, nor will they be required to maintain such an account.

 

10. Increased contributions

Q: The minimum assessment base for self-employed persons is increased from 50 to 60% of the average monthly wage from two years ago. What does this mean in numbers?

SH: The minimum contribution to the Social Insurance Agency for self-employed persons is €303.11, and the minimum health insurance contribution is increased to €121.92. Other self-employed persons: the minimum assessment base for social insurance has increased to €914.40. The health insurance contribution rate has also increased from 15 to 16%.

 

11. Payment limits

Q: What about the planned tightening of cash payment limits?

SH: From March 2026, cash payment limits will be tightened. A natural person who is not an entrepreneur may not pay more than €5,000 in cash, while entrepreneurs may pay up to €15,000 between themselves. If an entrepreneur pays a citizen, the limit is reduced to €5,000. From July 10, 2027, the limit will be further reduced to €10,000 as part of the transposition of the European directive.

 

12. Tax amnesty

Q: A tax amnesty has been in effect since the beginning of this year. Who does it apply to?

SH: The tax amnesty applies to tax arrears recorded by the tax administrator as of September 30, 2025, and will be paid between January 1 and June 30, 2026. The tax administrator will not impose a penalty or interest on late payment. If a penalty or interest on late payment has already been imposed and has not been collected by September 30, 2025, the tax arrears in the amount of the imposed penalty or interest on late payment will be extinguished.

 

13. Tax return

Q: When is it necessary to file a tax return in this regard and how?

SH: If, in the period from January 1, 2026, to June 30, 2026, a taxpayer files a tax return for which the deadline for filing was September 30, 2025, and also pays the amount assessed by the tax return filed in the same period, no penalty or interest for late payment will be imposed. If, between January 1, 2026, and June 30, 2026, a taxpayer files an additional tax return for a tax return that was due by September 30, 2025, and pays the amount assessed or the difference in the amount within the same period, no penalty will be assessed.

 

Note: This article was originally published in the daily newspaper Hospodárske noviny.