The Tax System in Slovakia

Since 1 January 1993, the tax system in Slovakia (SR) has evolved rapidly. The following outlines some of the issues that are now being encountered.

For foreign entities trading or investing directly into SR, many sources of income arising in SR are subject to Slovak taxation at the withholding tax rate at 25% or 15%. Sources include payments by Slovak persons or royalties, technical know-how fees, interest and dividends. A wide network of treaties exists with SR, which reduce the underlying rate of withholding from 25% on such sources. A special withholding regime for cross border leasing also exists for financial leases where withholding is 1% of leasing payments.

The Slovak tax net is widened by the inclusion of legislation deeming that income from provision of services of a technical and consulting nature by a foreign entity in SR is a source of Slovak income. Furthermore, if carried out for a period of more than six months, the activity is deemed to cause a taxable