The Slovak government has passed on 18 September 2024 a law on a new tax – Financial Transaction Tax. If approved by the Parliament, as it is expected, it will be effective from April 2025 and it will apply to both legal persons and natural persons who are entrepreneurs/sole traders.
Essentially, the transaction tax will apply to bank transfers from business accounts and the use of business account payment cards. The businesses will be required to have a business (transaction) account to carry out financial transactions related to their business in Slovakia. It is proposed that the businesses shall pay 0.4% tax of the transferred amount with a maximum charge of 40 Eur for bank transfers. For instance, if a business pays a supplier 5,000 Eur via bank transfer, the tax would be 20 Eur. For ATM cash withdrawals, the tax rate would be 0.8%, thus, if a business withdraws 100 Eur from an ATM, it will pay 0.80 Eur in tax. Therefore, what is surprising is the proposal that the businesses would pay only 2 Eur annually for payments by the card linked to a business account. Hence, most probably the businesses will increase and make payments by the business account payment cards as much as possible instead of by bank transfers to avoid tax.
The new tax should be paid monthly with the minimum tax of €0.01 per a financial transaction.
Our view: Official announcement of the brand new tax on financial transactions sent shock waves through the Slovak business community and rightly so. The Slovak government being under the pressure from the EU to start balancing the big hole in the state budget came with the huge 2.7 billion Eur public finance consolidation package. Probably inspired by Hungary or Venezuela, the only two countries with similar taxes, the new tax is the second largest measure of the package and it is expected to bring 700 million Eur for the state budget. We strongly doubt that and bet on creativity of Slovak business people to avoid this tax which is widely criticised by economists as damaging particularly small and medium firms. It is the harmful tax that will make Slovakia less competitive country, the country with one of the highest effective taxation not just in Central Europe, but in whole EU.
Please do remember that effective tax planning and professional consultation are crucial for mitigation of any tax, not just financial transaction tax. This is area of our expertise.
Are you looking for more information about new transaction tax in Slovakia and how to avoid it? With over 20 years of international experience, we offer you our tailored services to meet your specific needs. Contact us via phone (+44 20 3974 1244) or via email at office@bensonformations.com.
