Employee annual tax reconciliation for 2023

All individuals whose taxable income in 2023 exceeded half of the non-taxable portion of the tax base (NČZD) will have to settle their tax liability for 2023 (in 2024). In 2023, the non-taxable portion of the tax base is €4,922.82, so an individual will have to settle their tax if their income for 2023 exceeded €2,461.41. In addition, an individual who did not exceed the statutory income threshold is also required to file a tax return and settle their tax if they made a tax loss for 2023 or if the tax administrator has asked them to settle their tax.

Any employee whose income for the year came only from dependent activity (Section 5 of the Income Tax Act), i.e. who had income only from employment or other types of employment relationships, can ask their employer to carry out the annual tax reconciliation, and the employer will then settle the tax liability towards the tax administrator on their behalf.

How and when should you ask your employer to carry out the annual tax reconciliation for 2023 (in 2024)?

The employee asks their employer to carry out the annual tax reconciliation for 2023 (in 2024) by submitting a request on the new prescribed form entitled “Request to carry out the annual reconciliation of advance income tax payments on income from dependent activity for the 2023 tax period”. The employee must deliver this form to the employer by 15 February of the year following the end of the relevant tax period at the latest. For example, for 2023 the employee will be able to request the annual tax reconciliation by 15 February 2024 at the latest.

The completed request form for the annual tax reconciliation must be delivered to the employer:

• in paper form, or
• electronically, for example by e-mail.

The method of delivery depends on the agreement between the employer and the employee.

The employee is required to attach to the request for the annual tax reconciliation all the necessary documents the employer will need to process the annual reconciliation. If they do not, the employer will not carry out the reconciliation for them, even though they asked for it within the set deadline. The documents needed depend mainly on the type of tax relief the employee is claiming.

Together with the request for the annual reconciliation, the following must be submitted:

• a certificate of taxable income from previous employment (if the employee had any in 2023) or from agreements on work performed outside an employment relationship (with other employers),
• children’s birth certificates to claim the tax bonus for a child,
• to claim the NČZD for a wife: a marriage certificate, but only if the wife does not work and at the same time does not receive maternity benefit, sickness benefits, pension benefits, unemployment benefits, carer’s allowances and the like… These payments count towards her own income even though they are exempt from tax. The NČZD for a wife can be claimed only if her total income for 2023 does not exceed €4,922.82,
• a bank certificate to claim the tax bonus on interest paid (if the employee is entitled to it when repaying a mortgage),
• tax bonus on contributions paid into the third pillar: for this we will need a document such as a statement of the saver’s personal account issued by the supplementary pension company (DDS).

If the employee had more than one employer in 2023, they must submit to the employer they have asked to carry out the annual tax reconciliation a “Certificate of the amount of an individual’s taxable income from dependent activity and other data under Section 39(5) of the Act for 2023” from each of their other employers. The employee must send the request for these certificates by 5 February of the following calendar year at the latest, and the employer or employers have until 10 February to issue them. This means that for 2023 the employee must request these certificates by 5 February 2024, and the employer or employers have until 12 February 2024 (if a deadline falls on a weekend, it moves to the next working day).

Completing the form for the annual tax reconciliation for 2023 (carried out in 2024)

The request for the annual tax reconciliation is divided into several sections:

I. Employee’s personal details – the employee fills in their personal details and information about the employer they are asking to carry out the reconciliation. They also complete the necessary declarations (e.g. if they have limited tax liability, receive an old-age or other pension, or if their taxable income makes up 90% or more of all their income earned in Slovakia and abroad);

II. Non-taxable portions of the tax base – these include:

• the non-taxable portion of the tax base for a wife/husband,
• the non-taxable portion for the taxpayer,
• the non-taxable portion for the pan-European personal pension product and supplementary pension saving.

III. Tax bonus for dependent child/children;

IV. Tax bonus on interest paid;

V. Insurance premiums and contributions;

VI. Request for the granting and payment of the employee bonus (zamestnanecká prémia);

VII. Request for a certificate of tax paid for the purposes of Section 50 of the Act – the employee completes this part if they want to assign 2% or 3% of the tax paid to an organisation of their choice.

When completing the request for the annual tax reconciliation, the employee should know the tax advantages they are entitled to (and the conditions for claiming them). It is also important to attach the relevant documents to the request. If the employee is not sufficiently informed, they can use the instructions attached to the form, which clearly explain the conditions for the non-taxable portions of the tax base and the tax bonuses.

By when must the employer carry out the annual tax reconciliation for 2023 (in 2024)?

The deadline for the employer to carry out the annual tax reconciliation for 2023 is 2 April 2024 at the latest. The annual tax reconciliation is normally carried out by 31 March of the following calendar year, but in 2024 this day falls on a weekend or public holiday, so the deadline moves to the next working day, i.e. 2 April.

After carrying out the annual tax reconciliation, the employer has two further obligations towards the employees for whom it carried out the reconciliation:

• To give the employee a certificate of tax paid for the purposes of Section 50 of the Income Tax Act, if the employee asked for it in the request for the annual tax reconciliation. This certificate must be delivered by 15 April 2024 at the latest.
• To give the employee a certificate confirming that the annual tax reconciliation has been carried out for 2023. This certificate must be delivered by 30 April 2024 at the latest.

In addition to these obligations, the employer must also issue and deliver certificates of taxable income to those employees who did not request the annual tax reconciliation for 2023. The deadline for this obligation is 11 March 2024. This deadline is normally 10 March, but in 2024 this day falls on a Sunday, so the deadline moves to the next working day, i.e. 11 March.

How much will it cost me to pay employees their tax overpayments from the annual tax reconciliation?

The employer is required to pay the employee, in the March wage at the latest, not only the employee’s tax overpayment but also the tax bonuses to which they were entitled.

If employees are entitled to large amounts of tax bonuses, this statutory obligation can, if there is a larger number of employees, make a “dent” in the planned cash flow.

In such a case, we recommend that the employer agrees with the employees that it will have a type A tax return prepared for them, so that the state pays out their tax overpayments and tax bonuses. If we paid them out through wages, the state would refund the tax bonuses to us at the end of May, and the overpayments from the annual reconciliation would gradually be offset against our monthly liability.