Taxation of dividends: rates, procedure and common misconceptions

The taxation of dividends is of interest to every shareholder who pays themselves a share of their company’s profit. Understanding the procedure correctly helps you avoid mistakes as well as unnecessary surprises when the payout is made. In this article we go through the principle of dividend taxation, the difference between withholding and declaring the income in a tax return, and the most common misconceptions. For many company owners, paying out a share of the profit is the natural reward for running a business. So that nothing takes you by surprise, however, it pays to understand in advance how dividends are taxed.

What dividends are

A dividend is a share of a company’s profit that is paid out to its shareholders. It is paid only from profit already taxed at company level, and only after the distribution of the profit has been approved by the relevant body of the company, typically the general meeting. Only at that moment does the shareholder become entitled to their share.

How dividends are taxed

The way dividends are taxed depends on who receives them and where the distributed profit comes from. Both the rates and the procedure itself have changed several times over the years, so always check the current rates for the period for which the profit is being distributed, not just for the year of payment.

• It matters whether the recipient is an individual or a legal entity
• It depends on whether the source is domestic or foreign
• The period in which the profit was generated is important

Withholding versus the tax return

With domestic dividends, in many cases the tax is withheld and paid over directly by the company making the payment, so the recipient does not need to deal with anything further or state anything in their tax return. In other situations, however, especially with income from abroad, the recipient settles the tax themselves in their own tax return.

Dividends from abroad

If you receive dividends from abroad, international treaties on the avoidance of double taxation come into play. They take into account tax already paid abroad and the way it is credited against Slovak tax. This area is more difficult to assess, so with foreign dividends it pays to consult an expert. Without correctly taking the foreign tax into account, you could in effect be taxed twice on the same profit. Conversely, overlooking foreign income can lead to an underpayment of tax and a penalty in an audit.

Common misconceptions

Mistakes in the taxation of dividends arise mainly from mixing up the rules that apply to different periods, from overlooking foreign income or from misjudging who is actually supposed to pay over the tax. Each of these misconceptions can lead to an underpayment of tax and a penalty.

• Do not mix up the rules that apply to different years
• Do not forget to declare dividends from abroad
• Check who is obliged to pay over the tax

Recommended procedure

Before paying out a share of profit, always be clear about who the recipient is, for which period the profit was made and whether withholding or a tax return applies. Wherever there is any foreign element, professional advice is almost indispensable if you want to proceed correctly and without risk. It is also good to consider in advance when to pay out the profit, as the timing of the payout can affect which rules apply. A well-considered decision can therefore save you tax as well as needless complications.

Current figures (2026)

Taxation of dividends 2026

Figures valid for 2026; check the current wording.

Related articles: Motor vehicle tax: who pays and how much, How to take money out of an s.r.o. with as little tax as possible, Tax optimisation: legal tools for companies.

Frequently asked questions

Do I have to report dividends in my tax return?

With domestic dividends, the tax is often withheld by the company making the payment and you do not need to do anything more. With dividends from abroad, however, you generally settle the tax yourself in your tax return.

At what rate are dividends taxed?

The rate depends on the recipient and on the period for which the profit is being distributed, and it has changed over time. You should therefore check the current rate for the specific payout period.