Tax licence? Higher taxes for entrepreneurs? Minimum corporate income tax?

On Monday, 4 December 2023, the government approved a draft law that brings higher taxes for entrepreneurs, the introduction of a minimum corporate income tax and a new concept of the tax licence. These steps are intended to improve the state of public finances and strengthen the financial position of the state.

Tax licence and minimum tax for legal entities. A new beginning in the Slovak tax system

A minimum income tax for legal entities, known as the tax licence, is being introduced. The amount of this tax will vary depending on the taxable income for the period and may range from €340 to €3,840.

This tax charge already existed in the past, albeit at different amounts; however, it was abolished in 2018. Statistics showed that after tax licences were introduced, a larger number of companies began to be dissolved, because existing companies that went into liquidation or were in bankruptcy did not pay this tax.

What impact will this have on existing companies? That is a question only the near future will answer.

Higher health insurance contributions? A higher total labour cost for employees?

The government has decided to increase health insurance contributions for self-employed persons (SZČO) and people who pay their own contributions (samoplatcovia) from 14% to 15%. For individuals with a severe disability, these contributions will rise from 7% to 7.5% of the assessment base. For employers, the contribution rate changes from 10% to 11%; when employing people with disabilities, 5.5% of the assessment base will apply instead of 5%. These changes further increase labour costs and contributions, which are already high.

Changes are also being made to old-age insurance contributions. To support the payment of parental pensions and 13th pensions at the level of the average pension, the state will redirect a smaller share of the contributions of those who are building up a pension fund in the second pillar. Instead of the planned 5.75% contribution that was to apply next year, only 4% will be paid into this fund.