Tax return when you have income from abroad

A tax return with income from abroad is a frequent source of uncertainty. The key is to know where you are tax resident, which income must be declared in Slovakia and how to avoid double taxation of the same income in two countries at once. With the growing mobility of workers, more and more people are dealing with foreign income, and they often do not know where they should pay the tax. Below, we therefore explain the basic principles in a clear and practical way.

Tax residence is decisive

Where you are taxed on your worldwide income depends above all on your tax residence. A Slovak tax resident generally declares income from all over the world, whereas a tax non-resident declares here only income from sources in Slovakia. Determining your residence is therefore the first and most important step.

Which foreign income must be declared

A Slovak resident must take various types of foreign income into account in their tax return if they received such income during the year. This therefore concerns not only conventional work abroad but a wide range of income.

• Income from employment carried out abroad
• Income from business and from the provision of services
• Income from renting out or selling property abroad

Double taxation treaties

So that the same income is not unfairly taxed twice, Slovakia has concluded double taxation treaties with many countries. These treaties determine which of the countries has the right to tax the income in question and by what method double taxation is eliminated in practice.

Methods for avoiding double taxation

In practice, two methods are mainly used: the method of crediting tax paid abroad, or the method of exempting income from the tax base. Which of them applies in a particular case depends on the relevant treaty and on the type of income. You should therefore check the details for the country and period concerned, as individual treaties may differ. Under the credit method, the tax paid abroad is taken into account, but as a rule only up to a certain amount. Under the exemption method, on the other hand, the foreign income is not included in the tax base at all, although it may affect the rate.

• The foreign tax credit method
• The foreign income exemption method
• The choice depends on the relevant international treaty

Supporting documents and records

To declare foreign income, prepare in advance certificates of the income earned and of the tax paid abroad, and, where applicable, conversions of the amounts into euros at the applicable exchange rates. Without these documents it is not possible to claim either the tax credit or the income exemption, which can lead to a higher tax liability.

When to seek advice

International taxation is a fairly complex area, and any mistakes in it can be costly. If you have income from several countries at the same time or you are unsure about your tax residence, professional advice will help you declare everything correctly and in line with the treaties. Be particularly careful with a long-term stay abroad, which can change your tax residence. Even a seemingly minor change in this area can have a fundamental impact on your tax obligations.

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Frequently asked questions

Do I have to declare the income I earned abroad here in Slovakia?

If you are a Slovak tax resident, you generally declare your worldwide income, including foreign income. Double taxation is prevented by the relevant international treaty.

How do I avoid double taxation of the same income?

Depending on the double taxation treaty, either a credit for the tax paid abroad or an exemption of the income is applied. For this you need certificates of the income and of the tax paid.