Tax license – new tax for companies in Slovakia

On 12.11.2013 members of Smer at the meeting of the Parliamentary Committee for Finance and Budget approved the amending proposal to the amendment of the Income Tax which introduces a new tax on companies (so. tax licenses). The Minister of Finance justified the introduction of tax licenses by more equitable taxation of companies that long avoid paying taxes. At the same time the Minister expects cleaning up the commercial register.

New tax for companies primarily affects the companies that are at loss or achieve only a minimal profit. In these cases, the new tax will cause that business through a company will be more expensive for the entrepreneur compared to the business of an individual. Moreover, if the shareowner will be also the employee, pays the state twice – levies, as well as tax license.

Tax license – the amount of tax

The amount of tax licenses will depend on the company´s revenues, as well as from the fact whether the company is or is not subject to value added tax (VAT). According to the proposal, companies which are not subject to VAT and their revenues are to 500,000 EUR, will be obliged to pay a tax license in the amount of  € 480.

However, it is necessary to emphasize that if the company has a turnover of at least € 49,790 for the 12 previous consecutive calendar months, it becomes mandatory VAT payer. Automatically it falls within the group of companies that double the amount of  tax (€ 960).

For VAT payers the business will be even more expensive. Minimum tax for companies that are subject to VAT will be in the amount of € 960. This fact may also affect the interest of companies to register as volunteer VAT payers.

Trading companies with revenues greater than five hundred thousand euros will pay the ultimate license of € 2,880.

The Ministry of Finance defends the introduction of tax licenses also for the possibility of offsetting of further three years.

Tax license – exemptions

Tax license will not affect business owners – the self-employed persons. The obligation to pay tax will not apply to new entrants in the first year.

Companies in bankruptcy, liquidation, restructuring

The proposal does not modify so far how the tax license will affect companies that are in bankruptcy, liquidation or restructuring.

Income tax reduction

Ministry of Finance wants to introduce tax licenses together with a reduction of income tax for companies from the current 23 % to 22 %.

Effectiveness

They first have to pay a tax license in 2015 for the tax period of 2014.

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