Transaction Tax: New Tax on Payments and Withdrawals

”Nothing is certain except death and taxes”, Benjamin Franklin's famous quote remains true, especially in today's times.  In response to the challenging state of public finances, the Slovak parliament adopted a range of fiscal instruments aimed at consolidation. Part of the measures adopted in order to consolidate Slovak public finances is the introduction of the Transaction Tax. All companies, other legal entities and sole proprietors operating in Slovakia, are required to pay a tax when making a payment from their bank account, for cash withdrawals and the use of credit/debit cards. Exempted are only public entities, non-profit organizations or civic associations.

For transfers (payments) made from a bank account, a tax of 0.4% of the transaction amount, with a maximum of 40 EUR per transaction, will be paid. In the case of cash withdrawals, a tax of 0.8% of the amount withdrawn, with no maximum limit, must be paid. For the use of a credit/debit card, there is no tax on individual transactions, but a fixed tax of 2 EUR per year, if the credit/debit card was used at least once during the preceding calendar year.

However, not all payments made from a bank account will be taxed. Exceptions include for example payments of taxes, fees, and contributions to health and social insurance, payments of contributions to the second and third pension pillars, etc. Notably, internal transfers between one's own bank accounts within the same bank are also exempt.

As for the actual process of paying the Transaction Tax, in the case of bank accounts held in banks in Slovakia, the bank is the entity responsible for calculating and deducting the tax from the taxpayer’s bank account and subsequently remitting it to the tax authority on a monthly basis. However, for accounts held in foreign banks, the taxpayer will be directly responsible for calculating and paying the Transaction Tax to the tax authority.

By Mgr. David Benčat & JUDr. Valter Pieger

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