Following the introduction of the so-called "millionaire tax", Directive No. 119/1998 Coll. on the calculation of monthly personal income tax prepayments with respect to income from dependent activities and the emoluments of functionaries was published. Should monthly taxable income exceed Sk 90 000, the monthly prepayment should be increased as illustrated below:
Original amount of prepayment Tax surcharge from Sk to Sk 30 600 106 200 5% 106 200 333 000 10% 333 000 748 800 20% 748 800 and more 30%
The Directive is effective from 1 May 1998.
1998 corporate income tax prepayments
In relation to act introducing the "millionaire tax", Directive No. 26 was published by the Ministry of Finance in the Financial Newsletter No. 4 announcing that the method of calculating corporate income tax prepayments has not been changed.
Tax Treaty with between Slovak Republic and Switzerland
The Treaty, published on 7 May 1998 under No. 127/1998 Coll., stipulates the maximum withholding tax rates as follows:
- Dividends: 15%; alternatively 5% if the beneficial owner of the dividends is a company holding directly at least 25% of the company's assets;
- Interest: 10%; alternatively 0% if the interest relates to credit supplies or to credit sales of any manufacturing, commercial or scientific appliance. The same tax exemption is applied on all types of bank loan interests;
- Royalties: 10% if the receiver is the beneficial owner of the royalties.
The treaty entered into force upon exchanging ratification documents, i.e. 23 December 1997, while its provisions are effective from 1 January 1998.
Amendment to the Act on inheritance tax, gift tax and real estate transfer tax
Under the amendment, flats and non-residential premises are exempt from real estate transfer tax if their legal possession is acquired by their current tenants. The provision shall not apply if they are currently rented by a legal entity.
The amendment was published under No. 133/1998 Coll. and will become effective on 1 June 1998.
Amendment to the Health Insurance Act
The amendment introduces an obligation to pay health insurance for the members of statutory bodies, supervisory boards, boards of directors, controlling bodies and other autonomy authorities. The income from activities performed for these bodies serves as a base for establishing the level of health insurance contribution for these individuals.
The amendment was published under No. 124/1998 Coll. and will become effective from 1 June 1998.
Tax deductibility of expenses related to work clothes
Directive of the Ministry of Finance No. 29, published in the Financial Letter No. 4/1998, specifies, amongst others, the conditions for the tax deductibility of expenses incurred on uniformed work clothes in the cases where this obligation does not arise from generally binding legislation. This concerns, for example, uniforms for staff employed by banks, insurance companies, hotels, restaurants, etc.
The deductibility of expenses incurred on work uniforms is subject to following conditions:
- the employer has issued an internal ruling in which he sets forth the obligation to wear the uniform and the conditions under which the uniform will be provided to his employees;
- the type and pattern of the uniform were specified;
- logos of the employer are permanently attached to the uniforms.
Taxation of Slovak individuals for work performed in the Czech Republic
Directive of the Ministry of Finance No. 27/1998, published in the Financial Letter No. 4/1998, specifies, in compliance with the Czech Income Tax Act and the Tax Treaty between the Slovak and the Czech Republics, conditions regarding the international hire of labour. Under this Directive, the Czech user of the labour is obliged to withhold and pay tax prepayments to the local Financial Authority in the Czech Republic.
In addition, the Directive specifies the method of calculating the personal income tax base, the method of taxing the Czech source income in the Slovak Republic, obligations of the Slovak legal employer and the technique of bookkeeping entries with respect to revenues from labour hire and related payroll expenses.
Prolongation of the period for the 1997 income tax return submission
Directive of the Ministry of Finance No. 27/1998, published in the Financial Letter No. 4/1998, applies to Slovak individuals who received, in the course of 1997, income from dependent activities from a Slovak individual or a legal entity for work performed in the territory of the Czech Republic for a Czech legal entity or for a Czech individual. The Directive applies also to Slovak legal entities - employers of the individuals as specified above.
The deadline for the 1997 income tax return submission for the Slovak individuals and legal entities specified above is extended to 30 June 1998.
The information in this newsletter is correct to the best of our knowledge and belief at the time of going to press. Specific advice should be sought, however, before investment and other decisions are made.
For further information contact Mr Frank Walsh on +421 7 5340 545 Email directly on Click Contact Link
