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Financial Transactions Tax — New Rules Starting in 2025

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Starting April 1, 2025, a new financial transactions tax (FTT) will come into effect, marking an important legislative innovation in Slovakia. This tax is part of government measures aimed at fiscal consolidation and is focused on taxing specific financial transactions. The goal is to increase revenue for the national budget, with an expected annual income of around 750 million euros.

Below is detailed information about the FTT, including the taxable object, rates, exemptions, and taxpayer obligations.

Key Terms:

  • Financial Transaction: Includes transfers of funds between accounts, use of payment cards, or withdrawals of funds. The tax applies to transactions where funds are debited from an account.
  • Taxpayer:
    • Individual entrepreneur
    • Legal entity
    • Organizational structure of a foreign entity conducting financial transactions within Slovakia
  • Taxpayer: Providers of payment services, foreign organizations offering services in Slovakia, or organizations that incur expenses related to financial transactions.

Subject and Tax Rates

The tax applies to the following financial transactions:

1. Financial transactions from the taxpayer's account:

  • Rate: 0.4% of the debit transaction amount, with a maximum of 40 euros per transaction.
  • When withdrawing cash from an account, the rate is 0.8%.

2. Using a Payment Card:

  • Annual Fee: 2 euros per card.

3. Accrued Expenses:

  • Rate: 0.4% of the amount of excessively accrued expenses.

Example:

  • If an entrepreneur makes a bank transfer of 10,000 euros, they will pay a tax of 40 euros (the maximum rate).
  • When withdrawing 5,000 euros in cash, they will pay 40 euros (0.8%).

Exemption from Tax Payment

Certain types of financial transactions will be exempt from the FTT, such as:

  • Payments related to taxes, fees, and state contributions.
  • Transactions related to the purchase of securities, government bonds, and pension savings.
  • Payments between accounts of the same taxpayer within the same provider.
  • Payments related to operations in central bank payment systems.

The full list of exemptions can be found HERE.

Reporting and Tax Payment

Tax Period:

  • Calendar month for most transactions.
  • Calendar year for fees related to the use of payment cards.

Reporting Method:

  • Taxpayers are required to submit an electronic tax return by the end of the month following the completion of the tax period.

Tax Payment:

  • The first payment for the period from April to June 2025 must be made no later than July 31, 2025.

Optimization Options

Companies can take steps to minimize their tax liabilities, such as:

  • Payment Consolidation: Combining multiple transactions into one can reduce the number of taxable operations.
  • Cash Withdrawal Limitation: A higher rate (0.8%) applies to cash withdrawals.
  • Use of Internal Transfers: Transactions between own accounts within the same provider are exempt from the FTT.

Impact on Entrepreneurs and Citizens

The introduction of the FTT creates additional costs for both businesses and individuals, with those who frequently conduct large financial transactions being the most affected. On the other hand, its implementation aims to increase revenue for the national budget and enhance the transparency of financial flows.

Entrepreneurs should timely adjust their financial processes, ensure compliance with the new rules, and consult a tax advisor.

Obligation to Open a Business Account

Starting April 1, 2025, self-employed individuals will be required to have a separate bank account exclusively for business purposes. This account must be:

  • Registered in the name of the self-employed individual as a business account.
  • Used for all transactions related to the business’s income and expenses.
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