Exemptions from the Tax Licence

In addition to the entities described above, the tax licence does not apply to the following:

  • a company in its first year of existence,
  • a company operating a sheltered workshop or sheltered workplace,
  • a company in bankruptcy or liquidation.

Planning Around the Slovak Tax Licence

The tax licence is a form of minimum corporate income tax that has applied to Slovak legal entities in certain periods. Its practical effect is that a company may have to pay a set amount of tax even if it makes a loss or only a small profit. For this reason, it is an important consideration for anyone planning to form or acquire a Slovak company.

Check Which Rules Apply

The rules on tax licences in Slovakia have changed several times over the years, including the amounts payable, the categories of companies affected and the exemptions available. Before drawing any conclusions, it is therefore essential to check which version of the rules applies to the specific tax period you are interested in. Information that was correct a few years ago may no longer reflect the current position.

Why Exemptions Matter

Where exemptions exist, they can make a real difference to the cost of running a company, particularly for start-ups, socially focused businesses and companies that are winding down. Typical questions to consider include:

  • When was the company established, and does a first-period exemption apply?
  • Does the company operate a sheltered workshop or workplace?
  • Is the company in liquidation or insolvency proceedings?
  • Is the company’s turnover or registration for VAT relevant to the amount?
  • Can any amount paid be offset against tax in future periods?

Including It in Your Business Planning

If you are setting up a new company, it is worth estimating its expected profits for the first few years and comparing the possible tax licence obligation with the ordinary income tax that would be due. If you are buying an existing company, check whether any outstanding tax licence or other tax liabilities exist before the transaction is completed.

Alternatives

In some cases, entrepreneurs consider other legal forms or structures. Any such decision should be based on a full review of tax, liability and administrative factors rather than on a single tax.

If you are unsure whether your Slovak company is liable for the tax licence or entitled to an exemption, contact eTuls. Our accountants can review your situation for the relevant tax period and explain your obligations clearly.