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Slovak Republic: Living There - Tax Issues

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Living There

INDIVIDUAL TAXATION

Resident citizens are taxed on their worldwide income. Resident foreigners are taxed on their Slovakian-sourced income. Married couples are taxed separately.

INCOME TAX

A personal allowance of 19.2 times the minimum subsistence amount announced 01 January every year is available to all residents. For 2007, the annual personal allowance is SKK95,616 (€3,155). A resident can also claim a tax bonus of SKK6,480 (€213) for each dependent child living with him in a common household annually provided that he earns 6 times the minimum wage (currently SKK7,600 or €251 per month). This tax bonus would reduce the final tax liability.

A dependent spouse allowance of 19.2 times the minimum subsistence amount is available to permanent residents provided that the dependent spouse does not have income in excess of the personal allowance amount (SKK95,616 or €3,155 for 2007). Computation of the dependent spouse’s allowance is as follows: 19.2 times the subsistence amount less the spouse’s actual income.

RENTAL INCOME
Rental income is taxed at 19%, after deductions. Generally, necessary expenses incurred to generate, ensure, and maintain rental income are deducted before arriving at the taxable income. Deductions can include depreciation costs, interest and finance charges, real estate taxes, repairs, maintenance and other types of rental expenses. Alternatively, the taxpayer can make a general expense claim of up to 40% of the rental income instead of itemizing deductions.

Depreciation Rented buildings qualify for depreciation, and are usually depreciated over 20 years. Buildings can be depreciated either through the straight-line (property value – scrap value/estimated life) or accelerated method, under which depreciation is computed by multiplying the value of the property to a designated coefficient.

CAPITAL GAINS
Income from the sale of real estate is taxed at a flat rate of 19%. Exempt from capital gains tax are the disposal of:

• Real estate which has not been used for commercial purposes;
• Real estate held for more than five years;
• Any real estate previously used for business purposes and held for five years;
• The sale of a flat or a house that has been the taxpayer’s permanent residence and his own property for at least the two-year period prior to the sale.

VALUE ADDED TAX (VAT)

Real estate leasing and sale of real estate property is VAT exempt.

PROPERTY TAX

Real Estate Tax

The basic annual tax rate on apartments is SKK1 (€0.03) for every sq. m. of the flat’s floor area. The tax rate changes depending on the municipality and normally, it is between SKK1 (€0.03) to SKK10 (€0.30) per sq. m.

The basic annual tax rate on buildings is SKK1 (€0.03) for every sq. m. occupied by the finished building. This will be increased by a surcharge of SKK10 (€0.30) for each additional floors above the ground.

A separate tax on land is levied at 0.25% of the tax base which would be assessed by the municipality. Rates vary depending on the type of land and its location.

Slovak Republic - more data and information

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