Corporate Tax 2010 - BMR Advisors

Chapter 41
Slovakia
Miriam Galandová
White & Case
Matej Firický
1 General: Treaties
2 Transaction Taxes
1.1 How many income tax treaties are currently in force in
Slovakia
After the break-up of the Czech and Slovak Federal Republic
(“CSFR”) in 1993, the Slovak Republic acceded to the tax treaties
signed by the former CSFR. Since then, the Slovak Republic has
signed a number of new tax treaties. Currently, Slovakia has tax
treaties with 60 countries. This does not include the tax treaties
currently being negotiated which have not take effect yet.
1.2 Do they generally follow the OECD or another model
The tax treaties signed by the Slovak Republic generally follow the
OECD Model Tax Convention. The specific tax treaty is signed
with the U.S., which follows neither the UN nor OECD Model Tax
Convention.
1.3 Do treaties have to be incorporated into domestic law
before they take effect
The tax treaty, if signed, also needs to be approved by the Slovak
Parliament and subsequently ratified by the Slovak President.
Afterwards, upon the counterparty ratifying the tax treaty, the
treaties are published in the Collection of Laws and become part of
domestic law.
1.4 Do they generally incorporate anti-treaty shopping rules (or
“limitation of benefits” articles)
Slovak tax treaties do not usually include any specific anti-treaty
shopping provision, except for those incorporated in the model tax
treaties, e.g. principle of limitation of benefits to the “beneficial
owners” of income.
1.5 Are treaties overridden by any rules of domestic law
(whether existing when the treaty takes effect or
introduced subsequently)
2.1 Are there any documentary taxes in Slovakia
In Slovakia, no documentary taxes have been introduced.
2.2 Do you have Value Added Tax (or a similar tax) If so, at
what rate or rates
As of May 1, 2004, the Slovak value added tax (“VAT”) system
complies with the principles of VAT applied within the European
Union (the “EU”) by the Sixth Council Directive 77/388/EC
(Recast Council Directive 2006/112/EC) of the common system of
VAT.
Generally, a standard 19% VAT rate applies on the majority of
taxable supplies with the place of the transaction being in Slovakia,
unless these supplies are specifically exempt from VAT. The
reduced 10% VAT rate applies on qualified supplies such as supply
of certain pharmaceutical products, medical equipment and books.
2.3 Is VAT (or any similar tax) charged on all transactions or
are there any relevant exclusions
Under the Slovak VAT system, VAT is imposed on: (i) the supply of
goods for consideration in Slovakia; (ii) the provision of services
for consideration in Slovakia; (iii) intra-Community acquisitions of
goods; and (iv) the import of goods from countries outside the EU.
VAT-exempt supplies with an input-VAT deduction entitlement
include (i) the supply of goods from Slovakia to another EU
Member State, and (ii) the export of goods.
VAT-exempt supplies without an input-VAT deduction entitlement
include, among others: (i) insurance services; (ii) the transfer and
lease of real estate under certain circumstances; (iii) financial
services; (iv) lotteries; (v) postal services; (vi) healthcare services;
(vii) social care services; (viii) educational services; and (ix) other
activities in the public interest.
2.4 Is it always fully recoverable by all businesses If not,
what are the relevant restrictions
Once the Slovak double tax treaties are ratified in compliance with
Slovak legislation and published in the Collection of Laws, they
prevail over Slovak law.
ICLG TO: CORPORATE TAX 2010
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In general, the VAT payer is entitled to deduct VAT paid in respect
of supplies used for the purposes of its taxable business activities.
According to the Slovak VAT Act, input VAT cannot be deducted
from the acquisition of personal motor vehicles (unless they are
purchased by VAT payers whose scope of business covers the
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