Since 1 April, a significant change is taking place in the business environment in Slovakia. We have been hearing about it for months, but do we know what this change will bring for us? A new legislative obligation – the financial transaction tax – has been in place since the beginning of the year, but will only start to be levied from 1 April 2025. Who will be affected and how can we prepare for it in time? What does it mean for sole traders? Find out the essentials in our overview.
Transaction tax is a tax on selected outbound financial transactions carried out by entrepreneurs in the course of their business. It applies to non-cash transfers from a payment account, cash withdrawals at an ATM or bank branch and the use of a payment card. Apart from companies such as limited companies and public limited companies, this tax applies to all entrepreneurs and therefore also to individuals, self-employed persons, sole traders or traders with flat-rate expenses. It does not apply to ordinary residents, employees, pensioners or students who are not running a business. Transaction tax is not payable on payments received on account. The tax is always paid by the sender of the payment and not by the recipient.
Entrepreneurs won’t have to worry about calculating and paying the tax themselves, it will be taken care of (with exceptions) by the banks where they have business accounts. All businesses must now use these accounts. All entrepreneurs – including individuals and sole traders – must prepare for this change and must set up a business account by the end of March 2025 at the latest.
We recommend that sole traders do not leave the opening of such an account to the last minute and do so now. Banks can also set it up on the spot, but usually require an extract from the trade register to do so, which can prolong the whole approval process. If they fail or forget to set up such accounts by the deadline, they can quickly find themselves among the tax defaulters. After this deadline, the sole trader becomes not only a taxpayer but also a transaction tax payer (instead of a bank). They will have to calculate and pay the tax on each transaction to the tax office themselves. If he fails to do so, he will be liable to a tax inspection.
The transaction tax consists of three rates. From April you will pay it at the following rate:
- 0.4% of the amount of the non-cash payment at the bank, but no more than EUR 40 for payments over EUR 10,000.
- 0.8% of the amount of cash withdrawn from a branch or ATM, with no set limit. Sole traders do not have to worry about the taxation of ATM withdrawals. The current law allows you to transfer money from a business account to a private account at the same bank and then withdraw it from there without transaction tax.
- Fixed fee of EUR 2 per year for each business payment card used (regardless of how many times and in what amount the payment card was used during the year). Existing bank charges for withdrawals, transfers, account maintenance, etc. should be distinguished from the new tax. These are a matter for the banks and not for the State.
They are therefore not subject to the new tax:
- Payment of taxes, levies and contributions to the state, such as social security contributions or health insurance.
- Transactions between accounts of the entrepreneur held with the same bank. (However, transfers from one bank to another will be subject to the financial transaction tax.)
- Money transfers from a business account to a private account in the case of sole traders and self-employed persons.
- Payment transactions made by card (card payments excluding cash withdrawals).
- Payments for state bonds and others specified in the law.
And what about in the case of termination of the trade ? If you are no longer in business and you close your business account, the transaction tax will no longer apply to you. So, if you close your business, you will ask the bank to close the business account and the bank will then close your account. (If a business that has gone out of business continues to make transactions on that account, those transactions will be taxed until the account is closed.)
Tip for sole traders: some banks are currently offering various promotions for sole traders with their business accounts. You can find out more on the website of the specific bank.
