Last reviewed 08 Dec 2023
Besides general transfer pricing restrictions, thin capitalisation restrictions and interest limitation rules (see section "EU interest barrier" below), no specific rules apply.
The use of subordinated debt is allowed.
Interest expense on a loan used for acquisition of shares is considered as tax deductible in the
taxable period, in which shares are sold, provided that the income from sale of shares will not be exempted from tax. Exception in case of brokers.
Besides general transfer pricing restrictions, thin capitalisation restrictions and interest limitation rules (see section "EU interest barrier" below), at present no specific tax regulations for subordinate debt (mezzanine capital) exist in Slovakia.
New rules limiting the amount of tax deductible interest expense ("interest limitation rules") apply in Slovakia in case of loan contracts or amendments to aleady existing contracts concluded as of 2024. Interest limitation rules shall have priority to thin capitalisation restrictions and have been incorporated in Slovakia based on the EU ATAD.
Based on these rules, if the amount of net interest costs is higher than EUR 3,000,000, the tax base should be increased by the amount by which the net interest costs exceed 30% of the tax base increased by net interest costs and tax depreciation.
Net interest costs mean the amount by which tax-deductible interest expenses exceed taxable interest income in the relevant tax period. Interest expense treated as tax non-deductible due to interest limitation rules can decrease the tax base during subsequent 5 tax periods provided interest limitation rules are met in those periods.
Interest limitation rules will not apply to financial institutions and entities related parties of which are individuals only.
It is possible to squeeze out minority shareholders on condition that the majority shareholder owns
a minimum of 95 % of both registered capital and voting rights in the company. This applies only
to companies whose shares are listed on the regulated stock exchange.
Exempted from tax where at least 10% of shares are directly held for more than 24 months after date of acquisition.
Company selling the shares fulfils significant functions in Slovakia, manages and carries the risk related to the ownership of the shares, enough personal and material resources are available for these functions.
Exempted from tax where at least 10% of shares are directly held for more than 24 months after date of acquisition.
Company selling the shares fulfils significant functions in Slovakia, manages and carries the risk related to the ownership of the shares, enough personal and material resources are available for these functions.
The direct sale of an ownership interest in a limited or general partnership is not possible legally. It is usually effected by retirement of an existing partner and entry of a new partner. The gain on such a transaction is subject to tax.
No exemption for capital gains.
The sale of a business (enterprise) as a whole or part of a business as a going concern is possible.
The gain/ loss from the sale of business is taxable/ tax deductible in the tax period in which the contract on sale of business becomes effective.
Assets and liabilities transferred are valued in the financial accounts of the purchaser at fair value (substantiated by expert opinion). For tax purposes, acquired assets and liabilities are also valued at fair value.
The positive difference between acquisition price and fair value of the acquired assets and liabilities represents goodwill.
Merger, acquisition or demerger ("(de)-merger") - full de-merger, partial de-merger
In case of a (de)-merger (winding-up without liquidation), the legal successor records assets and liabilities at fair value (exception in case of special cases of cross-borders mergers where also historical value might be applicable for tax purposes).
On the date of a (de)-merger (winding-up without liquidation), the difference between net book values of assets and liabilities and their fair values determined by the market price, qualified estimate, or expert opinion, shall be posted to the respective accounts of assets and liabilities with a counter-entry to specific equity account ("revaluation differences").
A remaining difference is to be recognized as goodwill, with a counter-entry to the account gains or losses from revaluation upon mergers, takeovers and splits.
Goodwill may be created in specific circumstances (down-stream merger) and amortised for financial accounting purposes. Goodwill or badwill must be allocated in the tax base over a maximum of 7 years and at least 1/7 annualy. However, under certain circumstances the allocation must be ended prematurely, e.g. in case of sale of the acquired business.
The revaluation difference resulting from valuation at fair value may be considered in the taxable base either fully in the year of the merger or allocated in the taxable base over a maximum of 7 consecutive years. However, under certain circumstances the allocation must be ended prematurely, e.g. in case of a share capital increase, a dividend distribution or if over 50 % of the asset from which the revaluation difference originates is sold. If revaluation difference is included in the taxable base fully in the year of the merger, the amortisation can be continued using the increased acquisition cost (i.e. fair value at merger) and does not have to be restarted.
Only such property may be contributed in kind whose economic value can be determined by an official appraiser.
Assets acquired via contributions of (part of a) business as a going concern are recorded at fair value.
Individual assets acquired via contributions are recorded at value recognised for contribution.
(Exception in case of special cases of cross-borders contributions where also historical value might be applicable for tax purposes).
The entity that is contributing the business or individual assets accounts into its revenues/ costs for positive/ negative difference between (i) the value recognised for contribution and (ii) net book value of contributed assets ("difference at contribution").
The entity acquiring the business via contribution accounts for goodwill/ badwill being the positive/ negative difference between (i) the value recognised for contribution and (ii) fair value of acquired assets.
The difference at contribution as well as goodwill/ badwill can either be fully considered in the taxable base in the year of the contribution, or can be allocated in the taxable base over a maximum of 7 consecutive years (at least 1/7 annually). Under certain circumstances, however, the allocation must be ended prematurely, e.g. with respect to difference at contribution, in case of a sale of over 50 % of the value of the asset(s) acquired through the contribution. If difference at contribution is fully included in the taxable base in the year of the contribution, the amortisation can be continued using the increased acquisition cost (i.e. fair value at contribution) and does not have to be restarted.
For financial accounting purposes, goodwill may be amortiaed.
Goodwill or badwill has to be considered in the taxable base allocated of a maximum of 7 years and at least 1/7 annually. For more information, please see section above.
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Opening Hours:
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