Amendment to the Income Tax Act

It will affect not only companies and entrepreneurs, but also individuals from 2025!

The consolidation package of measures approved to stabilise public finances also introduces changes in the area of income tax. The measures will impact not only the business sector but also individuals.

These are the following key changes under the amendment to the Income Tax Act:

• Income tax rates are changed for both individuals and legal entities. For legal entities, a new corporate income tax rate of 24% is introduced, which will apply if the legal entity has taxable income (revenue) exceeding EUR 5 million. Another change in the tax rates is the reduction of the tax rate from 15% to 10%, while the threshold of taxable income of legal entities for the application of this rate is shifted from the current EUR 60,000 to EUR 100,000.

In the case of individuals earning income from business and other self-employment, the tax rate of 15% remains in force, but the income threshold for applying this tax rate is also shifted from the original EUR 60,000 to EUR 100,000.

In addition, the tax rate on dividends paid to individuals is reduced again to 7% (from the current 10%). This reduced tax rate will apply to dividends paid out of profits recognised for the tax period beginning on 1 January 2025 at the earliest.

• A number of changes are being introduced in the field of electric vehicles. Bicycles and scooters with an auxiliary electric motor have been added to depreciation group 0 to promote electromobility. Also trolleybuses and electric buses will now belong to depreciation group 1. These changes also apply to assets classified before 1 January 2025, but depreciation already claimed is not retrospectively adjusted.

The amount of the non-cash income of an employee, who has been provided with an electric or hybrid car for private use by the employer, is also reduced to the amount of 0.5% of the entry price of the vehicle. For cars with a combustion engine, the non-cash income in the amount of 1% remains in force.

The Amendment also introduced another method of proving fuel expenditure for electric vehicles when charging them at home. The average monthly prices announced by the Statistical Office of the Slovak Republic for the electricity consumed when charging electric vehicles and the amount of electricity consumed as stated in the technical certificate or according to the manufacturer’s or dealer’s data will be the bases.

• For the first time for the 2025 tax period, there will be an option to remit/donate a 2% share of the paid personal income tax to parents if they are recipients of an old-age, retirement, disability or disability-retirement pension. Up to 4% can be remitted in total, i.e. 2% for one parent and 2% for the other parent, but the remitted tax must be at least EUR 3 for each parent. However, the option to donate 2% or 3% of the tax to the non-profit sector still remains in force. According to the approved changes, the parental pension, which was paid out by the Social Insurance Institution, will be abolished from 1 January 2025.
• There are also changes for individuals in the rules for the application of the tax bonus and its amount. A parent with a child aged up to 15 years will be entitled to a tax bonus of EUR 100 (originally EUR 140), and with a child aged 15 to 18 years to a tax bonus of EUR 50 (originally EUR 140). The tax bonus of EUR 50, which was granted for dependent children from the age of 18, will be abolished from 2025. For high-income taxpayers, changes are also introduced from 2025 in the phasing out or even termination of the entitlement to a tax bonus.

All the above changes in the Income Tax Act will take effect on 1 January 2025.