This chapter contains a description of tax provisions applied to agriculture in 2019, unless otherwise specified. They include taxes on income and profit, property, good and services, environmental taxes, and tax incentives for R&D and innovation.
Taxation in Agriculture
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Chapter 32. Slovak Republic
Abstract
32.1. Overview
In 2004, the Slovak Republic introduced a major change into its tax system to encourage investors, strengthen work incentives as well as tackle low level of tax revenues and help low-income workers by introducing a health security contribution allowance.
Following these reforms tax treatments that were previously available to farmers were removed. Tax rules applies generally and there are no specific tax exemptions for sectors including agriculture, apart from the fuel tax rebate for famers reinstituted at the beginning of 2019. Currently farmers benefit from lower municipal property taxes on buildings and an exemption from the motor vehicle tax.
32.2. Income taxation
Individuals who have their permanent residence or habitual abode in Slovakia are treated as tax residents. All other individuals are treated as non-residents.
Tax residents in Slovakia are taxable on their worldwide income. Taxable income of an individual is usually calculated by aggregating the separate net results of employment income, business, independent professional activities, rental income and income from the use of work and art performance and other income (e.g. income from occasional activities) and from the sale of real estate if the seller is the owner for less than five years.
The tax year is a calendar year. For the income of natural persons, there are two tax brackets of 19% and 25%. For income up to EUR 36 256 (this amount is the equivalent to 176.8 times the 2019 minimum wage of EUR 210.20) the tax rate is 19% and for income above this amount the tax rate is 25%. Income from capital is taxed at a flat rate of 19%. All self-employed and employees can claim the following tax rebates that are all, with the exception of the tax bonus for children, means tested:
Basic personal allowance (non-taxable subsistence minimum).
Allowances for a dependent spouse.
Resident taxpayers are entitled to a so-called tax bonus for each child living in the same household.
Employees benefit from a health insurance contribution (HIC) allowance.
A company is treated as resident for the tax purposes if it has its legal seat or place of effective management in the Slovak Republic. Resident companies are taxable on their worldwide income, including capital gains. The taxable income is computed on the basis of accounting profits and is adjusted for several items as described in the tax law. Non-resident companies are taxed only on income derived from Slovak sources. Corporate income tax is levied at a rate of 21% (also 21% and 35% of a special tax base in accordance with tax law). All corporations can carry-forward tax losses over four consecutive years in equal parts (up to 25% of incurred tax loss volume per year).
32.3. Property taxation
There is no real estate transfer tax in Slovakia on property sales (if the seller has been the owner of the property for at least 5 years) or by gift, or inheritance.
Property taxes in Slovakia impose taxation only on immovable property. Under legislation there are eight different regimes for local taxes. Real estate taxes include land tax, building tax, flat tax and non-residential tax. The tax base for estates (arable land, permanent grassland) is the area of plots multiplied by land value of 1 m2 stated in the Appendix no. 1 of the Act of Local Taxes and Local Fee for Municipal Waste and Minor Construction Waste. Land values differ by region as every municipality (tax administrator) can set its tax rate (reduce or increase) according to local conditions (with some restrictions). The annual rate of land tax is 0.25% of the land tax base (values and areas). There are no special provisions stated in the Act related to agricultural buildings however, tax rates on agricultural buildings are usually set well below those applying to other buildings. The annual rate of building tax is EUR 0.033 for each m2 of built-up area.
32.4. Tax on goods and services
There is a standard value added tax (VAT) rate of 20% of the tax base applicable to most goods and services. A reduced VAT rate of 10% applies to a selected number of goods, including basic food, i.e. meat, fish, butter, bread, milk, and cream, some medical aids and drugs, printed books and brochures.
As of January 2019, the Slovak Republic reinstituted its regime of fuel tax rebates for farmers having abolished the programme in 2011.
The Slovak Republic applies a motor vehicle tax to which vehicles used in agriculture and forestry are exempt from. Exemption is applied only for usage in agriculture; if the vehicle is used for another activity, it is subject to motor vehicle tax.
Mineral oils, tobacco products, spirit, beer and wine (including other fermented beverages and intermediate products) and tobacco are all subject to excise taxes. Some small breweries and spirits producers are subject to reduced rates.
Additionally, energy use is subject to excise duties in the Slovak Republic. Several exemptions apply to energy usage. Some of them are obligatory exemptions, others are for high energy demanding sectors and for households, but none of the exemptions are specifically for the agricultural sector.
32.5. Environmental taxes
There are no tax incentives to encourage provision of environmental goods.
32.6. Tax incentives for R&D and innovation
All companies are able to deduct R&D costs from their tax base provided they meet certain conditions. In 2018, corporations could deduct the following R&D tax incentives:
100% of actual expenses on R&D in the respective tax period
100% from the average increase of R&D expenses over the last two tax periods.
During 2015 and 2016, only 10 corporations in the agriculture sector claimed the tax incentives to support their R&D projects and in 2017 only one agriculture corporation claimed the tax incentives.
32.7. Other taxes
There is no other special tax treatment for the agriculture sector in the Slovak Republic.