The Financial Transaction Tax Act has come into force in Slovakia, which introduces the application of a bank transaction tax to all business entities in Slovakia. The new tax will be levied for the first time in the tax period starting in April 2025. In this respect, we are providing you with the following summary about the tax and the requirements in which the tax is relevant for a foreign business entity.
Subject of financial transaction tax
Generally, the Slovak Financial Transaction Tax Act (FTTA) stipulates that tax is focused solely on the financial transactions performed by the taxpayer via its bank accounts kept in commercial banks. In this respect, the subject of tax is exclusively considered in the following situation:
- cash withdrawal through ATM
- bank account transfer to another account (so-called basic payment)
- use of a bank card
- situation when a third party pays on behalf of the taxpayer for its activity in Slovakia and third party reinvoice him expenses for payment
Please note that the financial transaction tax may arose in any situation where the taxpayer pay for its liabilities towards the business partners, employees, suppliers, contract penalties or sanctions, repayment of interest, loans or the provision of funds in the form of investments. Last but not least, using an ATM card at least once a year is also considered a taxable financial transaction. in this case, it is not the payment operation that is taxed, but the payment instrument itself.
Taxable persons
FTTA also provided a definition of taxpayer and situation or requirement when the criteria of such definition are met. In this respect, the taxpayer is defined as self-employer, business entity or branch of foreign business entity if they:
- are a client of payment service provider (bank client)
- have a registered office or place of business in Slovakia
- have a bank account in a commercial bank in Slovakia
- carry out business in Slovakia
Moreover, new legislation strictly stipulates that taxpayer in the position of person who is obliged to pay tax directly is also a business entity, if
- has a bank account in a commercial bank abroad
- performed payment via another non-transaction bank account
- third party pays liabilities on behalf of him
Since foreign persons may not have bank accounts established in domestic commercial banks or a registered office or place of business in Slovakia and, consequently, it is difficult to determine the performance of activities – the Ministry of Finance of the Slovak Republic has issued methodological guideline for a detailed assessment and interpretation of the definition of performance of activities in the country.
Assessment of performance of activity in Slovakia by foreign business entity
The Slovak Ministry of Finance stipulates the details to assess how is the taxpayer´s activity carried out in Slovakia and provide deeper explanation to comply with definition criteria for purposes of bank transaction tax:
- a) carried out in whole or in part through a permanent place or facility for the performance of activities located in the country, in particular the place from which the taxpayer’s activity is organised, a branch, office, workshop, workplace, place of sale, technical facility, place of exploration and extraction of natural resources or a permanent place of provision of services to the taxpayer or persons working for him. A place or facility for the performance of activities is considered permanent if it is used consistently or repeatedly for the majority of the monthly tax period for the performance of the activity. A construction site, place of implementation of construction projects and assembly projects is considered to be the place of performance of the activity. An activity carried out in the country is also an activity carried out by the taxpayer through a person who acts on behalf of the taxpayer and consistently or repeatedly for the majority of the monthly tax period negotiates or concludes contracts on his behalf on the basis of a power of attorney. A person acts on behalf of a taxpayer if he acts on the taxpayer’s instructions, while the taxpayer controls the results of his activities and bears the business risk for them.
Example: a place or facility available, in whole or in part, for the performance of a continuous or repeated activity likewise workshop, branch, sale place etc.
- b) domestically located platform, which is software, including a website or part thereof and applications, including mobile applications, which is accessible to the taxpayer’s customers and which enables the taxpayer to perform, directly or indirectly, an activity for the benefit of these customers and also includes all procedures for collecting and paying remuneration in connection with the activity. In order to meet the condition of performing an activity in the country, it is not sufficient that the goods and services on the platform are offered to Slovak customers; the location of the platform in the country is necessary.
Example: foreign business entity with domain including “SK” prefix.
- c) an online marketplace located in the country, which is a service that, using software, including a website, part of a website or an application, including a mobile application, allows customers to conclude contracts remotely with a taxpayer. In order to meet the condition of carrying out activities in the country, it is not sufficient that the goods and services on the online marketplace are offered to Slovak customers; the location of the online marketplace in the country is necessary.
Example: foreign business entity with domain including “SK” prefix.
- d) insurance risk related to this activity located in the country, if (1) the insured real estate, its parts, accessories, including the things located therein, except for goods in commercial transport, are located in the country and through which the taxpayer carries out this activity, (2) the insurance applies to any means of transport that is or is to be registered in the relevant register kept in the country.
Example: buildings located or insured in Slovakia (in Slovakia may be insured solely building located within the territory of Slovakia).
- e) The storage of a taxpayer’s stocks in the country without any other related activity of the taxpayer does not constitute an activity of the taxpayer in the country. The condition of carrying out the activity of the taxpayer in the country is met if the supply or display of these goods and services in the country through a permanent place or facility for carrying out the activity is continuous or repeated for the majority of the monthly tax period.
Example: foreign entity transfers goods from abroad to a warehouse located in Slovakia (transfer according to VAT) and subsequently sells these goods to Slovak customers.
Therefore, for the purposes of assessing the performance of activities in the country by foreign persons, it is important to assess the above-mentioned characteristics, as the fulfilment of at least one of the characteristics conditions the consideration of the foreign person as a taxpayer.
Additional monitoring requirement to bank transaction tax
In addition to the above, it is necessary to monitor – if the characteristics for fulfilling the significance of carrying out activities in the country are not met, other conditions set out in the methodological guidelines, which are:
- If the taxpayer does not have a registered office, location, or payment account in the country – only those transactions related to his/her activities in the country are subject to taxation
- If the taxpayer does not have a registered office or location in the country but has a payment account – transactions carried out on an account in the country are subject to taxation
- If the transaction was not related to activities in the country at the time of payment, but this activity was subsequently related to activities in the country – the transaction is subject to taxation in the period when the activity was carried out in the country
Bank transaction tax deduction
The taxpayer to whom costs are recharged – another person pays for his obligations (costs) related to his activities carried out in Slovakia is solely entitled to reduce the calculated bank transaction tax by:
- bank transaction tax collected by transaction tax payer (tax levied by its own bank)
- bank transaction tax paid by another person who recharged the cost on to the taxpayer
Bank transaction tax deduction is not allowed in cases of bank account transfer or cash withdrawal –the deduction is solely applicable to recharged costs.
If the costs related to the execution of a financial transaction that relates to such an activity of a taxpayer carried out in the country are charged to several taxpayers, they shall claim the amount of tax under the first sentence in the proportion in which these costs were charged to them.
Bank Transaction Tax settlement
The taxpayer who performs taxable financial transaction that fall under the FTTA regulations is obliged to submit a specific Tax Notification towards the Slovak Tax Authority. The process of payment and submitting of the Notification is divided by the following:
Obligatory person | Slovak bank | The taxpayer itself |
| Submission of the Notification | If taxpayer performs solely bank account transfer or cash withdrawal or pay by bank card | If taxpayer performs in addition to bank account transfer, cash withdrawal or use a bank card also other payment operations likewise recharge of costs |
| Payment the tax | Tax is paid directly by bank | Tax payment is divided between bank and taxpayer as follows: – tax for bank account transfer, cash withdrawal or use of bank card by bank – tax for recharged costs by taxpayer |
| Way of submission | Electronically | Electronically |
| No taxable transaction | Tax Notification is not required to submit | Tax Notification is not required to submit |
The Notification is considered as the official tax return under the Slovak Tax Administration Act.
Payment requirements
The bank transaction tax should be paid as any taxes valid in Slovakia to a specific bank account of the Slovak Finance Directorate. The tax payment is broken down by tax subject and depends on the tax period of the specific tax subject. Below we provide an overview of the payment of tax liability:
Subject of tax | Periodicity | Deadline |
| Bank account transfer | Monthly | By the end of the calendar month following the tax period |
| Cash withdrawal | ||
| Recharged costs | ||
| Use of bank card | Annual | By the end of the calendar year following the tax period |
The payment should be paid to the taxpayer’s personal bank account designated by the Slovak Tax Authority. However, the payment should include specific marking with the payment code no. 501403.
Evidence of return and data
The FTTA required to archive all information required by the bank transaction tax for purposes of potential tax inspection. The data are archived by:
- tax period with data on account number, amount of financial transaction, tax base, tax rate, amount and date of first use of payment card
- keep records until the expiry of the right to levy tax according to the tax code (5 calendar years)
- submit records upon request only electronically
