Go back Print version

Frequently asked questions

I would like to ask why working pensioners (in this case a military pensioner) are not entitled to the non-taxable part of the wages when they become employed again. Are you preparing any change?

According to Section 11(7) of the Income Tax Act No. 595/2003 as amended (the “Income Tax Act”), the taxpayer’s tax base is not reduced by the amount corresponding to 19.2 times the subsistence minimum per annum, where the taxpayer receives, at the beginning of the tax period, an old-age pension or early old-age pension under the social insurance or a pension under foreign mandatory insurance of the same kind or a service pension or if such pension has been granted retrospectively as at the beginning of the tax period and is higher than the specified amount. Where the sum of pensions does not exceed such amount per year, the taxpayer’s tax base shall be reduced only by the difference between the aggregate pension paid and such amount. By applying the non-taxable part of the tax base under the income tax, the state leaves part of the income to the taxpayer without taxation. With respect to the fact that the beneficiaries of the above-mentioned pensions are provided with an income by the state, which income is exempt from the income tax (these pensions – including the service pension – are thus not taxed), the application of both advantages to a single group of taxpayers (the application of the non-taxable part of the tax base also in the event that such pension exceeds the amount corresponding to 19.2 times the subsistence minimum per annum) would be at variance with the principle of fair taxation. The Ministry of Finance of the Slovak Republic is presently preparing no changes in this area. In conclusion it should be noted that according to Section 46 of the Income Tax Act, tax shall not be assessed and paid where it does not exceed SKK 500 for the entire tax period or where the total taxable income does not exceed 50% of the amount of the non-taxable part of the tax base per taxpayer (in 2007, this amount is SKK 47,808). The above-mentioned provision is general and applies to all taxpayers – natural persons who receive taxable income (unless they claim a tax bonus for a dependent child or received income taxed by withholding or advance payment of taxes), that means, including to the beneficiaries of old-age (service) pension.

Please, refer me to a decree or law, in which I would learn where and to what budgets individual direct and indirect tax revenues go

The basic distribution of the individual income tax revenue among municipalities, higher territorial units, and the state budget is conducted according to Act of the National Council of the Slovak Republic No. 564/2004 on Budgetary Allocation of Tax Revenue from Local Government Income amending and supplementing certain laws as amended by Act No. 171/2005, the specific criteria of their weight being determined by Government Regulation No. 668/2004 on the Distribution of the Tax Revenue from Local Government Income as amended by Government Regulation No. 519/2006. Next we recommend referring to Act of the National Council of the Slovak Republic No. 582/2004 on Local Taxes and Local Charges for Municipal and Minor Construction Waste as amended, which defines further types of taxes including their budgetary allocation.

I want to ask in what manner will households be exempt from the coal excise tax, if any, which is being prepared.

In the draft act on the excise tax on electricity, coal, and natural gas amending and complementing Act No. 98/2004 on the Excise Tax on Mineral Oil as amended, households are exempt from the coal excise tax in accordance with Section 19(1)(h). This applies to the full extent regardless of what kind of coal they use. The exemption of households from the excise tax is in accordance with Council Directive 2003/96/EC. The draft act was designed with the intention of not burdening the population. The complete wording of the draft act on the excise tax on electricity, coal, and natural gas amending and complementing Act No. 98/2004 on the Excise Tax on Mineral Oil as amended can be found on the Slovak Republic Government Office’s website in the section “Rokovanie vlády” (Government Sessions) – “61. rokovanie vlády SR 26.09.2007” (61st Government Session, 26 September 2007), under No. UV-17017/2007.

We would like to get information on the possibility of obtaining state aid, i.e., whether it is possible to obtain capital to finance our investment and operating needs.

According to Section 21 of Act No. 231/1999 on State Aid as amended, the Ministry of Finance of the Slovak Republic coordinates the state aid with respect to state aid providers in the Slovak Republic and with respect to the European Union. There is no legal title to provision of the state aid. The state aid may be provided in any form; the purposes of state aid provision are regulated by Section 4(2) of the said law. As for the provision of state aid or the possibility to provide state aid, it is necessary to address directly the competent state aid provider. Applications for the provision of state aid from the state budget are filed with the substantively competent ministry or with the legal entity, through which such funds are granted. Applications for the provision of state aid from the funds of a municipality or another legal entity providing state aid are filed with the municipality or with such legal entity.

I want to ask if VAT refund is still possible within the EU and if so, under what circumstances and how to proceed.

Tax refund to foreign nationals and the procedure for claiming the refund of tax included in the prices of goods and services is governed by the value added tax laws valid in individual states of the European Union. Tax refund to foreign nationals in Slovakia is governed by Sections 56 – 58 of the Value Added Tax Act No. 222/2004 as amended. Tax refund to travellers upon goods export from the territory of the European Communities is provided for by Sections 59 to 60 of the cited law. Complete wording of the cited law may be found on the Ministry of Finance’s website at www.finance.gov.sk. More information on the tax refund to foreign nationals can be found on the website of the Tax Administration of the Slovak Republic at www.drsr.sk.

I am a tenant in an apartment owned by the municipality. The Municipal Authority has recently notified me of a 5-fold rent increase. Please, let me know if the Municipal Authority has the right to increase the rent without my consent only by a notification and whether there is a legal regulation that would set the maximum limit of rent in apartments owned by municipalities (rent regulation). And if so, which one is it?

Regulation of apartment rental prices (the rent) is presently provided by Ordinance of the Ministry of Construction and Regional Development No. V-1/2003 of 22 December 2003 (Notification No. 4/2004). This Ordinance was published in the Journal of the above-mentioned Ministry No. 6/2003. As for rights and obligations under apartment rental, this issue is provided for by special legal regulations (in general, the Civil Code, but also, for example, Act No. 189/1992 on the Provisions for Certain Conditions Related to Apartment Rental and Replacement Apartments as amended) depending on the particular legal status of the matter. It should be noted that the authority to resolve disputes, if any, related to apartment rental, rests with independent courts (on the basis of a properly filed action).

I am interested in information concerning rent regulation in rental apartments returned to their original owners within the restitution. As the Decree of the Ministry of Construction and Regional Development concerning rent regulation in rental apartments should cease to be effective as of 1 July 2007, I noticed in the media that this deregulation has been postponed by the end of 2008. Is this information true? What law or decree does enact this?

The cancellation of Ordinance of the Ministry of Construction and Regional Development of the Slovak Republic No. V-1/2003 of 22 December 2003 on the Regulation of Apartment Rental Prices with effect as of 1 July 2007 was decided by the National Council of the Slovak Republic through Act No. 68/2005 (Article VIII in conjunction with Article I(12) of the Act). On 29 March 2007, the National Council passed Act No. 200/2007 amending and supplementing Act No. 68/2005, the amendment consisting particularly in the above-mentioned effect of the cancellation of Ordinance of the Ministry of Construction and Regional Development No. V-1/2003, where the words “1 July 2007” are replaced with the words “31 December 2008”.

I would like to obtain information concerning drawing lotteries. We would like to operate a consumer competition where we would like to sell lottery tickets for drawing of prizes in kind. Please, send us information as to how we can obtain a permit to operate such a competition.

Until 30 April 2005, the conditions for operating consumer competitions (consumer lotteries) were provided by Act of the Slovak National Council No. 194/1990 on Lotteries and Other Similar Games (the “Lottery Act”), which was cancelled as of 1 May 2005 by Act No. 171/2005 on Gambling amending and supplementing certain laws (the “Gambling Act”). The Gambling Act defines consumer lotteries in Section 3(5) as games having the nature of promotional competitions that are not deemed to constitute gambling, with the Ministry of Finance issuing no licence or other authorisation to the operators of such games. In accordance with the cited provision, gambling is not deemed to include promotional competitions that do not constitute a separate business activity and serve only to support the sales of goods and services, the participation in which is not conditional upon payment of a deposit pursuant to the Gambling Act. Promotional competitions are deemed to mean competitions, games, inquiries and other events, at which participants determined by random selection obtain prizes and for which the participation is conditional upon purchase of certain goods, services, or other benefits and proving such purchase to the organiser of the promotional competition or making a contract with the provider of the prizes for the promotional competition or participation in the promotional or advertising event including indirectly through another person. Payments made for the purpose of obtaining benefits from the organiser of the promotional competition or provider of prizes for the promotional competition are not deemed to constitute deposits pursuant to the Gambling Act. The operation of games compliant with the above-mentioned characteristics is exempt from the regulatory competence of the Ministry of Finance of the Slovak Republic. As you mention also so called “drawing lotteries” in your letter, we consider necessary to note that in the event of satisfying the conditions laid down in the Gambling Act in Section 3(1) (definition of gambling) and in Section 4(4) (definition of drawing lotteries), this would involve a lottery-type gambling. The operation of such game is conditional upon granting the respective individual licence pursuant to Section 16 of the Gambling Act.

I am interested in applying for a contribution – a subsidy towards an Internet connection in the framework of the Internet for Education, as we have no connection to the Internet at home and my son is a secondary school student. Is it possible to obtain this subsidy now, at this time, with respect to the limited number of new applicants who may be registered?

The state subsidy towards an Internet connection in the framework of the Internet for Education programme could be applied for before 31 December 2006. Similar programme is not envisaged to continue in 2007 and therefore it is presently not possible to apply for a state contribution towards an Internet connection.

Who is the inspection authority of a commercial insurance company and where can a motion for investigation of an insurance company’s activity be filed?

According to Section 1(2) of Act No. 747/2004 on Financial Market Supervision amending and supplementing certain laws (the “Financial Market Supervision Act”), the financial market is supervised by the National Bank of Slovakia pursuant to this Act and special acts. According to Section 1(3) of the Financial Market Supervision Act, the National Bank of Slovakia, in the framework of financial market supervision, supervises insurance companies and subsidiaries of foreign insurance companies. The National Bank of Slovakia, within the supervision of the supervised entities, 1) sets the rules of prudent business, rules of safe operation, and further requirements for the supervised entities’ business, 2) supervises the compliance with the provisions of this Act, special acts, and other generally binding legal regulations applicable to the supervised entities or their activities, as well as the compliance with the provisions of legally binding acts of the European Communities and European Union, which apply to the supervised entities or their activities, if provided so by such legally binding acts, 3) conducts proceedings, grants permits, licences, approvals and prior approvals, imposes sanctions and corrective measures, issues other decisions, opinions, methodological guidelines and recommendations under this Act and special acts and supervises the compliance with its decisions including the adherence to the conditions laid down in such decisions, 4) conducts on-site supervision and remote supervision of the supervised entities. You can address your motion to investigate the activity of the insurance company to: National Bank of Slovakia, Imricha Karvaša 1, 813 25 Bratislava.

I would like to ask about filing a tax return. I work for a US company. I spend only two months a year at home; do I have to file a tax return and how is it in fact?

If you, as a citizen of the Slovak Republic with the domicile in the Slovak Republic, became a resident of the United States of America under US internal regulations and under the provisions of the Treaty for the Prevention of Double Taxation and Tax Evasion in the Area of Income and Property Taxes between the Slovak Republic and the USA, which is binding upon the Slovak Republic and which has been registered in the Collection of Laws of the Slovak Republic under No. 74/1994, you will settle your tax liability from global income in the United States of America (underpaid or overpaid tax). In such case, you file a tax return to the Slovak tax administrator only including the income gained from sources in the territory of the Slovak Republic. If you gained no taxable income from sources in the territory of the Slovak Republic during the taxable period, you do not file a tax return to the Slovak tax administrator. For the sake of completeness we note that to determine the country, in which you are obliged to file a tax return from global income, one of the criteria is the assessment of tax residency pursuant to Article 4 of the above-quoted Treaty, particularly on the basis of your domicile, residence, centre of economic interests, etc.

I was provided de minimis aid under the Commission Regulation (EC) No. 1998/2006 of 15 December 2006 on the application of Articles 87 and 88 of the Treaty to de minimis aid (OJ L 379, 28.12.2006). And according to Section 22(2) of Act No. 231/1991 as amended, as a recipient of de minimis aid, I am obliged to notify the Ministry of Finance of the Slovak Republic of the receipt of such de minimis aid within 30 days following the quarter, in which I received the de minimis aid, which is why I would like to ask you how to proceed in this matter.

A recipient of de minimis aid, according to Section 22(2) of Act No. 231/1991 on the State Aid as amended, is obliged to notify the Ministry of Finance of the Slovak Republic quarterly of the receipt of such de minimis aid using a form available on the website of the Ministry of Finance in the category “Štátna pomoc” (State Aid) – “Formuláre pre príjemcov minimálnej pomoci” (Forms for the recipients of de minimis aid) – “Oznámenie o prijatí minimálnej pomoci” (Notification of receipt of de minimis aid) (www.finance.gov.sk).

Is there a publicly accessible list of companies that conduct audits of accounting software?

List of auditors and auditing companies can be found on the pages of “Finančný spravodajca” (Financial Newsletter), particularly on page 675 in the issue No. 12/2006 and on page 75 in the issue No. 2/2007 as well as on the website of the Slovak Chamber of Auditors.

Could you provide information as to the phase of the preparation of the draft law complementing the Income Tax Act No. 595/2003 that should be commented at the beginning of September 2007?

The draft act amending and supplementing the Income Tax Act No. 595/2003 as amended was submitted to the National Council of the Slovak Republic on 28 September 2007. The said draft act was discussed in the first reading at the 14th session of the National Council (resolution No. 550 of 16 October 2007). More information on the progress in the legislative process can be found on the website www.nrsr.sk.

I would like to get information concerning the duty to report in relation to organising competitions for non-financial prizes.

The competition for a non-financial prize against a purchase of goods can be characterised as a promotional competition provided that the conditions laid down in Section 3(5) of the Gambling Act No. 171/2005 amending and supplementing certain laws (the “Gambling Act”) are satisfied. In accordance with the cited provision, promotional competitions that do not constitute a separate business activity and serve only to support the sales of goods and services, the participation in which is not conditional upon payment of a deposit pursuant to this Act, are not deemed to constitute gambling. Promotional competitions are deemed to mean competitions, games, inquiries and other events, at which participants determined by random selection obtain prizes and for which the participation is conditional upon purchase of certain goods, services, or other benefits and proving such purchase to the organiser of the promotional competition or making a contract with the provider of the prizes for the promotional competition or participation in the promotional or advertising event including indirectly through another person. Payments made for the purpose of obtaining benefits from the organiser of the promotional competition or provider of prizes for the promotional competition are not deemed to constitute deposits pursuant to the Gambling Act. Based on the above, the operation of such “games” is not subject to the duty to report, registration duty or duty to obtain a permit within the meaning of the Gambling Act.

We found published lists of successful applicants in the framework of submission of applications for subsidies from the gambling levy revenues and subsidies to individual needs of municipalities. I would therefore like to ask for information as to how one can join this programme in the next year (when the applications are submitted) and what requirements need to be satisfied by an applicant in these programmes

The Ministry of Finance provides subsidies on the basis of Ordinance No. 26825/2005-441 on the Provision of Subsidies in the Competence of the Ministry of Finance of the Slovak Republic of 9 December 2005. The Ordinance is published in “Finančný spravodajca” (Financial Newsletter) No. 10/2005 and on the Ministry’s website. The above-mentioned Ordinance includes all conditions and deadlines related to the provision of subsidies within the competence of the Ministry.

I would like to get information concerning the transfer of money from one financial institution to another. Section 7 of the Payment System Act says that the payment from one financial institution to another should be credited to the account in the next day; in practice, this takes 3 – 4 days.

For domestic transfers, pursuant to Section 7(2) of the Payment System Act No. 510/2002 amending and supplementing certain laws (the “Payment System Act”), the implementing institution of the payer will debit the amount to be transferred from the payer’s account on the day when the payment is to be carried out (the “maturity day”) provided that the maturity day has been indicated in the payment order and provided that the conditions for making the money transfer pursuant to Section 4 of the Payment System Act have been satisfied. According to section 7(2)(b) of the Payment System Act, the payer’s implementing institution that is carrying out a transfer between two institutions is obliged to deliver background documents necessary for carrying out the transfer to the mediating institution so that the crediting of the transfer amount to the account of the recipient’s implementing institution is ensured on the immediately following banking day after the day of debiting the transfer amount from the sender’s account or after the day of depositing the transfer amount in cash at the latest, unless a shorter period has been agreed. According to Section 7(3) of the Payment System Act, recipient’s implementing institution shall credit the transfer amount to the recipient’s account or, in the event of paying the transfer amount in cash, otherwise make it available to the recipient on the same banking day on which the transfer amount was credited to the account of the recipient’s implementing institution. Pursuant to Section 2(10) of the Payment System Act, banking day is deemed to mean a day on which the implementing institutions and mediating institutions participating in the transfer carry out their activities. The above implies that money should be credited to the recipient’s account on the next banking day following the maturity day. For example, if the payment order indicated Monday as the maturity day (the day, when the amount was debited from your account), the transfer amount must be credited to the recipient’s account on Tuesday at the latest. Should the bank fail to comply with the specified deadlines, we recommend that you notify the bank on this fact or to submit the matter directly to the National Bank of Slovakia, Client Protection Department, Imricha Karvaša 1, 813 25 Bratislava 1, which supervises banking institutions, or to the bank ombudsman at the Slovak Banking Association.

Please, let me know whether the proposal of changing the VAT for books as of 1 January 2008 has been approved or what is the stage of implementation of this idea.

On 28 November 2007, the National Council of the Slovak Republic passed the draft amendment to the Value Added Act No. 222/2004 as amended, including, in its Annex 7 listing goods with a reduced tax rate, also goods included in the Customs Tariff codes 4901 – Printed books, booklets, leaflets and similar printing products, also on single sheets, where promotion and advertising amount individually or in aggregate to more than 50% of the total contents of the product, 4903 00 00 – Picture books, preprinted patterns for drawing or painting, for children, and 4904 00 00 – Music, printed or handwritten, also bound or illustrated.

We learned that on 31 December 2007, revenue stamps issued before a certain date cease to be valid. We take the liberty to ask you for information as to what to do with revenue stamps not used by 31 December 2007, as post offices do not repurchase them or replace them for new ones.

The new Decree of the Ministry of Finance of the Slovak Republic No. 284/2007 on Revenue Stamps does not envisage the possibility of replacement for unused revenue stamps, but does enable the revenue stamps issued before 30 April 2007 under earlier regulation to be used until 31 December 2007 for payment of administrative and court fees for filings to administrative authorities, courts, and the Prosecution Office. The cited Decree does not enable other solutions.

I need information concerning the transfer of a greater amount from a foreign bank; does such a transfer require an approval from a state institution in Slovakia?

The transfer of funds to and from foreign countries is not limited by the Foreign Exchange Act No. 202/1995 amending and supplementing Act of the Slovak National Council No. 372/1990 on Offences as amended, i.e., the transfer of funds from a foreign bank does not require consent from the foreign exchange authorities (the Ministry of Finance and the National Bank of Slovakia). Section 8 of this Act only implies the duty to report the transfers defined by this provision to the foreign exchange authority, which is, in accordance with Section 4(4) of the cited law, the National Bank of Slovakia. Details of compliance with the duty to report foreign exchange by a local national and by an organisational component of a foreign national in Slovakia are governed by the Measure of the National Bank of Slovakia No. 691/2006 on the Provision of Reports Pursuant to the Foreign Exchange Act. The details of a cross-border money transfer are provided for by Sections 12 to 20 of the Payment System Act No. 510/2002 amending and supplementing certain laws as amended.

4 What are the advantages of ISDS for the State as the respondent in international investment arbitration?

(i) Transparency. Following the adoption of the UNCITRAL Rules on Transparency in 2013 , international investment arbitrations conducted pursuant to UNCITRAL Arbitration Rules 2013 will be, compared to Slovak court proceedings, even more transparent, as not only the final award, but also most of the submissions of the parties will be published. Publication of awards may preventively discourage speculative investors from trying their luck in international investment arbitrations by filing speculative claims. (ii) The choice of arbitrator. In international investment arbitration, each disputing party (i.e. also the State) shall appoint its own arbitrator and consequently the disputing parties shall appoint the chairman by mutual agreement. The selection of arbitrators is based on qualification of candidates and their experience in the international law. This benefit of choice would be lost for both parties, if the dispute would be heard before a local court. Moreover, court judges do not have much experience with resolution of disputes under the international investment agreements. Arbitrators have to be independent and impartial and in proceedings they are bound by international standards (e.g. International Bar Association Guidelines on Conflicts of Interest in International Arbitration). __________________________________________ 3) Rules on Transparency came into force on April 1, 2014 and are applicable to arbitrations conducted under bilateral investment treaties concluded after this date. However UNCITRAL drafted a multilateral convention in order to extend application of Rules on Transparency to ISDS under existing bilateral investment treaties concluded before April 1, 2014, Parties may agree on application of the UNCITRAL Rules on Transparency also on disputes under other arbitration rules.

5 What are the disadvantages of ISDS for the State as the respondent in international investment arbitration?

(i) Significant costs. It is true that international investment arbitrations are associated with significant costs, especially for legal representation. However, this fact can be mitigated by awarding a part of legal costs to a winning party (see Statistics of the SK). Significant legal costs are also related to complexity of the dispute, in which a sovereign State is sued for violation of its international obligations. However, even if there was no ISDS mechanism, investors would still be able to sue States before local courts, which would require ensuring legal representation as well. In proceedings before Slovak courts, the regulation allows to compensate costs of legal representation only to the extent of statutory remuneration tariff, while real costs of legal representation are usually severalfold higher.