Do you have any uncertainties regarding the Financial Transaction Tax?
We recommend reviewing the examples below:
- Will the financial transaction tax apply to the transfer of funds from a Slovak company to a cash pooling account held in Poland?
The transfer of funds from a Slovak company to a cash pooling account is not subject to tax only if it is a payment transaction with a single service provider—in the same bank (subject to other criteria, such as the consolidated financial statement for the group). If it is a transfer of funds from a Slovak company’s account with a Slovak service provider to a cash pooling account with a different provider (whether in Slovakia or abroad), such a transaction is subject to the Financial Transaction Tax.
- We are a multinational company with only one account in a German bank. How do we pay the transaction tax?
In this case, you become a taxpayer and are required to calculate and remit the tax for the relevant tax period to the tax authority no later than the end of the calendar month following the tax period. You are also required to submit a notification of the financial transaction tax amount to the tax authority within the same deadline.
- A Swiss legal entity (“LE”), not registered in the Slovak Commercial Register, has an account with a Slovak branch of a bank from which it makes payments related to activities conducted in Austria. This account has been established in Slovakia for long-term EUR payments to other countries, but the Swiss LE does not carry out any business activities in Slovakia.
If a Swiss legal entity has a payment account in Slovakia from which it conducts financial transactions, it is subject to the tax obligation under the Financial Transaction Tax Act.
- A Czech legal entity not registered as a VAT payer in Slovakia has an account in the Czech Republic and makes payments related to various activities in Slovakia (purchase of goods/services from Slovak companies).
The Czech legal entity is a taxpayer, and the financial transaction in question is subject to the Financial Transaction Tax.
- The Financial Transaction Tax applies to “recharged costs associated with the execution of a financial transaction relating to the taxpayer’s activities carried out domestically” – could you please provide an example?
• A Slovak subsidiary of a French group (the taxpayer) employs 500 employees in Slovakia. The headquarters in France makes salary payments to employees of the Slovak subsidiary on its behalf and recharges the total salary amount. In the month when these recharged costs are paid or settled, the Slovak subsidiary must submit a notification and pay the tax. If the taxpayer can prove the individual transactions constituting the recharged amount, the tax calculation method, including the maximum tax ceiling of 40 EUR, will apply to each transaction. The term “costs” refers to the total value of the recharged financial transactions carried out by the headquarters for the subsidiary. • This provision applies to any recharged costs related to any activity of the taxpayer or a foreign entity’s organizational unit (e.g., recharging costs associated with any activity of an organizational unit by its founder, or refactoring costs from the parent company to its subsidiaries). It applies regardless of whether the payment was made directly or offset.
- An Austrian VAT payer is registered in Slovakia under § 5 (foreign entity) due to acquiring goods in Slovakia and selling them to other EU member states. Will they have to pay transaction tax?
The Financial Transaction Tax applies to any legal entity with a foreign headquarters that conducts activities in Slovakia. From the perspective of the Financial Transaction Tax, it is irrelevant whether the entity is a VAT payer; the taxes exist independently of each other.
- If a foreign entity with its headquarters in Spain has a permanent establishment in Slovakia for income tax purposes, is it considered a taxpayer under the Financial Transaction Tax law?
A foreign legal entity with headquarters in Spain will be considered a taxpayer if it has a payment account in Slovakia or conducts business activities in Slovakia. The creation of tax obligations for income tax and Financial Transaction Tax are independent and not conditional upon one another.
How can Kreston help?
- Setting up new transaction schemes to optimize the tax burden individually for the client.
- Tax compliance for tax payers.
- Ad-hoc advisory on Financial Transaction Tax.
- Compliance tools for foreign accounts and recharged costs.
- Advisory on setting up economic systems.
Do you have any questions? Need advice?
Feel free to contact us!
