THE NEW LAW ON THE TAX ON FINANCIAL TRANSACTIONS AND THE INTRODUCTION OF A NEW AMOUNT OF VAT RATES

#133The new law on the tax on financial transactions and the introduction of a new amount of VAT rates

In connection with the consolidation of public finances, the Government of the Slovak Republic approved new laws introducing a new tax on financial transactions and changing the VAT rates. According to the explanatory report, the introduction of these measures should contribute to the stability of public finances and to the appropriate distribution of the tax burden for selected tax subjects. The changes introduced in connection with the consolidation of public finances will take effect on January 1st, 2025.

The new tax on financial transactions is introduced for legal entities, organizational units of a legal entity, natural persons – entrepreneurs, and all bank transfers, withdrawals from ATMs, loan interest payments, commissions and fees will be subject to it.

The most significant changes in the new law on tax on financial transactions are:

1. For each debit financial transaction, except for cash withdrawals, a 0.4% tax rate is introduced on the amount of the financial transaction with a maximum tax limit of 40 Euros.
2. For each cash withdrawal from a transaction account in a bank or ATM, a 0.8% tax rate is introduced on the amount of the withdrawal without a maximum limit.
3. A fixed annual fee of 2 Euros is introduced for using a payment card at least once per calendar year.

The most significant changes in the introduction of the new amount of VAT rates are:

1. Change in the basic VAT rate from the original 20% to the new 23%.
2. Reduction of the VAT rate from the original 10% to the new 5% for a defined range of basic foodstuffs, medicines, books, magazines, restaurants, accommodation within the tourism industry and entry to sports grounds.
3. Introduction of a new VAT rate of 19% on selected items, which include other foodstuffs or electricity.