Slovak Implementation of ATAD Rules

Martin Kiňo Martin Kiňo

The new EU directive known as ATAD (Anti-Tax Avoidance Directive) ensures that tax is paid where profits and values are generated. It lays down binding measures that the Slovak Republic must implement in order to prevent aggressive tax planning.

In addition, the aim of this Directive is to facilitate the exchange of information between Financial Intelligence Units in identifying and monitoring suspicious transactions.

The Slovak Income Tax Act in force contains certain measures protecting against tax fraud and stipulates rules designed to strengthen the level of protection against aggressive tax planning and tax base erosion and rules against shifting profits outside the territory of the Slovak Republic.

With a view of implementing rules laid down by ATAD, the Slovak Income Tax Act and the Slovak Tax Administration Act (the Tax Procedure Code) will be amended. The change of the Tax Procedure Code is a result of a new form of exemption for the commercial use of intangible assets stipulated by the Income Tax Act, obliging the Financial Directorate of the Slovak Republic to publish a list of taxpayers who apply this type of exemption.

On 1 January 2018, the Slovak Income Tax established special tax regime for the commercial use of intangible assets. This regime exempts profits (yields) from payments for the provision of rights to use or for the use of approved and registered patents and utility templates, as well as from the use or for the use of computer programmes (software).

The special tax regime for the commercial use of intangible assets (the so-called patent box) creates incentives for tax entities to include research and development in their business activities, as the results of research and development and their commercial use will be subject to a more beneficial taxation than other types of business activities. Furthermore, this creates incentives to register the results of research and development activities with the Industrial Ownership Office of the Slovak Republic. Similarly to the increase in deductible costs for research and development, the establishment of this special tax regime can help to improve the employment rate in Slovakia.

In order to increase tax transparency, the Tax Procedure Code amended as of 1 January 2019 will extend the publishing obligation of tax entities with new lists of tax entities in relation to their levy obligation. This relates to the publishing of selected financial institutions (banks, subsidies of foreign banks) and their payments of special levies on the basis of a special regulation per calendar year and the publishing of tax entities (natural or legal persons) acting as a regulated person on the basis of a special regulation.

The extension of the number of published lists of tax entities and their tax obligations and the payment of special levies of selected tax entities is one of the tools designed to fight against tax evasion. All lists of tax entities are published and will be published by the Financial Directorate of the Slovak Republic on its website

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