Financial Transaction Tax
As of April 1, 2025, a new tax – the Financial Transaction Tax, often referred to as the Transaction Tax – has come into effect in Slovakia.
This is a new measure that affects business-related financial movements, particularly in the area of bank transfers, cash withdrawals, and card payments.
Act No. 279/2024 Coll., which introduced this tax, was adopted at the end of 2024 and has already been amended twice. Further changes are currently under discussion in Parliament – some proposed amendments seek to modify the law slightly, while others aim to repeal it altogether.
The Financial Transaction Tax is incorporated into the overall tax system, alongside income tax, value-added tax, excise duties, and others. As with other taxes, the Financial Administration of the Slovak Republic is responsible for supervising the correct determination and payment of the tax.
The essence of the Transaction Tax lies in taxing specific financial operations, most commonly carried out through bank accounts. In order to ensure administrative simplicity in tax collection, banks and payment service providers are designated as the primary taxpayers, although in certain cases, the taxpayer is required to calculate and remit the tax independently.
The Transaction Tax will increase the overall tax burden on entrepreneurs, with small and medium-sized businesses and those conducting a high volume of small transactions being most affected. Analysts anticipate that the introduction of this tax will also lead to an increase in the prices of goods and services.
Who is subject to the Financial Transaction Tax?
The Financial Transaction Tax applies to taxpayers, which include:
- natural persons – entrepreneurs,
- legal entities, or
- organizational units of foreign persons,
if at least one of the following conditions is met:
- the person has a registered office or place of business in the Slovak Republic and uses payment services provided by a payment service provider (generally, a bank account);
- the person holds a payment account with a payment service provider having its registered office in the Slovak Republic; or
- the person carries out an activity in the territory of the Slovak Republic.
This follows from information provided by the Financial Administration of the Slovak Republic and the Ministry of Finance of the Slovak Republic.
A natural person – entrepreneur is considered a taxpayer for the Financial Transaction Tax even if they apply a flat-rate expense deduction.
Thus, it suffices for a natural person – entrepreneur, legal entity, or organizational unit of a foreign person to meet any one of the above conditions to become liable for the Financial Transaction Tax.
The Financial Transaction Tax therefore applies to:
- a natural person – entrepreneur, legal entity, or organizational unit of a foreign person with a registered office in the Slovak Republic and using a bank account.
Example: A natural person – entrepreneur with a place of business in Slovakia using a bank account from an Austrian bank.
- a natural person – entrepreneur, legal entity, or organizational unit of a foreign person holding a payment account with a payment service provider based in the Slovak Republic.
Example: A legal entity established and registered in Austria, using a bank account opened with a bank headquartered in Slovakia, while having no other activities in Slovakia.
- a natural person – entrepreneur, legal entity, or organizational unit of a foreign person carrying out activities in Slovakia.
Example: A legal entity established and registered in Austria that conducts a minor part of its business activity in Slovakia.
In practical terms, it is quite easy for the Financial Transaction Tax to apply to foreign entities – it is sufficient for them to carry out any activity in Slovakia or merely maintain a bank account there.
The Financial Administration of the Slovak Republic interprets “activity carried out in Slovakia” broadly.
The Ministry of Finance of the Slovak Republic has sought to eliminate this uncertainty through its Methodological Guidance – Guidance of the Ministry of Finance of the Slovak Republic No. MF/008722/2025-77 on the assessment of a taxpayer’s activities carried out in the Slovak Republic, the method of taxation of re-invoiced expenses, and the automated offsetting of balances (hereinafter referred to as the “Guidance”, available here:).
A Foreign Entrepreneur Becomes a Taxpayer if They Conduct Business Activities in the Slovak Republic
One of the definitions of a taxpayer under the FTT Act includes foreign natural persons (entrepreneurs), foreign legal entities, and branches of foreign entities, provided that they carry out business activities in the Slovak Republic.
Thus, a foreign entrepreneur becomes a financial transaction tax (FTT) taxpayer simply by conducting business activities within the Slovak Republic.
Example: A Polish legal entity with a bank account in a Polish bank offers goods for sale in a store located in the Slovak Republic.
Such a foreign legal entity is subject to the FTT.
Previously, it was unclear what constitutes business activity carried out in the Slovak Republic. The Guidance seeks to clarify this.
According to the Guidance, a taxpayer is deemed to be carrying out activities within the Slovak Republic if such activities are:
- Conducted wholly or partially through a fixed place or facility for the conduct of business located in the Slovak Republic.
These include, in particular, locations from which the taxpayer’s activities are managed: branches, offices, workshops, workplaces, sales points – stores, technical facilities (i.e. facilities used for the taxpayer’s operations), permanent service provision sites, construction sites, or sites of assembly/construction projects.
A place is considered permanent only if it is used for business activities on a continuous or recurring basis for the majority of the monthly tax period.
Furthermore, a taxpayer is also considered to be conducting business in the Slovak Republic if they carry out activities through a third party (e.g. employee, authorized representative) who, on a regular or recurring basis, negotiates or concludes contracts on behalf of the taxpayer during most of the monthly tax period.
Activities such as mere storage of goods or purchasing of machinery, without further related activity, do not constitute business activity in the Slovak Republic.
Example: A foreign travel agency operating in the Slovak Republic has office premises there and pays its local expenses from a foreign bank account.
Such an entity is considered a taxpayer. However, only financial transactions on the foreign account related to its Slovak activities (e.g. salary payments, commissions, rent) are subject to the FTT.
Such a taxpayer is also a tax remitter and is thus obliged to calculate the FTT due, remit the tax to the tax authority, and submit a monthly notification.
- A platform located in the Slovak Republic – such as software, including websites, applications, or mobile apps accessible to customers and enabling the taxpayer to perform business activities for their clients.
It is not sufficient for the goods/services on the platform to be offered to Slovak customers; the platform must be physically located in the Slovak Republic.
In our view, a platform is located in the Slovak Republic only if its source code and/or machine code is hosted on servers within the Slovak Republic. However, this is our interpretation; the Guidance does not define this precisely.
- An online marketplace located in the Slovak Republic, enabling customers to conclude contracts remotely with the taxpayer.
Again, it is not sufficient that goods or services are offered to Slovak customers – the marketplace must be hosted within Slovakia.
- Insured risks under insurance contracts located in the Slovak Republic, where such risks are connected with the taxpayer’s activity.
This includes insurance of real estate and its contents located in Slovakia, as well as insured vehicles registered (or to be registered) in the Slovak Republic.
A foreign entrepreneur fulfilling any one of these criteria becomes a taxpayer under the FTT Act, even if they do not have a registered office or place of business in the Slovak Republic and do not use payment services from Slovak-based providers.
From Which Financial Transactions Does the Foreign Taxpayer Pay FTT? Who Is the Tax Remitter?
Foreign entrepreneur without a registered office or place of business in Slovakia and without a Slovak-based payment account, but conducting business in Slovakia:
Such an entrepreneur pays FTT only on financial transactions related to their Slovak activities, even if made via a foreign payment account.
If only part of a transaction relates to Slovak activity, the tax base and FTT must be allocated proportionately.
Such a taxpayer is also the tax remitter, responsible for self-assessment, payment, and filing.
