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- International income taxation guiding principles for Slovakia - NAVIGATION
International income taxation guiding principles for Slovakia - NAVIGATION
Are you an international full‑time PhD student in Slovakia receiving a state scholarship, pursuing PhD. mobility, or are you an international researcher/university teacher/part‑time PhD student carrying your activity in Slovakia?
- Did/do you have also income from a country other than Slovakia in the past/current calendar year?
- Should your income be taxed in Slovakia or elsewhere?
- What is the tax residence and why is it important to determine it?
- When is it necessary to file a tax return in Slovakia?
The following navigation will try to help you with the answers. However, it does not provide complete and binding advice, and specific circumstances must always be taken into account.
Please indicate your main activity.
- Assess your tax residence based on Slovak legislation and the country of your former stay/country of origin/country of former or other current income.
Based on Act No. 595/2003 on Income Tax, Article (§) 2, a person qualifies as a tax resident if he/she meets one of the following criteria:
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- Permanent Residence in Slovakia;
- Habitual Stay in Slovakia for at least 183 days within a calendar year, whether continuously or in several periods;
- Residence Availability: having a dwelling place in Slovakia that is not used solely for occasional purposes, indicating strong personal and economic ties to the country.
Slovak tax residents are taxpayers with unrestricted tax liability. Such a taxpayer must pay taxes in Slovakia on income earned in Slovakia as well as any income from abroad, unless a Double Tax Treaty states otherwise. Slovak tax residents are taxed on their worldwide income.
A taxpayer with a restricted tax liability is a person who is not a taxpayer with an unrestricted tax liability. Such a taxpayer pays in Slovakia only the tax from income received in Slovakia for his/her period of employment in Slovakia. Non‑residents are taxed only on Slovak‑source income. -
- Has Slovakia concluded a Treaty for avoidance of double taxation (Double Tax Treaty) with the country of your former stay/country of origin/country of former or other current income? Check the list of Double tax Treaties between Slovakia and other countries here.
Double Tax Treaties are usually prepared on the basis of internationally recognised model conventions, however, the numbering of articles in individual bilateral treaties may vary slightly. The following questions are based either on the model Tax treaty, or based on some typical provisions encountered in some of the treaties related to the target group of researchers/professors, etc.
- In case you are considered a tax resident in Slovakia, but also in another country based on the respective applicable legislation, decide your tax residence using Article 4 of the Treaty.
Based on the Model Tax Convention on Income and on Capital, OECD, Article 4:For the purposes of this Convention, the term “resident of a Contracting State” means any person who, under the laws of that State, is liable to tax therein by reason of his domicile, residence, place of management or any other criterion of a similar nature. This term does not includeany person who is liable to tax in that State in respect only of income from sources in that State.
Where by reason of the provisions of paragraph 1 an individual is a resident of both Contracting States, then his status shall be determined as follows:
a) He shall be deemed to be a resident only of the State in which he has a permanent home available to him; if he has a permanent home available to him in both States, he shall be deemed to be a resident only of the State with which his personal and economic relations are closer (centre of vital interests);
b) If the State in which he has his centre of vital interests cannot be determined, or if he has no permanent home available
to him in either State, he shall be deemed to be a resident only of the State in which he has an habitual abode;
c) If he has an habitual abode in both States or in neither of them, he shall be deemed to be a resident only of the State of which he is a national;
d) if he is a national of both States or of neither of them, the competent authorities of the Contracting States shall settle the question by mutual agreement.Once it is possible to determine the tax residency based on any of the former criteria, the subsequent points are not to be taken into account anymore.
- Check Article 20 (or similar) on payments to Students to define if and where the payments to students are eligible to be taxed or if they are exempt from taxation.
Based on the Model Tax Convention on Income and on Capital, OECD, Article 20:
Payments which a student or business apprentice who is or was immediately before visiting a Contracting State (= studies state) a resident of the other Contracting State (= residence state) and who is present in the first‑mentioned State (= studies state) solely for the purpose of his education or training receives for the purpose of his maintenance, education or training shall not be taxed in that State (= studies state), provided that such payments arise from sources outside that State (= studies state).
The extracts from specific Double Tax Treaties related to Students can be found here.
Do the provisions of the Article 20 (or similar) on Students in the relevant Treaty apply to you context?
- It might still be relevant to know what provisions there are in Slovak law related to scholarships
Based on Act No. 595/2003 on Income Tax, Art. § 9, section (2), j) (shortened version):
Exempt from taxation are scholarships provided e.g. from the state budget (including PhD scholarships), or by higher education institutions or similar benefits provided from abroad, corporate scholarships provided to university students, financial support from foundations or non‑profit organisations except for remuneration for carrying out employment or business activities. -
Nevertheless, it is recommended to learn some basic facts on Income taxation in Slovakia.
-
In case you have earned income that needs to be taxed based on either legislation and taking into account your residency status (on top of the scholarship/payments to students), it is essential to learn more about methods of elimination of double taxation.
- It might be relevant to know what provisions there are in Slovak law related to scholarships:
Based on Act No. 595/2003 on Income Tax, Art. § 9, section (2), j) (shortened version):
Exempt from taxation are scholarships provided e.g. from the state budget (including PhD scholarships), or by higher education institutions or similar benefits provided from abroad, corporate scholarships provided to university students, financial support from foundations or non‑profit organisations except for remuneration for carrying out employment or business activities. -
Nevertheless, it is recommended to learn some basic facts on Income taxation in Slovakia.
-
In case you have earned income that needs to be taxed based on either legislation and taking into account your residency status (on top of the scholarship), it is essential to learn more about methods of elimination of double taxation.
- Better check also the case as a researcher/university teacher/part-time PhD student with a work contract.
- It is important to know that based on Act No. 595/2003 on Income Tax, Art. § 9, section (2), j) (shortened version):
Exempt from taxation are scholarships provided e.g. from the state budget (including PhD scholarships), or by higher education institutions or similar benefits provided from abroad, corporate scholarships provided to university students, financial support from foundations or non‑profit organisations except for remuneration for carrying out employment or business activities. -
Nevertheless, it is recommended to learn some basic facts on Income taxation in Slovakia.
-
In case you are considered a tax resident in Slovakia (based on Slovak legislation), and you have earned income from abroad that needs to be taxed in Slovakia (on top of the scholarship, the worldwide income), it is essential to learn if and how to avoid double taxation based on Slovak legislation.
- Assess your tax residence based on Slovak legislation and the country of your former stay/country of origin/country of former or other current income.
Based on Act No. 595/2003 on Income Tax, Article (§) 2, a person qualifies as a tax resident if he/she meets one of the following criteria:
-
- Permanent Residence in Slovakia;
- Habitual Stay in Slovakia for at least 183 days within a calendar year, whether continuously or in several periods;
- Residence Availability: having a dwelling place in Slovakia that is not used solely for occasional purposes, indicating strong personal and economic ties to the country.
Slovak tax residents are taxpayers with unrestricted tax liability. Such a taxpayer must pay taxes in Slovakia on income earned in Slovakia as well as any income from abroad, unless a Double Tax Treaty states otherwise. Slovak tax residents are taxed on their worldwide income.
A taxpayer with a restricted tax liability is a person who is not a taxpayer with an unrestricted tax liability. Such a taxpayer pays in Slovakia only the tax from income received in Slovakia for his/her period of employment in Slovakia. Non‑residents are taxed only on Slovak‑source income. -
- Has Slovakia concluded a Treaty for avoidance of double taxation (Double Tax Treaty) with the country of your former stay/country of origin/country of former or other current income? Check the list of Double tax Treaties between Slovakia and other countries here.
Double Tax Treaties are usually prepared on the basis of internationally recognised model conventions, however, the numbering of articles in individual bilateral treaties may vary slightly. The following questions are based either on the model Tax treaty, or based on some typical provisions encountered in some of the treaties related to the target group of researchers/professors, etc.
- In case you are considered a tax resident in Slovakia, but also in another country based on the respective applicable legislation, decide your tax residence using Article 4 of the Treaty.
Based on the Model Tax Convention on Income and on Capital, OECD, Article 4:For the purposes of this Convention, the term “resident of a Contracting State” means any person who, under the laws of that State, is liable to tax therein by reason of his domicile, residence, place of management or any other criterion of a similar nature. This term does not includeany person who is liable to tax in that State in respect only of income from sources in that State.
Where by reason of the provisions of paragraph 1 an individual is a resident of both Contracting States, then his status shall be determined as follows:
a) He shall be deemed to be a resident only of the State in which he has a permanent home available to him; if he has a permanent home available to him in both States, he shall be deemed to be a resident only of the State with which his personal and economic relations are closer (centre of vital interests);
b) If the State in which he has his centre of vital interests cannot be determined, or if he has no permanent home available
to him in either State, he shall be deemed to be a resident only of the State in which he has an habitual abode;
c) If he has an habitual abode in both States or in neither of them, he shall be deemed to be a resident only of the State of which he is a national;
d) if he is a national of both States or of neither of them, the competent authorities of the Contracting States shall settle the question by mutual agreement.Once it is possible to determine the tax residency based on any of the former criteria, the subsequent points are not to be taken into account anymore.
- Check if the Treaty contains Article 20/21 (or similar) on income for carrying out Research or Teaching activities.
Example from Agreement between Slovakia and India for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income:
A professor or teacher who has or had a residence in one Contracting State (= residence state) before visiting the other Contracting State (= work state) to teach or work in research, or to carry out both activities at a university, college, school, or another recognized institution in that other Contracting State (= work state), shall be exempt from tax in that other State (= work state) on remuneration for such teaching or research for a period not exceeding two years from the date of arrival in that other State (= work state). This Article shall not apply to income from research if such research is conducted primarily for the private benefit of a specific person or persons.
For the purposes of paragraph 1, “recognized institution” means an institution that has been approved in this regard by the competent authority of the relevant Contracting State.
The provisions in specific treaties vary, hence it is always necessary to consult the exact wording of the relevant bilateral Treaty. It may even happen, that the 2‑year limit is not applied (e.g. with Hungary, Italy). On the other hand, an additional condition is often required: to exempt this income from tax in the work state, it must come from sources outside that state (e.g., in the case of Brazil).
The extracts from specific Double Tax Treaties related to Researchers/Teachers can be found here.
Do the provisions of the Article 20/21 (or similar) on Research or Teaching activities in the relevant Treaty apply to you context?
-
Nevertheless, it is recommended to learn some basic facts on Income taxation in Slovakia, including tax exceptions.
-
It might be helpful to find out more on methods of elimination of double taxation.
- Check Article 15 of the Treaty on income from Employment to define the country where the income is eligible to be taxed.
This article establishes general rules for taxing employment income, emphasising that such income is primarily taxable in the state where the employment is exercised, with specific exceptions based, e. g., on the duration of employee’s stay or employer’s
presence. Exceptions may also apply to different types of income.
Based on the Model Tax Convention on Income and on Capital, OECD, Article 15:Income derived by a resident of a Contracting State in respect of an employment shall be taxable only in that State (= residence
state) unless the employment is exercised in the other Contracting State. If the employment is so exer cised, such income as is derived therefrom may be taxed in that other State (= work state).
Notwithstanding the provisions of paragraph 1, income derived by a resident of a Contracting State in respect of an employment shall be taxable only in the first‑mentioned State (= residence state) if:
a) the recipient is present in the other Contracting State (= work state) for a period or periods not exceeding in the aggregate 183 days in any twelve month period commencing or ending in the fiscal year concerned, and
b) the remuneration is paid by, or on behalf of, an employer who is not a resident of the other Contracting State (= work state), and
c) the remuneration is not borne by a permanent establishment which the employer has in the other Contracting State (= work state).Each day of employee’s stay in the work state (including a day of arrival, or departure, weekends, sick days) is counted towards those 183 days.
All those conditions need to be fulfilled at the same time in order for the tax being paid in the country of residency rather than country of work.
Check the exact wording of Article 15 in the applicable Double tax Treaty. -
It is recommended to learn some basic facts on Income taxation in Slovakia, including tax exceptions.
-
It might be helpful to find out more on methods of elimination of double taxation.
-
Nevertheless, it is recommended to learn some basic facts on Income taxation in Slovakia, including tax exceptions.
-
it is essential to learn if and how to avoid double taxation based on Slovak legislation.
This guide is produced as part of EURAXESS Slovakia programme managed by SAIA, n. o. and funded by the Ministry of Education, Research, Development and Youth of the Slovak Republic. It reflects the views of the authors only, and the funding organisation cannot be held responsible for any use of the information contained here.
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