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all payments connected with a house or flat of the employee (electricity, telephone, water etc.) paid by the employer pension plan contributions paid by the employer exceeding the obligatory contributions individual insurance or endowment policy premiums paid by the employer bonuses paid in connection with work performed in Slovakia employee share and share option plans income tax paid by the employer on behalf of the employee paid home leave relocation expenses paid by the employer other non-monetary benefits provided by the employer (i.e. dinners, travel expenses exceeding the amounts set by the Act on Travel Allowances or other special legislation, etc).

Income tax prepayments must be withheld or paid from employment income on a monthly basis and remitted to the tax authorities in respect of the following individuals:

all employees of a Slovak company all employees of a Slovak branch of a foreign company all employees of a PE all individuals hired by a Slovak company as "economic employees" or in certain cases individuals staying in Slovakia for 183 days or more.

When an individual who is an employee of a foreign company performs activities for the Slovak company, the individual can be treated as an 'economic employee'. A number of tests apply to determine whether an individual should be treated as an economic employee, but broadly this applies in cases where the foreign employer's contractual obligations, in terms of the services provided by the individual, are to provide manpower to the Slovak employer who supervises and takes responsibility for the activities of the individual.

The Slovak company is treated as effectively leasing manpower and is deemed to be the economic employer of the individual (often an expatriate). The salary paid to the expatriate by the foreign employer is subject to Slovak income tax as if the individual were on the Slovak company's payroll. The tax is normally collected by withholding at source from payments of the service fee incorporating the charge for the employee from the foreign entity to the Slovak employer (e.g. by deduction from the amount invoiced) unless it is agreed that it be collected in some other way such as through tax prepayments.

Entrepreneurial activities

Income from entrepreneurial and other self-employed activities is subject to Slovak taxation in accordance with general tax principles. Individuals who are not Slovak tax residents will be taxed on Slovak sourced income. Broadly, expenses incurred to attain,


©2010 KPMG Slovensko spol. s r.o. , a Slovak limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

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