Global

Details

  • Service: Tax, International Tax
  • Type: Regulatory update
  • Date: 4/15/2014

Slovakia - “White list” of countries regarding cross-border payments  

April 15: The Slovak Ministry of Finance published a “white list” of countries for purposes of determining the rate of withholding tax on cross-border payments—i.e., payments made by Slovak tax residents to taxpayers of other countries.

Background

Changes to the Slovak income tax law (effective 1 March 2014) introduced a “qualified” withholding tax rate of 35% that applies to certain payments made by Slovak tax residents to taxpayers of non-treaty countries. The standard withholding tax rate of 19%, however, continues to apply with respect to payments made to other taxpayers.

White list

For these purposes, a “treaty country” is defined as a country that is included in a list—i.e., the “white list”—published on an official website by the Ministry of Finance.


The “white list” includes:


  • Countries that have concluded an income tax treaty or an agreement for the exchange of information on tax matters with the Slovak Republic
  • Countries that are parties to an international treaty providing for similar provisions on the exchange of information (as would an income tax treaty), provided the international treaty is binding on both the subject country and the Slovak Republic
  • Countries that have concluded an income tax treaty for the avoidance of double taxation with the Slovak Republic

Based on the definition of the “white list” in the Slovak income tax law, it must include other countries that have concluded agreements for the exchange of information and other similar treaties or agreements. Therefore, an update can be expected in the near future.


Finally, payments from the Slovak Republic to non-EU and non-EEA countries need to be considered in light of particular provisions of EU law on fundamental freedoms.

KPMG observation

Taxpayers need to give increased attention to the tax treatment of cross-border payments that are made after 1 March 2014, and may consider an internal audit of such payments to reduce potential risks or to allow for potential tax savings.


For more information, contact a KPMG tax professional in Slovakia:


Martin Zima

+421 259 984 111




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