Administrative Burden of the Global Top-Up Tax: Overview of Reporting Obligations and Tax Deadlines

The implementation of Act No. 507/2023 Coll. on Top-Up Tax introduces a complex system into the Slovak legal order to ensure a global minimum level of taxation, known as Pillar II. This system, transposing Council Directive (EU) 2022/2523, brings extensive new administrative and reporting obligations for multinational enterprise groups and large-scale domestic groups in Slovakia.

‍

Who files the tax return, and when is it due?

The taxpayer of the top-up tax is a constituent entity that is not a permanent establishment, the main entity of a permanent establishment that is a constituent entity, as well as a joint venture and an entity affiliated with a joint venture. The taxable period for the top-up tax is generally the accounting period for which the Ultimate Parent Entity (UPE) prepares consolidated financial statements, or the calendar year if the UPE does not prepare consolidated financial statements. The top-up tax return is filed with the tax administrator exclusively by electronic means.

‍

Deadlines for filing the tax return

The taxpayer is obliged to file the top-up tax return within 15 months after the end of the relevant taxable period. Transitional rules are important, bringing the following deadline extensions:

• If the taxable period is a so-called transitional year, the deadline for filing the tax return is extended by three full calendar months.
• If the deadline for filing the tax return expires before 30 June 2026, this deadline is extended until 30 June 2026.

The maturity of the top-up tax occurs on the last day of the month in which the deadline for filing the tax return expires. In the event that the taxpayer finds that their tax should be higher than was declared, they must file an additional tax return by the end of the month following this discovery. A corrective return may be filed before the expiry of the deadline for filing the tax return.

‍

Information reporting obligation

A key administrative obligation is the filing of the Notification with information for the determination of the top-up tax (GloBE Information Return – GIR). This notification is filed with the tax administrator by electronic means no later than 15 months after the end of the reporting period. If the reporting period is a transitional year, the deadline is extended by three full calendar months. As with the tax return, if the deadline expires before 30 June 2026, it is extended until 30 June 2026. The notification is intended to provide extensive data on the group, including:

• Identification data of taxpayers and their status in the group.
• Information on the overall corporate structure, including controlling interests.
• Information necessary for the calculation of the Effective Tax Rate (ETR) and the top-up tax.
• A record of all elections made in accordance with the Act.

‍

Exceptions and sanctions

The Act allows the taxpayer to choose various "exemptions" or "elections" (e.g., application of the Safe Harbour based on the small scale of average revenues, or application of simplified calculations). Many of these elections are valid for five accounting periods with automatic renewal if not revoked. Other elections are valid for only one accounting period with the possibility of re-notification. All these elections must be notified to the tax administrator within the notification with information for the determination of the top-up tax. Non-compliance with administrative obligations is subject to sanctions. If a taxpayer fails to file the notification or tax return within the specified deadline, they commit an administrative offence. The tax administrator may impose a fine from EUR 1,500 to EUR 50,000, even repeatedly.

‍

‍

Pillar II brings new rules and new risks, especially regarding deadlines, data quality, and proper documentation of elections. If you want to be sure that the reporting obligations and the top-up tax return will be prepared on time and in the correct scope, it pays to set up processes now. In case of need, we can assist with identifying obligations within the group, setting up schedules, and verifying data inputs.

‍

‍

‍_{The content of this article is for informational purposes only and in no way replaces professional legal, tax, or accounting advice. The company Dravecký & Partner bears no responsibility for any decisions made based on the information provided herein, nor for any potential damage that might arise from such actions. Before applying any information to your specific situation, we strongly recommend consulting with a qualified expert.}