Top-up Tax in Slovakia: Key Information and Obligations

Legislative Framework

A new top-up tax was introduced in Slovakia by Act No. 507/2023 Coll. on the Top-up Tax, effective from 31 December 2023, to ensure a minimum level of taxation for multinational enterprise groups and large-scale domestic groups. The Act was amended by Act No. 355/2024 Coll., effective from 31 December 2024.

The basis for the adoption of the Act is:

• the OECD/G20 Model Rules, the so-called GloBE rules - Global Anti-Base Erosion Model Rules (Pillar II) and
• Council Directive (EU) 2022/2523 on ensuring a global minimum level of taxation for multinational enterprise groups and large-scale domestic groups in the Union.

The objective of introducing the top-up tax is to ensure that large multinational enterprise groups and large-scale domestic groups pay a minimum tax of at least 15%.

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Entities to which the Act applies

The Act applies to:

• constituent entities located in the Slovak Republic that are members of a multinational enterprise group or a large-scale domestic group which reaches annual revenues of at least EUR 750 million in the consolidated financial statements of the ultimate parent entity, in at least two of the four fiscal years immediately preceding the tested fiscal year
• joint ventures and joint venture affiliates pursuant to Section 26, established in the Slovak Republic

The Act does not apply to certain excluded entities, such as public entities, non-profit organisations, pension funds, investment funds, and certain holding structures, if they meet the exemption conditions.

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Rules for taxation with the top-up tax

The EU Directive distinguishes between three taxation rules:

1. Income Inclusion Rule (IIR) - under this rule, parent entities will pay a top-up tax in relation to their low-taxed constituent entities located in another jurisdiction.
2. Qualified Domestic Minimum Top-up Tax (QDMTT) - this is an optional rule that is applied at the level of individual jurisdictions, allowing states to collect the top-up tax for their own budget before foreign parent companies do.
3. Under-Taxed Payments Rule (UTPR) - this applies if the parent entity does not tax the income of its subsidiaries under the IIR. Under the UTPR, jurisdictions that have implemented this rule are allocated an amount of top-up tax that they can collect from entities located in their territory.

The Slovak Republic has introduced the optional QDMTT rule. For the introduction of the IIR and UTPR rules, the Slovak Republic has used a deferral until 31 December 2029, which is permitted by the European directive.

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Calculation and tax rate

The effective tax rate is calculated as the ratio of the adjusted covered taxes of the constituent entities to the net qualifying income of the constituent entities. If this rate is lower than 15%, a top-up tax is calculated. The calculation requires adjustments to the accounting profit and tax according to a standardised model.

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Safe Harbours

In the initial years of the tax implementation, transitional rules are being introduced that allow for the avoidance of the complex top-up tax calculation if the group meets one of the following three conditions in a given jurisdiction:

• The effective tax rate of the constituent entities is higher than 15%, or
• the average qualifying revenues of the constituent entities are less than EUR 10 million and at the same time, the average qualifying income or average qualifying loss of the constituent entities is less than EUR 1 million, or
• the net qualifying income of the constituent entities is less than or equal to the substance-based income exclusion amount.

The exemption from the tax calculation can be assessed based on a qualified country-by-country report (CbCR report).

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Notification obligations and tax return

Undertakings subject to the top-up tax are obliged under the Act to file a notification with information for determining the top-up tax and a top-up tax return. The filing deadline is 15 months from the end of the fiscal year (for the first time for the year 2024, a deadline of 18 months will apply, i.e., until 30 June 2026).

In April 2025, the EU approved Directive No. 2025/872 (DAC9), the purpose of which is to simplify the filing of Notifications with information for determining the top-up tax and the exchange of information between individual jurisdictions. According to the directive, the Notification with information for determining the top-up tax is to be filed by only one entity from the group and not by all constituent entities. The financial administrations will then exchange the necessary information for the individual jurisdictions among themselves. The directive also contains a standardised Notification with information for determining the top-up tax. Member States are obliged to implement the directive into local legislation by 31 December 2025, with the changes to be effective from 1 January 2026. The Ministry of Finance of the Slovak Republic is already preparing an amendment to Act No. 507/2023 Coll. in this regard.

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Conclusion

Calculating the top-up tax is a complex and time-consuming process. Therefore, we recommend that you assess as soon as possible whether the Top-up Tax Act applies to your company and, if so, whether any exemption from the tax calculation can be used. If necessary, we will be happy to provide you with support in analysing the impact of the top-up tax on your company and assistance in fulfilling the new obligations.