Taxation of software payments in Slovakia: What changed on 1 January 2026?

With effect from 1 January 2026, there was a significant change in Slovakia to the taxation of software payments to foreign recipients. The change follows the publication of Guidance No. MF/016959/2025-724 issued by the Slovak Ministry of Finance on the taxability of income of taxpayers with limited tax liability from computer programs (software) and could have a significant impact on Slovak companies that make cross-border payments for software or related services.

What changed and why?

The Slovak Republic has withdrawn its long-standing Observation to the Commentaries of the OECD Model Convention, under which payments for non-standardised or custom software were treated as royalties and could therefore be taxed in Slovakia via withholding tax.

Upon withdrawing the Observation, Slovakia began to apply the standard OECD interpretation, meaning that payments for software will, in many cases, no longer be treated as royalties and will not be subject to taxation in Slovakia.

When does withholding tax apply?

The obligation to withhold tax on software payments is based on a comprehensive assessment of how the software is used, the scope of rights granted in respect of the software, and the applicable double tax treaties.

As of 1 January 2026, withholding tax does not apply to payments for:

• providing software as a service, where the user only has remote access to the software's functionality,
• using software as a product for personal and business purposes (only where the recipient of the payment is from a country with which Slovakia has concluded a double tax treaty and the relevant treaty does not expressly include income from the use of software as a royalty),
• a full transfer (alienation) of the copyright to the software.

Conversely, payments for software may be subject to withholding tax in Slovakia if:

• the buyer is granted the right to commercial use of copyright, such as the right to reproduce, adapt, translate, or modify the software, or
• know-how for software development is provided.

What does this mean for your company?

This change requires a comprehensive reassessment of the tax treatment of all cross-border software payments after 1 January 2026. The new tax regime also applies to deliveries agreed and contracts concluded before 2026 — the decisive factor is the moment of payment, and not the date the contract was concluded.

We would be happy to assist you with examining your software-related transactions in detail and verifying your obligations to withhold tax on cross-border payments for software.