Tax & Legal Services

We provide you with an overview of laws and measures adopted in connection with COVID-19

Legal & State Aid

  • Overview of security measures and current changes in the judiciary
    - closure of businesses, statute of limitation, limitation of court hearings
  • New rights and obligations of employers during the state of emergency
    - home office, vacation, sickness, nursing care benefit, right to seek damages
  • State aid measures adopted in Slovakia and at the level of the European Union

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Taxes and contributions

  • Postponement of the statutory filing deadlines for income taxes and accounting based on the end of the pandemic period
  • Extension of the due date for social insurance contributions and health insurance prepayments in selected cases
  • The deadlines for value added tax and other indirect taxes remain unchanged

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Legal & Staid Aid

Legal

Updated as of 15 July 2020

The most significant changes applicable during the extraordinary situation, the state of emergency or period of crisis declared in relation to COVID-19 include:
A) Ordering work from home (i.e. Home Office)
During the effectiveness of a measure aimed to prevent the spread of the disease or a measure aimed to protect the public health the employer is entitled to order employees to carry out work from home (i.e. home office); moreover, employees have the right to work from home if this is possible (considering the type of work performed) and if this is not precluded by serious operational reasons on the part of the employer.
B) Working time schedule
The employer may notify the employee of his/her working time schedule only 2 days in advance (instead of the usual 7-day period) and such working time schedule shall be valid for at least one week.
C) Ordering expenditure of vacation
The employer is entitled to order to take paid holiday to its employees within a shortened period of 7 days in advance (instead of the usual 14 days in advance). In addition, with respect to holidays that the employees have transferred from the previous year, it is enough to announce to take paid holiday to its employees only 2 days in advance.
D) Obstacle at work on the part of the employee
Quarantine and isolation are considered a substantive personal obstacle at work on the part of the employee. Therefore, they are subject to a regime similar to an employee's temporary incapacity to work. The prohibition on dismissal is extended and applies also to obstacles at work due to quarantine, isolation, personal all-day care of a sick family member or of another person.
E) Reduction of wage compensation
The employer who had to stop or limit his business activity does not have to pay 100% of the employee's average earnings during this period, but only 80% of employee’s average earnings (however, not less than the minimum wage). This reduction in wage compensation does not apply to employees of economic mobilization entities in which an obligation to work has been imposed.

A) Nursing care benefit for childreni
With effect from 27th March 2020, the Social Insurance Act has been amended to introduce a change in nursing care benefit for children. According to the law, a parent of a child who has not reached 11 years of age yet (or 18 years in the case of a child with a severe disabilities) is entitled to the nursing care benefit (if the child has been subject to a quarantine or the school/kindergarten has been closed by a decision of the competent authority). This benefit is automatically provided to parents by the Social Insurance Agency during the whole period of quarantine and isolation when schools and kindergartens are closed. This legislative change is of temporary application for the duration of an extraordinary situation, state of emergency or period of crisis declared in relation to COVID-19.
B) Sickness benefit during a quarantine
The amendment to the Social Insurance Act also temporarily regulates the amount of sickness benefit during a quarantine. Until now, the employer has paid the first ten days (while the first three days were in the amount of 25% and the following days in the amount of 55% of the employee's daily assessment base). From now, the amount of this benefit will be adjusted to the amount of 55% of the employee's daily assessment base and will be provided by the Social Insurance Agency. Entitlement to this benefit is assessed by a doctor, who will be able to contact by phone or e-mail.
C) Deferral of social insurance and healthcare insurance contributions
Another significant change with a transitional effect is the deferral of social insurance and healthcare insurance contributions due from 6th April 2020. This amendment introduces for employers a deferral of social insurance and healthcare insurance contributions, which this employer is obliged to pay for March 2020 (originally due in April 2020). Payment of such contributions shall be deferred until 31st July 2020. The extension of maturity will be effective for a temporary time only, i.e. for the duration of the state of emergency declared in relation to COVID-19. In order to extend maturity, the employer (or compulsorily insured self-employed person) has to report a net loss of 40% in net turnover (revenues from sales of merchandise, goods and services after deductions) due to the COVID-19 crisis. The method of determining the decrease in net turnover shall be determined by decree of the Government of the Slovak Republic. However, the employer is still obliged to pay the social and healthcare insurance contributions for employees within the original due date.
D) Extension of the unemployment support period
The unemployment support period, which would expire during the period of crisis, is extended by one month. The measure concerns policyholders whose support period have expired during the crisis period since 4th April 2020, i.e. the amendment to the Labour Code. The unemployment support period, which has elapsed during the period of crisis before the Act becomes effective shall start to run again on the day the Act becomes effective and expires one month after the Act becomes effective.

A) Suspended or postponed statutory limitation periods and statutory extinction periods
Lex Corona suspends until 30th April 2020 all statutory limitation periods (i.e. period within which a party must bring its claim) and statutory extinction periods (i.e. period upon the lapse of which the concerned right expires). At the same time, the periods which would elapse between 12th March 2020 and 27th April 2020 will be renewed and will not lapse sooner than 30 days after the entry into force of Lex Corona, i.e. on 27th April 2020. This measure is meant to ensure that individuals and businesses do not have to exercise their rights during the pandemic or worry about losing their rights as a result of statutory limitation periods or statutory extinction periods.
B) Suspended procedural time limits in civil proceedings
The procedural time limits set forth by legislation or determined by the court are suspended until 30th April 2020. Therefore, the time limits set by law or by the court are not running, including the time limit for filing an appeal, the time limit for completing a submission, or the time limit for commenting on the counterparty's submission. However, if a case cannot be delayed, the court will be entitled to apply the original procedural time period or to set a new time period. It is expected that this measure will alleviate the pressure on the parties to the proceedings.
C) Suspended procedural time limits for legal remedies in criminal proceedings
In criminal proceedings, the time limits will be suspended until 30th April 2020, but only with respect to the accused, his/her attorney, the injured party and the involved party. On the other hand, the procedural deadlines will not be postponed in relation to the state, because it is legitimate to expect the public prosecutor's office to function properly even during the extraordinary situation and state of emergency.
D) Restrictions on court hearings and exclusion of the general public
This measure intends to reduce the number of court hearings held during the extraordinary situation and state of emergency to the indispensable minimum. The indispensable hearings that should nevertheless be held include main trials in custody cases in criminal proceedings, hearings in juvenile custody cases, and other hearings in the absence of which irreversible damage or other serious irreversible consequences may occur. Whether or not a hearing will be held is decided by the concerned judge or senate. In addition, a new ground for excluding the general public from court hearings, main trials and public sessions has been introduced, namely the protection of health in the state of emergency. In the event of excluding the public for this reason, the court is obliged to make an audio recording of the hearing, trial or session and make it available to anyone after the hearing.
E) Extension of the period for a debtor's bankruptcy petition
The time period for filing a debtor's bankruptcy petition is extended from the current 30 days to 60 days if the debtor's bankruptcy occurred between 12th March 2020 and 30th April 2020.
F) Per rollam decisions and meetings of company bodies by electronic means
During the extraordinary situation and state of emergency collective bodies of legal entities (established under civil law and commercial law) can adopt per rollam decisions, i.e. by correspondence voting, and can enable participation at meeting of these bodies by election means even if this does not follow from their internal regulations or articles of association. In such a case, the provisions of Sections 190a to 190d of the Commercial Code shall apply mutatis mutandis. In practice these changes apply not only to the decision-making at the general meeting, but also to the decision-making of other collective bodies, e.g. the Board of Directors or the Supervisory Board. These meetings may also be organized by correspondence or by electronic means
G) Temporary ban on enforcing pledges (auctions, bidding processes, sales)
No right of pledge may be enforced until 30th April 2020. Any actions leading to enforcement of a pledge performed between Lex Corona’s effective date and 30th April 2020 are ineffective. Lex Corona also introduces a temporary ban on auctioning, authorizing sale of property, organizing a bidding process or other competitive process, as well as enforcement by means of sale of property. If any of these actions are performed between Lex Corona’s effective date and 30th April 2020, they will be considered null and void.
H) Processing of certain data protected by telecommunications secrecy
Lex Corona introduces also a special regime for processing of data that is otherwise protected by the telecommunications secrecy (location data and personal data of the communicating parties: name, surname, title, and address of permanent residence of an individual). Businesses providing telecommunications services have to, during the extraordinary situation and state of emergency, process the above-mentioned data (i) in anonymised form for statistical purposes in order to prevent any danger to life and health, (ii) for the purpose of identifying the users to whom a message for the protection of life and health needs to be sent, and (iii) to the extent necessary to identify users in order to protect life and health, and shall provide such data to the Public Health Authority of the Slovak Republic at its reasoned request. These data may be processed and stored by the Public Health Authority during the time of the extraordinary situation or state of emergency, however, no longer than until 31th December 2020.
I) Exemptions from the mandatory registration in the Register of Public Sector Partners in public procurement
Another temporary measure, applicable during the extraordinary situation or state of emergency, lifts he ban on contracting with entities that are not registered in the Register of Public Partners Sector provided that (i) the requirements for a direct negotiated procedure are met, or (ii) the procurement procedure relates to a low-value contract. The aim of this legislative change is to facilitate the procurement of goods and services, or construction services as if necessary, during the extraordinary situation or state of emergency, in order to protect life and health.
J) Measures relating to the judiciary
Lex Corona also reacts to the current situation in the Judicial Council of the Slovak Republic and the Supreme Court of the Slovak Republic: The reasons for dismissal of the President of the Judicial Council of the Slovak Republic are extended so that the Judicial Council can dismiss the President of the Judicial Council if his/her continued presence in office would seriously jeopardize the credibility or the good reputation of the judiciary. If the office of President of the Supreme Court of the Slovak Republic becomes vacant, the oldest judge of the Supreme Court of the Slovak Republic will perform the urgent duties of the President of the Supreme Court.
K) Temporary protection of entrepreneurs (moratorium)
An entrepreneur (natural or legal person) who carried out his business activity before 12th March 2020 and was not in bankruptcy before this date may apply for temporary protection from creditors. An application for temporary protection must be submitted to the competent district court (electronically according to the applicant's place of business) using a form published by the Ministry of Justice of the Slovak Republic on its website. The applicant's (legal entity) signature on the application must be authorized or officially certified. If the application is submitted by the applicant's representative, the application must be accompanied by a power of attorney. In this case, the power of attorney must be either authorized by the applicant or the signature on the power of attorney must be officially certified. The basic conditions for the provision of temporary protection are: (i) the entrepreneur is entitled to submit an application and by this application applies for temporary protection, i.e. if they have a significant increase in the number of overdue receivables, or a significant decrease in revenues that significantly jeopardize the operation of their business, (ii) the entrepreneur was not insolvent before 12th March 2020, (iii) there are no grounds for dissolution of the entrepreneur pursuant to Section 68 (6) of the Commercial Code, (iv) the entrepreneur has not already paid or will not pay profit to its shareholders in 2020, (v) the entrepreneur is not in a bankruptcy or restructuring proceeding, (vi) the entrepreneur will not endanger their financial stability in 2020 and (vii) the entrepreneur keeps proper accounting and fulfils the obligation to deposit financial statements according to the law. If these conditions are met, the competent court will examine the application from a formal point of view and take immediate steps to publish information on the granting of temporary protection from creditors in the Commercial Gazette and third parties will find out about the provision of temporary protection from the Commercial Gazette. The most significant effects of the ordered temporary protection from creditors include: (i) protection of the entrepreneur from creditors’ bankruptcy petitions, (ii) suspension of the entrepreneur’s obligation to file for bankruptcy, (iii) suspension of enforcement proceedings against the entrepreneur after 12th March 2020 (in the event of obligations arising from the business), (iv) impossibility of commencing the exercise of a lien relating to the entrepreneur, (v) ban on offsetting related claims, (vi) ban on terminating a contract by a contractual party due to delays between 12th March and 12th May 2020 related to the pandemic and (vii) possibility to give priority to liabilities related to the maintenance of the business. The effects of the temporary protection take effect on the day following the day of publication of the information on the provision of temporary protection in the Commercial Gazette. The court that granted temporary protection to the entrepreneur may decide to revoke such temporary protection if the entrepreneur under temporary protection breaches the obligations arising from temporary protection (e.g. during the duration preferred their own interests over the interests of creditors).
L) Possibility to suspend an enforcement proceeding
A debtor (only natural persons) may file an application and request a bailiff to suspend the enforcement of a decision if the enforcement proceeding began after 12th March 2020 and the debtor’s income has rapidly decreased due to the COVID-19 pandemic and the immediate enforcement of the judgment would have particularly adverse effects on them or family members. In justified cases, the bailiff will immediately notify the persons concerned of the suspension of the judicial enforcement of the decision (e.g. parties to the proceedings, employer, bank, etc.). In this case, the enforcement of the decision may be suspended for up to six months from the issuance of the notice of suspension, but not beyond 1st December 2020.
M) Increased protection of lessees
The lessor may not unilaterally terminate a lease (for apartments and non-residential premises), due to a lessee’s delay in paying rent, including payments for services normally associated with rent due in the period from 1st April 2020 to 30th June 2020 if the lessee’s delay arose as a result of circumstances due to the spread of COVID-19. The reason for the delay must be sufficiently certified by the lessee. Other reasons for a termination of the lease are not affected by this act.

Please see below for a chronological overview of the most important safety and prevention measures adopted by the competent authorities in Slovakia to prevent the spread of COVID-19:

June 5, 2020 - Due to the favourable epidemiological situation in Hungary and Austria, the Public Health Office of the Slovak Republic has further relaxed the border regime between these countries. This means that people living in these countries or having a permanent or temporary residence there can travel to the other country without a limit on their length of their stay. For more details, please click here.

June 4, 2020 - Due to the favourable epidemiological situation in Slovakia and the Czech Republic, the Public Health Office of the Slovak Republic, after careful consideration, has further relaxed the border regime between the countries. People living in these countries or having a permanent or temporary residence there can travel to the other country without a limit on the length of their stay. For more details, please click here.

June 3, 2020 - Effective as of June 3, 2020 from 7:00 am, significant new safety measures were adopted by the Public Health Office of the Slovak Republic under no. OLP/4592/2020 (For more details, please click here). The most significant changes include:

  • The rules on wearing a face mask outdoors have been relaxed and people do not have to wear them if they keep a distance of at least 2 meters between each other. The obligation to wear a face mask indoors remains.
  • The so-called chessboard seating for spectators at theatre, film, music and other artistic performances, which replaces the mandatory distance of 2 meters from each other.
  • Mass events of a sporting, cultural, social or other nature over 100 spectators are permitted.
  • Reserved time in shops for the over 65s is cancelled. However, mandatory sanitary days on Sundays remain in force for retail establishments.
  • The maximum limit of customers in shops at one time is increased to 1 person per 10 m2 of sales area for customers (does not apply if 2 meters distance between customers is ensured).
  • There is no limit for people sitting at the same table in public catering establishments and opening hours previously restricted to 10:00 pm are replaced by the opening hours stated in the effective generally binding regulation of the municipality.
  • Hotels will no longer have to observe a 24-hour time interval between accommodating clients in the same room and rooms no longer require their own bathroom, as was required before.
  • Indoor sports facilities for the public (e.g. fitness centres), natural and artificial swimming pools, wellness centres, including hotel wellness centres, indoor spaces in zoos and botanical gardens, natural health spas, and casinos may open.
  • In taxi cabs, it is permitted to turn on the A/C for customers. The 15-minute break between trips is no longer required, but the disinfection of the vehicle remains mandatory.
  • Short-stay hospitals have been opened for people under 62 years. The admission of new clients to social services facilities will also be gradually relaxed.

June 2, 2020 - In addition, (with effect from June 2, 2020) citizens of the European Union who return to the country in which they have citizenship may pass through Slovakia without stopping. Such EU citizens do not have to apply to the Ministry of the Interior of the Slovak Republic for an exemption for such transit, as was required before. However, the obligation to apply for this exemption remains valid for EU citizens who are travelling to a country where they do not have citizenship, but only permanent or temporary residence. In both cases, they may transit via Slovakia for a maximum of 8 hours and may stop only at a petrol station for refuelling. For more details, please click here. Before your trip, we recommend that you check the conditions for entering individual countries.

May 27, 2020 - People with permanent or temporary residence in Slovakia may travel to Poland, Slovenia, Croatia, Germany and Switzerland, but on their return, they must show to a border police officer documentation regarding their stay. For a short-term stay not exceeding 48 hours abroad, such persons need not show a negative test result for COVID-19 or go into mandatory quarantine. For more details, please click here.

However, it should be noted that other safety and hygiene measures and instructions that both operators and customers must follow are still applicable. Failure to comply with the measure is an administrative offense for which the relevant regional public health authority can impose a fine of up to EUR 20,000.

22nd April 2020 - The Public Health Authority of the Slovak Republic issued another security measure No.: OLP/3461/2020 by which it authorized the opening of additional retail and service establishments until further notice, i.e. establishments with a sales area of up to 300 m2 (trying out clothes is prohibited), accommodation establishments providing long-term accommodation services for a minimum of 10 days (without the possibility of boarding) and outdoor fresh markets with one-way limited movement of customers. This is an extension of the original list of establishments allowed to be open from March 2020. To see whether these exemptions apply to your business, or to check the full list of permitted establishments and other prohibitions and exceptions click here.

20 May 2020 - In view of the improving epidemiological situation and the fight against COVID-19, the Public Health Authority of the Slovak Republic adopted several new measures regulating the reopening of shops and shopping centres, mass events, and wearing facemasks outdoors and exceptions to mandatory quarantine when returning from abroad. The most important measures include:

  • People with permanent or temporary residence in Slovak Republic, do not have to go to obligatory state or home quarantine when returning home from Hungary, Poland, the Czech Republic, Austria, Slovenia, Croatia, Germany or Switzerland, unless their stay outside the Slovak Republic exceeds 24 hours, and a similar exception is also valid for specific categories of persons stated in this measure (for more details click here.)

  • People outdoors will not have to wear a facemask or otherwise cover their mouth and nose if they keep a distance of at least 5 m from others, the obligation to wear a facemask indoors remains (for more details click here.)

  • Almost all shops and services may open, including those in shopping centres, with the exception of indoor children's playgrounds, hygiene measures must continue to be observed in shops, but the number of customers at one time has increased to 1 customer per 15 m2 of sales area (for more details click here.)

  • Restaurant interiors may also be open until 10:00 pm, but 2 m distance between the tables and strict hygiene measures must be observed,
  • Mass events of a sporting, cultural, or social nature and mass events of another nature of up to 100 people are permitted.

6th April 2020 - To prevent the spread of COVID-19, the Slovak Government adopted a resolution extending emergency measures to restrict movement between 8th April 2020 12:00 pm and 13th April 2020 11:59 pm. (i.e. the Easter holiday period). It also suspended the right to assembly, with the exception of persons living together in one household. The following are exemptions to restrictions on public movement:

  • travel to and from work and business or other similar activity,
  • travel to procure essential goods (food, medicines and medical devices, hygiene goods, cosmetics and other drugstore goods, feed for animals and other essentials, care for children, provision of care for pets, petrol),
  • travel to acquire essential goods (under point 2) for another person (e.g. volunteering, neighbourhood assistance) within the district, and for Bratislava and Košice, within the city,
  • travel to a medical facility for an urgent health examination, including accompanying a close person or relative,
  • stay in the countryside within the district, for Bratislava and Košice within the city,
  • attendance at the funeral,
  • travel for the care of a close person or a relative who is dependent on such care, within the district, for Bratislava and Košice within the city.

30th March 2020 from 6.00 am - In view of the continuing situation associated with the spread of COVID-19, the Public Health Authority of the Slovak Republic ordered the closing of all retail and service establishments until further notice, with the exception of grocery stores, pharmacies and medical device stores, fast-food outlets with a take-away food window, drugstores, petrol stations, post offices, banks, insurance companies, newsagents, e-shops and delivery services, car repair shops, collection yards, home improvement and building materials retailers with a sales area of up to 2,000 m2, and offices of public notary officers, attorneys, trustees, and translators. The measure prohibits the public remaining at public catering establishments and fast-food stalls until further notice (with the exception of fast-food establishments with a take-away food window). This measure also introduced a mandatory 2-metre space in queues, and preferential shopping for seniors older than 65 in groceries and drugstores from Monday to Saturday between 9.00 am and 12.00 am.

28th March 2020 - The Slovak Government extended the state of emergency and imposed a duty to provide nursing care at residential social services facilities, which are facilities for seniors, nursing facilities, social services homes, specialized facilities, social protection facilities children and social guardianship.

25th March 2020 - The Public Health Authority of the Slovak Republic suspended provision of social services at social services facilities until further notice. These are mainly day care centres, facilities for seniors with outpatient social services, retirement clubs and nurseries.

25th March 2020 - The Public Health Authority of the Slovak Republic ordered the following retail and service establishments to close every Sunday (so-called sanitary day) until further notice: grocery stores, pharmacies and medical device stores, drugstores, newsagents and pet shops.

24th March 2020 - The Public Health Authority of the Slovak Republic banned the holding of mass events, sports, cultural, social and other events, until further notice. Violation of this prohibition constitutes a public health offense pursuant to Section 56 of the Public Health Protection Act, for which the competent regional public health authority may impose a fine of up to EUR 1,659.

16th March 2020 from 6.00 am - The Public Health Authority of the Slovak Republic ordered the closing of all retail and service establishments for 14 calendar days, with the exception of grocery stores, pharmacies and medical device stores, fast food outlets with a take-away food window, drugstores, petrol stations, post offices, banks, insurance companies, newsagents, e-shops and delivery services. A breach of the ban on the closure of operations is an administrative offense under Section 57 (33)(a) of Act No. 355/2007 Coll. on the Protection, Promotion and Development of Public Health and amending certain laws, for which the competent regional public health authority may impose a fine of between EUR 150 and 20,000.

15th March 2020 - The Slovak Government declared (at an extraordinary meeting) a state of emergency concerning providers of inpatient health care, and took important measures to prevent the spread of COVID-19. The state of emergency, which took effect from 16th March 2020, was subsequently extended from 19th March 2020 to the whole health sector.

12th March 2020 - The Public Health Authority of the Slovak Republic banned the operation of the following facilities: outdoor and indoor swimming facilities, wellness centres, ski resorts and amusement parks, sports facilities, public catering facilities, i.e. patisseries, cafeterias, cafes, bars and similar establishments, with the exception of restaurants and fast food outlets.

12th March 2020 - The Slovak Government declared an emergency situation in the Slovak Republic.

10th March 2020 - The Central Crisis Staff banned the holding of mass events, sports, cultural, social and other events for 14 calendar days.

A crisis situation is an extraordinary situation, or a state of emergency declared in connection with the COVID-19 disease.

The extraordinary situation declared on March 11 remains in place, while the national emergency expired on June 13, 2020.

Changes to Act No. 404/2011 on Residence of Aliens in effect during the situation of crisis:

  • Temporary, permanent and tolerated residence permits that would have expired during the crisis situation are prolonged until two months from the end of the crisis situation declared by the Slovak government.
  • Foreigners who legally entered Slovakia (e.g. visa holders, foreigners with the right to enter Slovakia without visa, etc.) may stay in Slovakia until one month from the end of the crisis situation
  • Foreigners with granted temporary residence or a permanent residence for five years who were abroad during the crisis situation, may submit an application for the renewal of temporary residence, or an application for a permanent residence for an unlimited time at a Slovak diplomatic or consular mission abroad.
  • The Foreign Police may accept documents that expired during the crisis situation if the applicant did not leave Slovakia during the crisis situation.
  • Many legal deadlines were frozen during the crisis situation, e.g. the obligation to arrive in Slovakia within 180 days from the day the residence permit was granted, submission of medical confirmation, submission of health insurance confirmation, etc.

Self-quarantine

Individuals who were in the previous 14 days outside of the "safe countries" are obliged to immediately notify their arrival to the local regional public health authority and must self-isolate in their home environment. They are also required to pass a COVID-19 laboratory test on the fifth day after their arrival in Slovakia, at the earliest. If the test result is negative, domestic isolation may end.

All forms of transport are restored with "safe countries" and mandatory state quarantine is abolished. Voluntary domestic quarantine continues to be applied. Kindly find the full list of "safe countries" here.

State aid measures adopted in Slovakia and at the level of the European Union

Updated as of 20 April 2020

The temporary framework to support economies due to the COVID-19 outbreak
In order to minimize the economic consequences of the current crisis, the European Commission announced during the last week a package of state aid measures. For these measures, it assigned EUR 37 billion to Member States, of which EUR 526 million was assigned Slovakia. These EU funds may be redistributed during this calendar year via newly-created state aid schemes.
Following a Communication of the European Commission, Member States may provide aid up to a maximum of EUR 800 00 per enterprise. Aid intended for compensation to specific enterprise or sectors is unlimited.

Forms of Aid:

  • Direct grants,
  • Repayable advances,
  • Tax advances,
  • De minimis aid,
  • Loan guarantees and subsidized interest rates,
  • Export insurance donations.

The amended temporary framework to support economies due to the COVID-19 outbreak as at 03.04.2020
In its Amendment to the Temporary Framework, the Commission introduced the following new forms of aid:
  • Support for coronavirus related R&D: R&D activities to develop vaccines, antibodies or other anti-viral R&D activities may be supported by direct grants, repayable advances or tax advances.
  • Support for the construction and upscaling of testing facilities: direct grants, tax advantages, repayable advances and no-loss guarantees may be used to support investments to test facilities or to improve important infrastructure for the development and testing of products important to tackle the COVID-19 outbreak.
  • - Relevant production: medical products (including vaccines) and preparations, medical equipment (including ventilators, protective clothing and diagnostic equipment), disinfectants, data collection and processing tools.

    - The amount of aid may be increased in the event of international cooperation.

  • Support for the production of products relevant to tackle the coronavirus outbreak: direct grants, tax advantages, repayable advances and no-loss guarantees may be used to support investments in expanding production capacity and mass production of the above products. The amount of aid may be increased in the event of international cooperation.
  • Deferral of tax payments and/or social and health contributions: may be granted based on a regional or sectoral key.
  • Wage subsidies: to reduce the impact on employees, the state may reimburse part of the wage costs to employers.
The modified framework also increased the maximum amount of the aid per enterprise to EUR 1 million.

The SURE initiative
The European Commission has earmarked a total of EUR 100 billion from its budget to maintain employee’s wages across the Union. Under the SURE initiative, employers and self-entrepreneurs will be able to reduce the number of working hours during the working week. The mechanism of this instrument is straightforward: the employer only pays a wage for the time spent at work and the state repays the remaining part of the wage for normal working hours. This is the German Kurzarbeit model, but the rules for employment reduction and the participation of the state have been left to the Member States. These funds will be channelled via the Fund for European Aid to the Most Deprived (FEAD) to all Member States in the form of a loan.

1. Supporting the maintenance of operations at small and medium-sized enterprises

The Ministry of Finance of the Slovak Republic has published additional measures to minimize the impacts of the current crisis on the business environment. These focus on credit facilities in the context of measures adopted by the European Commission and in the context of de minimis aid.

Financial support is distributed via the Export-Import Bank of the Slovak Republic and the Slovak Guarantee and Development Bank and is provided in two ways:

A) Loan Guarantee,

B) Interest rate subsidy.

The maximum aid is EUR 200 000 for three consecutive years.
1.1 Credit facilities of the EXIM bank
On 27 March 2020, EXIM bank launched a new bank product, the COVID loan, for the support of operational maintenance under the approved de minimis aid scheme. Loans are available from EUR 100 000 to EUR 500 000 up to a maximum of 50% of a beneficiary’s turnover for 2019. Eligible applicants are all SMEs, excluding those operating in agriculture, fishery and aquaculture, which undertake export activities and have been in operation for at least 2 accounting periods prior to the application. Eligible costs include operating expenses and investments in long-term tangible and intangible assets and costs related to the settlement of social securities and health insurance (within 180 days after maturity). The interest rate is fixed at 4% p.a. with the possibility of a full subsidy if for a period of 12 months from the first day of the loan drawing the beneficiary has no obligations with health and social insurance companies more than one month in arrears and maintains its average level of employees. An interest rate subsidy may be applied 12 months from the day of the first drawing of the loan.

1.2 Credit facilities of Slovak Guarantee and Development Bank – Operating Loan Entrepreneur 2020

On 20 April 2020, the Slovak Guarantee and Development bank (SGDB) is launching a new bank product – Operating Loan Entrepreneur 2020, as the result of the adopted state aid de minimis scheme. Eligible applicants for this aid are all SMEs, excluding those operating in fishery, agriculture, aquaculture, or exports (where they are eligible for EXIM bank’s COVID loan for exporters), and companies receiving aid conditional on preference for local products ahead of imported products.

The maximum amount is set at 50% of the company’s turnover for 2019 and can be granted from EUR 10 000 up to EUR 350 000. Funds may be drawn on a continual basis or at once.

There is a 4% fixed annual interest rate, with a possibility of a 4% interest rate subsidy if the company meets the conditions for state aid under this instrument.

Companies are obliged to submit with an application to the SGDB an overview of drawn de minimis aid, an overview of social security and health insurance liabilities, and information on the result of the test of a company in difficulties.

1.3 SIH anti-corona guarantee

The Ministry of Finance of the Slovak Republic has allocated EUR 38 million for the portfolio and interest subsidies to loans provided by domestic financial institutions. From these funds, EUR 30.4 million is intended for repayment of non-performing loans and EUR 7.6 million for interest rate subsidies. The allocation of funds will be subject to a regional key (EUR 4.55 million for the Bratislava region and EUR 33.45 million for other Slovak regions).

The maximum aid intensity provided by SIH is 80% of the loan coverage, up to a maximum of 50% of the financial institution’s portfolio. The interest rate subsidy may not exceed 4 %.
The loan conditions are as follows:

  • Maximum amount: EUR 1 180 000,
  • Maximum maturity: 36 months including postponement of instalments,
  • Maximum maturity: 48 months including postponement of instalments,
  • Postponement of principal instalment and interest: 12 months from the first drawdown of the loan

Entitled beneficiaries are small and medium-sized enterprises, except enterprises engaged in fisheries, aquaculture, primary production of agricultural products, processing and marketing of agricultural products, and those conducting export activities in or outside the European Union.

Eligible applicants can apply for this type of an aid via commercial banks.

2. Ensuring liquidity for small, medium and large enterprises

With the amendment to the act containing measures as a response to COVID-19 outbreak, the Ministry of Finance of Slovak Republic extended the package of credit facilities for SMEs and their application for LEs. The main purpose of these measures is to ensure liquidity for all categories of undertakings. These measures are realized by the Export-Import bank of Slovak Republic (“Exim-bank”) and funds administered by the Slovak Investment Holding (“SIH”). As for the SIH anti-corona guarantee for SMEs, financial aid from SIH will be distributed via commercial banks in line with the Amended Temporary Framework adopted by the European Commission.

State aid will be provided as loan guarantees and loan guarantee fee subsidies. From this type of aid are excluded temporary employment agencies and registered employment brokers. To be eligible, applicants may not have social security or health insurance liabilities older than 90 days and may not be the subject of bankruptcy or restructuring.

First aid to employees, entrepreneurs and self-entrepreneurs to reduce the impact of COVID-19
Measure 1:

The employer (including self-employed, who is employer), as an eligible applicant, may apply for a contribution to compensate the costs of employee´s wage, in the amount of 80% of employee´s average earnings, up to a maximum of EUR 1 100, if the employer could not allocate to the employee a work due to an obstacle on the part of the employer at the time of the declared exceptional occurrence or emergency (closure of the business under the Public Healt Authority of the SR (PHA) measure).

  • An employer, who pays compensation to employees of more than 80% of their average earnings under the Labour Code, will be paid a reimbursement allowance of 80% of the employee's average earningsfor the relevant period, but no more than EUR 1,100.
  • If the wage compensation (which the employer has already paid or will pay by the end of the relevant calendar month for which the application is submitted) is less than EUR 1 100, the contribution equals to the actually paid compensation.
  • An employer who, in accordance with a collective agreement or a written agreement with employee representatives (Section 142 (4) of the Labour Code) pays a compensation to employees of less than 80% of their average earnings, will be paid a contribution, which equals to the paid compensation, but no more than EUR 880.
Measure 2:

Measure 2 is for self-employed persons who, at the time of a declared emergency, have closed their businesses or experienced a decline in their sales in comparison with the same period in 2019 (or alternatively with the monthly average in 2019). The amount of the contribution depends on the drop in sales as follows:

 Decrease in sales  March 2020  Decrease in sales  April 2020 & other months
 Less than 10 %  0 EUR  Less than 20 %   0 EUR
 10 % - 19,99 %  90 EUR  20,00 - 39,99 %  180 EUR
 20 % - 29,99 %  150 EUR  40,00 - 59,99 %  300 EUR
 30 % - 39,99 %  210 EUR  60,00 - 79,99 %  420 EUR 
 40 % +  270 EUR  80 % +  540 EUR
Measure 3:

The employer (including self-employed, who is employer), as an eligible applicant, may apply for a contribution to compensate the costs of employee´s wage

3A) contribution to compensate the costs of employee´s wage to whom the employer is unable to allocate work because of an obstacle on the part of the employer (Section 142 (4) of the Labour Code), up to 80% of his average earnings.

3B) a flat-rate contribution to cover apart of the salary costs for each employee, depending on the decrease in sales as follows:

 Decrease in sales  March 2020  Decrease in sales  April 2020 & other months
 Less than 10 %  0 EUR  Less than 20 %   0 EUR
 10 % - 19,99 %  90 EUR  20,00 - 39,99 %  180 EUR
 20 % - 29,99 %  150 EUR  40,00 - 59,99 %  300 EUR
 30 % - 39,99 %  210 EUR  60,00 - 79,99 %  420 EUR 
 40 % +  270 EUR  80 % +  540 EUR
  • For the purpose of 3B, both the employee to whom an employer assigns work as well as the employee to whom an employer cannot assign work because of an obstacle on the part of the employer (Section 142 of the Labor Code) are considered employees.
  • The condition for granting the allowance under 3B is that the staff member did not have more than 50% of his/her monthly working hours an obstacle on the part of employeer side or did not take personal holiday
Measure 4:

The last of the measures taken is targeted at specific groups of natural persons who have no other income, i.e. limited liability companies with one person or self-employed persons who do not pay contributions to the Social Insurance Agency. In such cases, however, the employment relationship may not be terminated. The flat-rate contribution to compensate for a loss of earnings will be EUR 105 per month for March and EUR 210 for April and May of this year.

Taxes and contributions

Income tax and accounting

Updated as of 28 July 2020

For more information click on the title.

Based on the Act on Certain Extraordinary Measures as Regards Financing in connection with COVID-19 (the Lex Corona package of measures) the filing deadlines falling on a day within the pandemic period are postponed as follows:

Until the last day of the first calendar month following the month in which the pandemic period comes to an end

  • Income tax returns – individual and corporate taxpayers
  • Annual payroll reconciliation
  • Motor vehicle tax return of taxpayers who are obliged to file a return for a period other than a year

Until the last day of the second calendar month following the month in which the pandemic period comes to an end

  • Annual payroll report (employers’ obligation)
  • Delivery of confirmation on annual payroll reconciliation to the employee (employers’ obligation)
  • Confirmation of allocation of a certain percentage of tax paid to qualifying entities by the employee

Until the last day of the third calendar month following the month in which the pandemic period comes to an end, or the deadline for filing the tax return, whichever comes first

  • Filings in line with the Act on Accounting, including deposition of applicable documents in the financial statements register

PwC notes: The Decree of the Slovak Government of 18 March 2020 on the cancellation of tax underpayments equal to an outstanding sanction, which extended taxpayers statuary filing deadline to 30 June 2020 with no sanction for late filing, will not be applied given the adopted wording of the Act.

For more information, please see here.

 

Based on the amendments of the Act on Certain Extraordinary Measures as Regards Financing in connection with COVID-19, and other legislative changes, the following measures has been adopted:

Tax loss utilization

Taxpayers whose filing deadline for income tax returns falls during 2020, will be allowed to decrease their tax base by a one-off amount of unutilized tax losses declared for 2015 to 2018, up to the reported tax base, and up to a maximum of EUR 1 000 000. The above one-off utilization can only be applied to tax losses for which the taxpayer is entitled to, based on the provisions of the Income Tax Act. This means that the utilization does not apply to expired tax losses, i.e. tax losses which could not have been used due to an insufficient level of the tax base. Unutilized tax losses should be deducted gradually, from the oldest one to the most recently reported tax loss. If a taxpayer decides for tax loss utilization under the Lex Corona rules, Table D of the tax return form should not be completed. Instead, the utilization should be recorded on line 500, and Part VII. - Taxpayer's special records, of the tax return form. A one-off deduction of unutilized tax losses, which the taxpayer may claim in the tax return for 2020 may now be claimed in only one tax period of 2020, provided the deadline for filing a tax return expires for several tax periods in 2020.

Income tax advances

Taxpayers who have already filed or will file a tax return for 2019 during the pandemic period will pay tax advances during the pandemic period as follows:

  • based on the 2018 tax liability, if the tax advances to be paid based on a filed tax return for 2019 are higher than those paid on the basis of the 2018 tax return,
  • based on the 2019 tax liability, if the declared tax liability for 2019 is lower than their tax liability for 2018.

Taxpayers who have not yet filed a tax return must pay advances based on the 2018 tax liability.

For taxpayers that reported a decrease in sales (revenues from the sale of products, goods, and services net of discounts) of at least 40% in comparison with the same period of the previous calendar year (a month or a quarter), the option of not paying CIT advances applies. The non-payment of a CIT advance will be applied for the period following the period in which the taxpayer declares a relevant decrease in revenues by submitting a declaration to the tax administrator at least 15 days before the CIT advance due date. The taxpayer should assess a decrease in revenue and file a declaration for each month separately.

Tax overpayments

  • on income tax
  • The tax administrator will refund a tax overpayment which a taxpayer claims on an income tax return filed during the pandemic period, within 40 days of the end of the month in which the taxpayer files the tax return (e.g. an overpayment claimed via tax return filed in April 2020 must be refunded by 10 June 2020). Taxpayers that filed their tax returns by 31 March 2020 will be refunded by 10 May. If a taxpayer claims a refund of a tax overpayment via a tax return, and this overpayment is subsequently decreased (after a tax inspection, or due to the filing of an additional or amended tax return), a 100% penalty of the declared difference (decrease) would be levied. The taxpayer will also be required to refund the difference. Such a penalty should not, however, be levied, provided the taxpayer files a tax return in which they decrease the overpayment before the deadline for its refund.

  • on tax advances
  • If the taxpayer filed or will file his tax return for 2019 by the end of the pandemic period, and the tax advances due calculated based on this tax return are lower than those paid until this filing, the tax administrator will use this overpayment to settle the next tax advances or will refund them in accordance with the provision of the Tax Code, e.g. within 30 days of the request for a refund.

    Tax advances underpayments

    A taxpayer is not obliged to pay a difference that arises in respect of paid corporate income tax advances due from the beginning of 2020 until the deadline for filing the tax return for 2019 and the higher tax advances calculated based on the 2019 tax return. This applies to the tax period that began on 1 January 2020, as well as to financial years.

Contributions

Updated as of 28 July 2020

Under the approved amendments, the following measures has been adopted:

1. The due date for health insurance prepayments that selected employers must pay for March 2020 is extended until 31 July 2020, provided the employer reported a decrease in net turnover (revenues from the sale of products, goods, and services net of discounts) due to a critical situation caused by COVID-19 of at least 40% for March 2020.

2. Employers that in April 2020 were forced to close their operations under the law (e.g. in line with the Regulation of the Public Health Authority of the Slovak Republic) for at least 15 days, have been exempted from payment of social security contributions for April 2020.

3. The due date for social insurance contributions that selected employers must pay for March, May, June and July 2020 is extended until 31 December 2020, provided the employer reported a decrease in net turnover (revenues from the sale of products, goods, and services net of discounts) due to a critical situation caused by COVID-19 of at least 40% for the relevant month.

Contributions paid by employees and remitted by their employers are still due by the original deadlines. The amendments also allow the Slovak Government to issue an additional decree specifying other periods for which employers will not be required to pay contributions, or for which the due date may also be postponed, as well as the conditions under which such an exemption will apply.

For more information in respect of payment of nursing allowance and compensation during a quarantine period see here.

 

Cross-border work performance

Updated as of 23 April 2020

The OECD has published Analysis of Tax Treaties and the Impact of the Covid-19 Crisis on international taxation in cross-border situations. The analysis address the creation of a permanent establishment, change of tax residency status of individual and corporate taxpayers, as well as the taxation of cross-border workers due to a temporary change of place of work (e.g. home office, distance work), as well as due to a temporary change of the place of effective management due to Covid-19.

In general, a temporary change of place of persons concerned in relation to Covid-19 is considered an extraordinary situation and should not change their status. However, each case will be analysed on a case-by-case basis. Based on the information published by the Ministry of Finance of the Slovak Republic, they consent with the above analysis. So far, the Tax Directorate has not published additional information in this respect.

 

VAT and excise duties

Updated as of 23 April 2020

The Lex Corona 1 and 3 packages of measures have introduced the following provisions:

  • Exemption from customs duties and VAT on imports of goods (e.g. medical supplies) from third countries will be applied if intended for allocation free-of-charge to victims of a natural disaster, including a pandemic. The Slovak Ministry of Interior will approve organizations authorized to import goods exempt from import customs duties and VAT. This exemption will be subject to a decision of the European Commission and the Customs Office, if the set conditions are met, will suspend the payment of import customs duties and VAT until notified of the European Commission’s decision.
  • If during the pandemic period a VAT payer repeatedly fails to submit a VAT return and control statement and fails to pay the VAT liability, the tax administrator will not add them to the Tax Directorate website list due to a potential VAT registration cancellation, provided the taxpayer meets these obligations by the end of the calendar month following the month in which the pandemic period comes to an end.
  • Underpayments of custom duties and mandatory social security and health insurance contributions incurred by the taxpayer during the pandemic period will not be taken into account for the purpose of an early VAT refund, provided these are paid up by the end of the calendar month following the month in which the pandemic period comes to an end.

So far, no specific measures have been implemented in relation to deferral of filings or payments in the area of VAT and excise duties.

 

Other taxes

Updated as of 28 July 2020

The Lex Korona measures have introduced the following provisions:

  • The period for filing a motor vehicle tax return, for taxpayers who are obliged to file a return for a period other than a year (e.g. taxpayers dissolved with or without liquidation), will be extended until the last day of the calendar month following the month in which the pandemic period comes to an end.
  • The obligation to settle payments of the special levy payable by certain financial institutions for the 3rd and 4th quarter of 2020 has been waived. The obligation of payment of the levy for the 1st and 2nd quarter of 2020, including interest, has not changed. Nevertheless, the intention is to abolish this special levy and replace it with other obligations for the banking sector. No specific legislative changes in this regard have been adopted yet.

 

Tax administration

Updated as of 28 July 2020

Based on the Lex Corona 1 and 3 packages of measures the following provisions have been introduced in the area of tax administration:

  • Interruption of a tax inspection and tax proceedings if requested so by the taxpayer. It the taxpayer does not file a request for an interruption, the inspection and the proceedings will continue.
  • Suspension of tax execution
  • Forgiveness of certain missed deadlines and actions in tax administration procedures - will not apply to filing a tax return, a control statement and EC sales list and paying the tax and tax advances.
  • The amount of tax which becomes due during the pandemic period, will not be considered a tax underpayment for e.g. execution purposes, provided the taxable entity pays or remits the amount due by the last day of the calendar month following the month in which the pandemic period comes to an end. This, however, does not apply for a deferral of tax payments. This means that if the taxpayer fails to pay the tax due by the standard deadline, late payment interest would be levied.

Note PwC: In reasonable cases when the taxpayer fails to meet filing and payment deadlines, it is possible to ask the tax administrator for forgiveness of a missed deadline in line with the provisions of the Tax Administration Act. Each request will, however, be assessed individually, as the commencement of the pandemic as such, does not automatically mean forgiveness of a missed deadline.

Furthermore, the exemption from paying administrative fees applies if a filing is made during the pandemic period with the purpose of mitigating the adverse consequences of the pandemic.

Due to the current COVID-19 situation, deadlines for the mandatory automatic exchange of information on taxation in relation to reportable cross-border arrangements (DAC 6 reporting), have been changed. You could find more information here.

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Contacts

Christiana Serugová

Partner, Tax & Legal Leader, PwC Slovakia

+421 903 261 010

Email

Rastislava Krajčovičová

Director, PwC Slovakia

+421 903 268 040

Email

Zuzana Maronová

Senior Manager, PwC Slovakia

+421 911 010 528

Email

Eva Fričová

Senior Manager, PwC Slovakia

+421 903 268 048

Email

Gabriela Kubicová

Lawyer, PwC Slovakia

+421 911 679 229

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Štefan Palkovič

Lawyer, PwC Slovakia

+421 911 058 124

Email

Lenka Bartoňová

Senior Manager, PwC Slovakia

+421 911 920 004

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