The Slovak s.r.o. (Ltd.) - 19 % Flat-Tax
Conclusions applies to Germany and Austria
The Slovak s.r.o. (Ltd.) and 19 % for withdrawn profits?
Basically we can say that the natural persons and legal entities - i.e. with their global profit - are liable to income tax without limitations, if they have their company registered office or the company management headquarters in Slovakia. The capital companies like s.r.o. (Ltd.) are liable to legal entity income tax, the natural persons to natural person income tax. The amount of both rates of taxation is the flat one 19 % after January 2004 (known as the 19 per cent Flat Tax in the meantime).
If the person being the tax-liable is a sharer of the Slovak s.r.o. (Ltd.) and this makes him/her the unlimited tax-payer in Austria, however the revenues from shares of profit of the Slovak s.r.o. (Ltd.) will not be taxed in Slovakia, but he/she will be tax-liable by the Austrian sharer in a form of the Austrian income tax! Therefore the statements formation agencies are not true that through formation of the Slovak s.r.o. (Ltd.) there is an advantage of the 19 per cent tax!
We recommend to our clients to form the Ltd. & LP (limited partnership), because the limited partnership in Slovakia - as to share of profit of the limited partners concerns, is understood similarly as the capital company and therefore the shares of profit of the limited partners are liable to the Slovak legal entity income tax, which makes the known 19 %.
Essential thereby is the fact that the profits are actually created in the limited partnership in Slovakia and thus the limited partnership does not represent any dummy company. These shares of profit are not allowed to be taxed in Austria in terms of the Double Taxation Agreement between Austria and Slovakia, whereby the tax duty for the withdrawn profits or the withdrawing profits lies really at the level of 19 per cent.
However it is necessary to remark that there is a gradation condition, which means that even if the profits in Slovakia are not liable to taxation, but their amount is included into the gradation level calculation.
We will help you in correction of faulty company formations
If you did not form your s.r.o. (Ltd.) correctly as to the taxation and legal form, please turn to our office in Bratislava together with your tax consultant in Austria or Germany, we will revitalize the foundations of your company in a legal form. If your tax consultant would have any questions, refer him to directly to our Hotline, our answers to his eventual questions will be quick and competent.