Source: https://www.financnasprava.sk/en/individuals/taxes-individuals/income-tax/taxation-of-incomes-of-a-sr-no
Timestamp: 2019-04-19 00:52:08+00:00

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The information in this part is determined for the tax non-residents of the SR (individuals having no residence or habitual abode on the territory of the SR) who have gained income from sources on the territory of the SR during the fiscal year.
A SR non-resident (an individual having no residenceor habitual abode on the territory of the SR) is obligated to file the tax return in the event his total taxable incomes from sources on the territory of the SR for the fiscal year 2013 exceed the amount of EUR 1,867.97 or in case of incurring a tax loss.
If a SR non-resident received in 2013 any incomes from dependent activities (employment) only, he shall fulfill his tax obligation by using the income tax form FO type A; if the non-resident received also other types of incomes (e.g. income from lease or sale of immovable property or from prize, etc.), he shall use the income tax form FO type B.
The tax return must be accompanied by copies of all confirmations on incomes of the individual, derived from employment from the sources on the territory of the Slovak Republic (e.g. employer´s confirmation, payroll slips, etc.).
Taxation of incomes of a taxpayer who is a tax resident of another contracting state (i.e. the state having concluded an international double taxation agreement with the SR), and that were derived from sources on the territory of the SR, shall be governed by the provisions of such agreement and at the same time by the Income Tax Act. The condition for application of the agreement is the proof of tax residence of such tax payer (a SR non-resident) on or before the date of payment, remittance or crediting of the income for his benefit. If the income from sources on the territory of the SR has been derived by a resident of any state that has not concluded an international agreement with the SR, his incomes are taxed solely according to the provisions of the Income Tax Act.
According to the Income Tax Act, permanent establishment means, for the purposes of this Act, a fixed place of business or a facility for performance of activities, through which the SR non-resident performs, wholly or partially, his activity on the territory of the SR. Such place or facility must be constant from the aspect of geography and time (classical permanent establishment).
According to Article 7 of the Agreement between the Czechoslovak Socialistic Republic and the Federal Republic of Germany for avoidance of double taxation and fiscal evasion with respect to taxes on incomes and capital No. 18/1984 Coll., any profit of the German business may be taxed in the Federal Republic of Germany only, provided the enterprise performs no activity in the SR through a permanent establishment which is situated there, but only in the extent that may be allocated to that permanent establishment. The general conditions for existence of a permanent establishment according to provisions of § 16(2) of the Act No. 595/2003 Coll. on incomes tax, as amended, and Article 5(1) of the Agreement, is the existence and the location of the fixed place (facility), which is stabile from the geographic and time aspects, and performance of the activities through that place (facility).
The essential condition for taxation of the incomes from dependent activities is performance of that activity on the territory of the SR. They cover the incomes e.g. from the employment, service relationship, employment in governmental agencies, membership or any other similar relationship, where at working for the payer of the income (the employer), the SR non-resident is obligated to observe the employer´s instructions or orders. The incomes cover also any incomes of a shareholder and managing director of a limited liability company, a partner with limited liability of a limited partnership, and other.
The incomes from dependent activities cover also any incomes from the activities performed by the SR non-resident on boards of aircraft or ships operated by a tax payer with unlimited tax obligation (a SR resident).
The income of the SR non-resident from dependent activities is relieved from tax on the territory of the SR in the event that income is paid by a foreign employer (SR non-resident) having no permanent establishment on the territory of the Slovak Republic, and the time period attributable to performance of the given activity on our territory shall not exceed 183 days in any period of 12 consecutive months. The above shall apply for any incomes other than the incomes of an artiste, sportsman or acrobat (or incomes from similar activities) and any incomes from the activities performed in a permanent establishment.
In the event the above conditions are not satisfied, the income of a SR non-resident on the territory of the SR are taxed according to the Income Tax Act and the double taxation agreement (Article „Dependent Services“ applicable for the Member State).
The employer (taxpayer) is obligated to pay an advance tax from the dependent activity, according to the provisions of the Income Tax Act.
The employer means also any taxpayer with unlimited tax obligation for whom the employee performs work according to the employer´s instructions and orders, even if the income for that work under a contract is paid by any person with registered seat or residencein a foreign country.
If the SR non-resident performs any dependent activity for an employer that is neither a tax payer nor foreign tax payer, the obligation (to pay the tax advances) should be fulfilled by the non-resident himself. The tax advances shall be computed from the income paid, remitted or credited to the SR non-resident´s account in the relevant calendar month, less the pro rata amount of the non-taxed part of the tax base per tax payer, by applying the tax rate according to the Income Tax Act. The SR non-resident is obligated to pay the advances to the local tax administrator (tax office). The local tax office of the SR non-resident means the tax office having jurisdiction in the place of his habitual abode or according to the place of performance of the dependent activity. The advances are due and payable by the end of a calendar month following the month when the income was paid, remitted or credited to an account. The start of receiving the income must be notified by the SR non-resident to the local tax administrator by the end of a calendar month following the month when the income was paid, remitted or credited for the first time.
The tax obligation from incomes from dependent activities may be fulfilled by the SR non-resident after the end of the fiscal year in either of two ways. If he receives on the territory of the SR the taxable incomes from the dependent activities only, he may request the employer in writing, by 15th February of the given year, to prepare an annual statement. In the event of not requesting the annual statement, the tax return will be filed by the non-resident himself.
A Slovak employer employs a Czech resident on the territory of the SR under an agreement on performance of work. Where the tax advances from that dependent activity should be paid? In the SR or in the CR? Is the CR resident obligated to file an income tax return on the territory of the SR?
According to § 16(1)(b) of the Act No. 595/2003 Coll. on income tax, and Article 14(1) of the Double Taxation Agreement between SR and CR (published in the Collection of Acts under No. 238/2003), the income of a tax resident of the Czech Republic from dependent activities performed on the territory of the Slovak Republic for the employer with registered seat on the territory of the SR are taxed on the territory of the Slovak Republic.
The Slovak payer of income (taxpayer) shall withhold the tax advances from that income in accordance with § 35 of the Income Tax Act, and has the same obligations as the other resident (Slovak) employees (e.g. monthly statements).
Upon the end of the fiscal year, the income on the territory of the SR should be taxed either by the tax return filed by the non-resident payer, or by the annual statement that will be prepared by the Slovak employer, if the statutory conditions are satisfied.
On the territory of the CR, that employee will tax his global incomes (i.e. also including the incomes from the dependent activities performed on the territory of the SR) and will eliminate double taxation of the incomes derived from sources on the territory of the SR by the method described in the double taxation agreement.
Ukraine a royalty for the use of an ordered software. Is the royalty payer (the Slovak company) obligated to withhold and pay tax in the rate of 19% in Slovakia?
This is the income of a SR non-resident that was derived from payments by a SR resident and by a SR non-resident´s permanent establishment for provision of the right to use or for the use of copyright or any right similar to the copyright.
In case of a movable asset which is leased in the form of „pure“ financial lease, the income (installments) for the financial lease should be divided into the amount of the principal and the amount of the interest. According to the Income Tax Act, the amount of the principal is not considered as income from sources on the territory of the SR, and therefore, it is not taxed on that territory. The amount of interests represents the income from a source on the territory of the SR and is taxed on our territory by a withholding tax in accordance with the Income Tax Act. In respect of the contracting states where such income is covered by Article „Interests“, the tax rate may be modified or the right to tax the interest income may be granted to the state of residence only.
Generally, the incomes derived by a resident of the Federal Republic of Germany for operative lease of movable assets situated on the territory of the SR from the payer of the income, being a SR resident, are taxed according to § 16(1)(e)(4) of the Income Tax Act and Article 12(2) of the Agreement between the CSSR and FRG for avoidance of double taxation with respect to taxes on income and capital (published in the Collection of Acts under No. 18/1984) on the territory of the SR (the state of source of income), provided that the maximum tax rate according to Article 12(2) of the Agreement may not exceed 5 % of the gross amount of royalties.
The said incomes ate taxed by a withholding tax according to § 43(2) of the Income Tax Act through the tax payer (the payer of the income). The tax must be withheld by the tax payer at payment, remittance or credit of payment to the tax payer in accordance with the provision of § 43(10) of the Income Tax Act.
In respect of a resident of a contracting state, taxation of such incomes is governed by the Income Tax Act and also by the provisions of Article „Gains from Alienation of Property“ of the relevant double taxation agreement.
If a SR non-resident receives any remunerations as a member of statutory body and other body of a legal entity having registered seat on the territory on SR, such incomes are taxed on our territory in accordance with the Income Tax Act and Article „Directors´ Fees“ in the relevant double taxation agreement (in case of a resident of the contracting state). Such incomes are paid by the SR non-resident upon the end of the fiscal year by filing a tax return on the territory of the SR, or if the non-resident has no other type of income, he shall request the employer in writing (as it is dependent activity according to the Income Tax Act) to prepare an annual statement, by 15th February of the relevant year.
A resident of the Czech Republic receives from a joint-stock company with registered seat in the SR quarterly remunerations for the duties of a member of the Board of Directors (Supervisory Board). How such income will be taxed? Is it the income from dependent activity or the income which is subject to the withholding tax?
In accordance with § 16(1)(e)(6) of the Act No. 595/2003 Coll. on income tax, as amended, and Article 15 (“Directors´ Fees“) of the Double Taxation Agreement between the SR and the CR (No. 238/2003 Coll.), the remunerations for a member of statutory bodies (directors´ fees), who is a tax resident of the Czech Republic, are taxed in the Slovak Republic.
The given income represents the incomes from dependent activities that are set forth in § 5(1) of the Income Tax Act. The given incomes are taxed on the territory of the SR by tax advances paid by the payer of the income (the Slovak employer) in accordance with the relevant provisions of the Income Tax Act, and after the end of the fiscal year, they are settled either by an annual statement (if the conditions are satisfied) or by a tax return that would be filed by the Czech tax payer.
They cover any winnings in lotteries and other similar games, winnings in promotion contests and from drawing lots, prizes from public contests and sports contests, derived by the SR non-resident from payments made by a SR resident and by a SR non-resident´s permanent establishment. Taxation of such incomes on our territory is subject, in respect of any contracting states, to the provisions of Article „Other Income“ of the relevant double taxation agreement. In majority of the agreements, the right to tax such income is granted to the state where the recipient is a tax resident. In the event the recipient of the given income is a resident of any non-contracting state, the income on the territory of the SR will be taxed solely according to the provisions of the Income Tax Act.
In respect of some contracting states (e.g. in the agreement with the Czech Republic), the right to tax the income from winnings in lotteries, stakes, and other similar games, prizes from contests and drawing lots, is granted also to the state of source.
cash winnings and prizes, the withholding tax will be paid by the payer of the given winning or prize. In case of any tax payers which are not tax residents of the Member States of the European Union and who file tax returns in the SR, where the given incomes are included, the Slovak payer of the income is obligated to withhold an advance from the paid income in order to secure payment of tax.
Caution: According to the Income Tax Act, any winnings in lotteries and other similar games operated under a license granted according to the Act No. 171/2005 Coll. on gambling games and similar winnings from foreign counties are relieved from tax.
Any other received winnings and prizes are relieved from tax in the SR in the value not exceeding EUR 350 per prize or winning. (Prize or winning means, for the purposes of tax relief, any prize from a public contest, any prize from a contest where the group of contestants is limited by the conditions of the contest or if the contestants are elected by the contest organizer, other than the remuneration included in such prize for use of a work or performance, if it represents a part of that prize, any winning from a promotion contest or from drawing lots, any prize from a sports contest, however, the tax relief shall not apply for any prizes from sports contests, received by the tax payers whose sports activity represents other individual pay activity).
Example No.1: If a tax resident of the Czech Republic wins in Slovakia, in a public contest, a coffee maker in the value of EUR 200, the right to tax the winning is granted also to the Slovak Republic according to the double taxation agreement between SR and CR and according to § 16(1)(e)(7) of the Income Tax Act. However, according to § 9(2)(m) of the Income Tax Act, the prizes from public contests are relieved from tax in the value not exceeding EUR 350, which means that although the SR has the right to tax that income, the given prize will not be taxed (it is relieved from tax).
Example No. 2: If a tax resident of the Czech Republic wins in Slovakia a cash prize in the amount of EUR 500 in a sports contest, the right to tax that income is granted also to the Slovak Republic according to the double taxation agreement between SR and CR and according to § 16(1)(e)(7) of the Income Tax Act. According to § 8(10) of the Income Tax Act, the incomes according to clause 1(j), other than non-cash prize, (i.e. the cash prize) are taxed by the withholding tax in accordance with the provision of §43(3)(d) of the Income Tax Act. It means that the payer of the income (the contest organizer) shall withhold in the SR the tax from that prize in the rate of 19 %. The income afterthe withholding tax, will be paid by the payer of the income to the CR resident. Thus, the CR resident may consider his tax obligation from that income fulfilled on the territory of the SR.
If the SR non-resident receives from the territory of the SR any pension benefits, alimony or annuity, they represent, according to the Income Tax Act, incomes from a source on our territory. If he is a resident of any contracting state, such income may be classified, in the double taxation agreement, under Article „Pension Benefits“, „Dependent Activity“ or „Other Income“. The income may be correctly classified only upon individual review of the situation. If the given income is classified, under the relevant agreement (if any), according to Article „Pension Benefits“, the income will be taxed by the SR non-resident only in the state where he is a tax resident.
If the SR non-resident receives any income from sale, lease or any other exploitation of the immovable property situated on our territory, such income is considered taxable on our territory in accordance with the Income Tax Act as well as in accordance with the double taxation agreement (in respect of a contracting state).
If the SR non-resident sells on our territory any immovable property which is situated here, the income will be taxed according to the Income Tax Act and Article „Gains from Alienation of Property“ in the relevant double taxation agreement (if any).
If the SR non-resident leases on our territory any immovable property which is situated here, the income will be taxed according to the provisions of the Income Tax Act and Article „Income from Immovable Property“ in the relevant double taxation agreement (if any).
In the event that in the fiscal year, the SR non-resident derives any incomes from sale or lease (or any other exploitation) of the immovable property, his tax obligation will be fulfilled on the territory of the SR by filing a tax return after the end of fiscal year. In respect of any tax payers who are not tax residents of the Member States of the European Union, the Slovak payer of income is obligated to withhold an advance from the paid income in order to secure payment of tax. This shall apply under the conditions that the given income is not relieved from tax in accordance with the Income Tax Act or under an international agreement.

References: § 16
 § 16
 § 35
 § 16
 § 43
 § 43
 § 16
 § 5
 § 16
 § 9
 § 16
 § 8
 §43