On 19 December 2023, the Slovak Parliament approved the amendment to Act No. 595/2003 on Income tax. The amendment was enforced by the Government bill. This act modified several laws in order to improve the state of public finances. The amendment is increasing the 7% withholding tax (WHT) rate to 10% on the domestic dividends paid to investors - private individuals, local and foreign tax residents.
In case of non-resident investors – private individuals, the 10% WHT applies to residents of white-listed countries (countries which have concluded an agreement with the Slovak Republic on the exchange of tax-relevant information or hold a Convention on the avoidance of double taxation).
The change is applicable to dividends distributed out of profits generated in a taxable period beginning on or after 1 January 2024. Therefore 10% WHT will be applied in year 2025 or in later years. The amendment is expected to come into effect on 1 January 2024.
Before becoming valid, the amendment will need to be signed by the Slovak President and published in the collections of laws.
Impact on investors: Amended legislation will increase dividend rate for private individuals on profits generated in a taxable period beginning on or after 1 January 2024. Reduced WHT rates will apply for non-resident investors residing in states which have concluded with the Slovak Republic a Convention on the avoidance of double taxation according to specific Convention conditions.