Based on the daily monitoring of legislation, the Better Regulation Center have selected 10 most important changes that would increase costs of entrepreneurs from 2019.
1. Increasing the sum of the minimum wage from current EUR 480 to EUR 520
Whereas the current minimum wage is EUR 480, it will be increased by EUR 40 to EUR 520 in 2019. The hourly rate of the minimum wage, which has been increased by EUR 0.23, i.e. from the current sum of EUR 2.759 to EUR 2.989, is important too even from the aspect of the minimum wage for particular levels of work difficulty, when the rate is to be multiplied by a respective coefficient.
If an employee applies a deductible item for the health insurance and the tax allowance, the net wage will increase from the current sum of EUR 403.18 to EUR 430.35, i.e. the increase is EUR 27.17. The statutory minimum wage is also applicable for agreement workers; statutory representatives receiving minimum wages for their work in the companies as well as employers employing persons who have currently not received the minimum wage but the wage within the range from the current to the planned minimum wages (i.e. within the range from EUR 480 to EUR 520) should be careful too, since such wages will have to be revised too.
In accordance with the SME Test elaborated in cooperation with the Slovak Ministry of Labour, costs of SMEs relating to the increased minimum wage will be up to EUR 51.1 million.
2. The second phase of increasing extra pays for works of employees in the night and in the weekends
With regard of the increase of the minimum wage relating to extra pays for works in the night and in the weekends, costs of entrepreneurs from 1 May 2019 will be even higher than those caused by the changes from 1 May 2018.
Now they will pay 50 % of the minimum hourly rate for every hour of the night work for risky employees (categories 3 & 4) (this is the last year when they pay 30 % of the minimum hourly rate); as for the so-called general employees (whose work has to be performed in the night as well – i.e. food and automotive industries), 40 % of the minimum hourly rate will be paid (35 %, if the derogation clause is applied, and this is the last year when 30 % of the minimum hourly rate is paid).
Along with the wage earned, employees will be entitled to extra pays in the sum of at least 50 % of the minimum hourly rate for works performed on Saturdays (this is the last year when 25 % of the minimum hourly rate is paid) and at least 100 % of the minimum hourly rate for works performed on Sundays (this is the last year when 50 % of the minimum hourly rate is paid).
The extra pay in the sum of 100 % of the employee’s average hourly rate for works performed on public holidays as applicable from 1 May 2018 will not be changed.
3. Special levy for retail chains in the sum of 2,5 % of net sales
Finally, a special levy in the sum of 2.5 % of net sales for the period of three consecutive calendar months will be paid by the retail chain:
- in which at least 25 % of the net sales are produced by selling food to final consumers,
- the operations of which are located in at least 15 % of all districts and the operations have similar design, common communication, and common marketing activities.
The exemption from paying the levy is applicable to SMEs in general as well as to company shops provided that the producer and the seller are the same person and to retail shops selling the only food line-up. Retail chains are obliged to submit written notifications regarding the sum of the levy to the tax office no later than by the end of the month following the period defined and to pay the levy by the same deadline.
If an entrepreneur fails to meet the duty, he/she may be liable to a penalty in the sum of 0.2 % of the sum of the last known operational and financial revenues for the previous accounting period (if the notification is not submitted) or 10 % of the unpaid sum, if the sum defined is not paid.
4. Mandatory employer´s contribution to the employee´s holidays in the territory of Slovakia
A new mandatory extra pay provided by employers to employees in the form of a contribution to holidays has been established. It is applicable to employers with more than 49 employees (i.e. micro and small enterprises are exempted from the obligation) that are obliged to contribute to holidays of their employees in the territory of Slovakia in the sum of 55 % of the costs for such holidays, but not more than EUR 275 per calendar year.
The sum decided by the employer as the contribution for holidays includes neither the income tax nor mandatory payments both on the side of employer and employee. The employees employed by the employers longer than 24 months without any interruption will be allowed to ask for the contribution for holidays.
Employees will document eligible costs to their employers no later than by 30 days from the end of the holidays via submitting accounting documents and employers will provide their employees the contribution for holidays by the nearest payment date.
5. Extending the direct electronic connection between cash registers and financial administration
A mandatory on-line connection between cash registers and the central database of the financial administration has been established. In practice, it means that the financial administration will be informed of every purchase/transaction immediately, since every receipt issued will be registered in the eKasa central storage place.
The entrepreneurs that have currently used electronic cash registers for recording their sales might start to use eKasa from 1 April 2019, but the entrepreneurs that are obliged to record their sales on 1 April 2019 for the first time shall use eKasa from this date. And from 1 July 2019, eKasa will be mandatory for any and all entrepreneurs recording their sales by means of cash registers, since they accept cash at the place of sale and, at the same time, sell their goods or provide specific services.
So far, entrepreneurs were allowed to choose whether to connect to the systems of the financial administration (by means of virtual cash registers), but from now on, connection to the financial administration will be mandatory. Electronic cash registers will turn onto on-line cash registers (OCR or eKasa). However, entrepreneurs will have more options, since, along with the conventional ECRs, they will also be able to use tables, mobile phones, computers or VCRs. Nevertheless, they will have to modify their current cash registers or even to buy new ones.
As estimated by the Slovak Ministry of Finance, circa 80% cash registers will need modifications only with unit costs of circa EUR 80; the remaining 20% will have to be replace by new ones with the costs according to the Slovak Ministry of Finance of circa EUR 280 a piece. As calculated by the Ministry of Finance, entrepreneurs in Slovakia will thus pay for the implementation of eKasa circa EUR 28 million in total.
6. Taxation of virtual currencies
Taxation of virtual currencies or the so-called cryptocurrencies became effective on 1 October 2018. The income from sold virtual currencies is considered subject to taxation, which is not exempted from tax, i.e. it is considered a taxable income. Exchange of virtual currency for assets, exchange of virtual currency for another virtual currency, exchange of virtual currency for services provided or paid transfer of virtual currency are considered sales of virtual currency. New provisions of Income Tax Act will be applied even at filing tax returns after 30 September 2018.
7. Obligation of reporting every job vacancy
From 2019, employers shall report job vacancies and their characteristics to the Labour Office, in the territorial scope of which such job vacancies are included. Job vacancies can be reported personally to an employee – representative for job vacancies, via phone or e-mail or the Labour Office’s website by filling up the document “Report of Vacant Job Position”. Employers can also report job vacancies electronically via the portals istp.sk or profesia.sk or kariera.sk. Once published on the portals, the Labour Office will understand the obligation of reporting job vacancies as met. If an employer fails to meet the obligation, such employer can be penalized in the sum of up to EUR 300.
If a vacant job position reported by an employer is also appropriate for citizens of third countries, the same conditions will be applied with one exemption – employers reporting job vacancies electronically can use the istp.sk portal only.
8. Stricter conditions for employing foreigners
Starting with the next year, employers applying for permits to employ or for approving confirmations of a possibility to occupy a vacant job position shall meet two cumulative conditions – the ban of illegal employment must not be breached in the period of five years from filing the application (this period has been extended from original two years to five years) and job vacancies and their characteristics shall be reported to the Labour Office, in the territorial scope of which such job vacancies are included (at least 20 days prior to filing the application).
9. Annual change of levies for self-employed persons
The minimum basis of assessment to be used by self-employed persons as a basis for paying social insurance is defined as 50% of the average wage in Slovakia two years ago. Since the average wage in Slovakia in 2017 as calculated by the Slovak Statistical Office reached EUR 954, the minimum monthly basis of assessment for paying social insurance of self-employed persons for the period from 1 January 2019 to 31 December 2019 will increase from EUR 456 to EUR 477.
The maximum basis of assessment is defined as seven times the monthly average wage and will be increased from EUR 6,284 to EUR 6,678 for the period from 1 January 2019 to 31 December 2019. The trade licence holders who were informed of their obligation to pay minimum or maximum sum of levies shall start to pay the new sum of monthly levies on 1 January 2019.
If a trade licence holder paid minimum levies in the sum of EUR 151.16 from 1 July 2018, from now on he/she should pay the levies in the minimum sum of EUR 158.11, which represented the increase by EUR 6.95. If a trade licence holder paid maximum levies in the sum of EUR 2,116.29 from 1 July 2018, from 1 January 2019 he/she should pay the levies in the maximum sum of EUR 2,213.75, which represented the increase by EUR 97.46.
10. New retroactive tax from non-life insurance
Not only that the 8 % levy from the received non-life insurance premiums, which has been in force for two years, is replaced by 8 % tax, but it is also applied to the insurance policies entered into before 1 January 2017, when the original levy became effective, i.e. to all non-life insurance contracts administered by insurance companies (we are talking about millions of contracts that were previously calculated without tax).
It is a quarterly payable tax and new administrative costs (changed information systems, recalculation of premium sums, revisions of insurance policies, keeping and storing records required for due tax specification) related thereto occur to the insurance companies.
Insurance companies shall pay the tax for the whole non-life insurance group excluding PZS, i.e. for private property and liability insurance (insurance of household, apartment, house), car insurance, travel insurance, but, for example, also for accident insurance being a type of non-life insurance unless it is an additional insurance to a life insurance.
At the first sight, the change is relating to insurance companies in particular, but other entities having bought/planning to buy an insurance product can be affected thereby too due to the price increase in response to the costs distribution. If you decide to get insured abroad for avoiding the risk of a higher price, the obligation of paying the 8 % insurance tax will be transferred onto you as the policy holder, i.e. the client. Such situation shall be reported to the tax office and you will have to fill up the respective form and to pay the tax.