Amendment to the Top-up Tax Act: Overview of the Most Important Changes

The Government of the Slovak Republic approved a draft amendment to Act No. 507/2023 Z. z. on the top-up tax, thereby responding to the latest OECD administrative guidance on the global minimum tax rules (the so-called Pillar Two). The aim of the amendment is to ensure compliance of Slovak legislation with the international framework and to implement changes arising from the new OECD guidance.

The most significant proposed changes include:

• Extension of the period for applying the transitional safe harbour based on a qualified country-by-country report (the so-called CbCR Safe Harbour) by one year. The exemption from the calculation of the top-up tax based on a qualified country-by-country report may thus be applied to accounting periods beginning from 31. December 2023 to 31. December 2027.

• Introduction of a new safe harbour for qualified tax incentives linked to economic substance. The aim of the proposed amendment is to ensure that tax incentives based on real economic activity carried out in the territory of the Slovak Republic are not neutralised by the global minimum tax rules. If the statutory conditions are met, their value will be taken into account when calculating the effective tax rate, which may lead to a reduction or elimination of the final top-up tax. Under Slovak conditions, this may primarily include the super-deduction of research and development expenses and the deduction of investment expenses (costs).

• Clarification of the rules in the event of the dissolution of a taxpayer without a legal successor. The amendment introduces a mechanism under which the obligation to file a tax return, fulfil notification obligations and pay the top-up tax is transferred to a designated group member. If such an entity is not designated, the other members of the group will be jointly and severally liable for fulfilling the obligations, or, where applicable, the ultimate parent entity of the group.

The draft amendment is currently in the legislative process, and its adoption will require approval by the National Council of the Slovak Republic. The individual changes are proposed to take effect from 30 December 2026, respectively, from 31 December 2026.