Amendments to the Building Act Introduce Changes to Income Tax Regulations
A draft amendment to Act No. … has been submitted to the National Council of the Slovak Republic. 25/2025 Z. z. The Building Act, which introduces a number of changes that will also be reflected in the Income Tax Act (the “Amendment”). The proposed effective date of the Amendment is set for 1 January 2027.
The Relationship Between the Building Act and Income Tax
One of the most significant changes introduced by the proposed Amendment is the strengthening of the link between the Building Act and the tax treatment of assets. The Amendment refines and partially revises the definitions of individual types of structures and buildings, while the Income Tax Act will directly refer to these definitions.
Consequently, as of 1 January 2027 tax depreciation of assets will be based on the classification of structures under the Building Act. In practice, this may result in certain assets being reclassified into different depreciation groups, thereby changing the depreciation period and/or the method of depreciation applicable to such assets.
At the same time, any tax depreciation already claimed will not be adjusted retrospectively.
Introduction of a Tax Regime for Information Structures
The Amendment also introduces a specific tax regime for so-called information structures (e.g. billboards, advertising installations and advertising displays).
Under the Amendment, an information structure that is classified as a structure under the Building Act (i.e. one that is permanently attached to the ground) will, for income tax purposes, be treated as a minor structure and classified in Depreciation Group 4.
The purpose of this amendment is to eliminate the existing uncertainties regarding the classification of these assets and to ensure a consistent approach to their depreciation.
Clarification of the Definition of Technical Improvement of Assets in Relation to Repairs
The Amendment also clarifies the definition of expenditures incurred for modifications to completed structures and construction alterations from the perspective of their classification as technical improvements.
Technical improvements will include such modifications and construction alterations that result in a change to the nature or characteristics of the asset. Conversely, expenditures on construction alterations that are treated as repair and maintenance costs of tangible assets under accounting regulations will not be regarded as technical improvements.
Conclusion
The proposed Amendment brings, among other things, greater alignment between tax and construction law, increased legal certainty in the classification of assets, and a clarification of the rules governing their depreciation. Preparing for these changes will be particularly important for entities that own or acquire buildings and carry out construction modifications, as their impact may be directly reflected in tax-deductible expenses as early as the 2027 tax period.
