Tax Residency Criteria in Slovakia
In Slovakia, the criteria for determining tax residency are outlined in the Income Tax Act. According to the Act, an individual is considered a tax resident if they meet any of the following conditions:
- They have a permanent residence in Slovakia.
- They are present in Slovakia for more than 183 days in a calendar year.
- They have their center of vital interests in Slovakia.
The center of vital interests is determined by considering factors such as the individual's family, social, and economic ties to Slovakia.
For entities, tax residency is determined based on their place of incorporation or management and control. An entity is considered a tax resident if it is incorporated in Slovakia or if its management and control is exercised in Slovakia.
Impact of International Tax Treaties
Slovakia has entered into numerous tax treaties with other countries to prevent double taxation and promote cross-border trade and investment. These treaties may modify or provide exceptions to the standard criteria for tax residency as defined in domestic law.
For example, under the Slovakia-Austria tax treaty, an individual is considered a resident of Slovakia if they have a permanent home in Slovakia or if their center of vital interests is in Slovakia. However, if an individual is considered a resident of both Slovakia and Austria under their respective domestic laws, the treaty provides a tie-breaker rule based on the individual's habitual abode.
Another example is the Slovakia-Germany tax treaty, which provides that an individual is considered a resident of Slovakia if they have a permanent home in Slovakia or if their center of vital interests is in Slovakia. However, the treaty also provides an exception for individuals who are employed in Germany and who have their center of vital interests in Germany.
These treaty-specific modifications aim to provide clarity and prevent double taxation by establishing clear rules for determining tax residency in cases involving cross-border activities. They reflect the mutual agreement between Slovakia and the other country to facilitate tax compliance and enhance economic cooperation.
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