German companies are the biggest foreign taxpayers in Slovakia.

18. Oct 2018 at 13:09  | Compiled by Spectator staff

German companies are the biggest foreign taxpayers in Slovakia. They paid more than €450 million in direct taxes to the state coffers in 2017, which accounted for 17 percent. Slovak companies with a 12 percent share followed while Czech companies were third with a 9 percent share. Austria ended fourth with an 8 percent share. This stems from an analysis of the 200 biggest companies in Slovakia, including the financial sector, elaborated by tax advisory company BMB Leitner for 2017.

The analysis shows an increase in payroll taxes over 2017, but also a significant growth of the burden of payroll taxes.

“While revenues of the 200 biggest companies decreased 5 percent compared with 2016, the income tax from the dependent activities of these companies increased by 6 percent,” said Renáta Bláhová, partner of BMB Leitner and the author of the study, when presenting the results of the analysis on October 17 at the Slovak-German Chamber of Commerce and Industry. “Payroll taxes went up by even 17 percent year to year.”

Bláhová especially ascribes this growth to night, weekend and holiday work surcharges. This burden will grow next year as the minimum wage, serving as the calculation base for some of them, will increase by €40 to €520 as of the beginning of 2019, as well as surcharges increasing within a second phase.

Bláhová sees such a steep increase in the payroll tax burden as a risk for the further development of the Slovak economy.

“It is of key importance for the sustainable development of Slovak economy that the income and payroll tax burden of the labour force in Slovakia start to decrease,” said Bláhová. “This pertains to low-income labour force but especially to the middle class, if it should continue to be the driving force of Slovak companies.”

Bláhová pointed out that Slovakia’s middle class is exposed to a higher burden of income and payroll taxes than in Austria, while it receives lower social services.

The analysis was done on the basis of the Ultimate Parent Company principle, i.e. the official registered office of the parent company was not taken into consideration but its headquarters. Based on this principle, German companies in Slovakia invested €7.4 billion euros according to Bundesbank data and employed 132,000 people by the end of 2016.