Real Estate Information
Slovakia has an attractive real estate market. With its advantageous position at the heart of Europe, it boasts a diverse landscape, a highly developed economy, and a rich history that one can witness in practically any town. Bratislava is the leading city and dominant center, and has successfully transformed itself into a vibrant European metropolis. It is full of interesting properties that, for now, are still less expensive than in most western cities, and therefore have a potential for growth.
If you decide to buy or rent a residential or commercial property in Slovakia, you will need reliable, up-to-date information in order to make the right decision. We will be happy to help you orient yourselves around this rapidly changing and developing market. Our team of experienced professionals knows everything that is happening in the world of real estate. We complement our know-how with our own regularly conducted research, and can assess current trends as well as anticipate future ones.
What You Need to Know About the Slovak Real Estate Market:
All property owners in Slovakia are required to pay a yearly property tax. The law differentiates between a tax on plots, buildings, apartments, and commercial space in residential buildings. The tax percentage is based on the type, total area, and location of the property. The municipality under which the property falls administers the property tax. The city of Bratislava (not its individual city districts) administers the property tax. Owners must pay the tax between the 1st of January of the tax period that is after the tax period during which the taxpayer became an owner, manager, tenant, or user of a property that is subject to the tax, and December 31st of the tax period in which the taxpayer is no longer an owner, manager, tenant, or other user of the property. When the taxpayer becomes an owner, manager, tenant, or user of the property by January 1st of the annual tax period, the tax must be paid starting on this day. For example, if you become the owner of a property on 21. 12. 2018, you must file your property taxes by 31. 1. 2019. However, if you become the owner of a property on January 2nd, 2019, you can file your taxes by 31. 1. 2020. Unless there are any changes, you are not required to pay this tax in the following years.
Property Transfer Tax
Slovakia does not have a property transfer tax.
When a taxpayer sells a property (e.g. a house, apartment, or plot), or part of a property, based on a purchase agreement, for tax purposes this income is considered a property ownership transfer income. To determine whether income from the sale of a property needs to be taxed or is exempt from being taxed, one needs to consult the valid legal income tax regulations. The income tax law in regulation § 9 of the Income Tax Act defines the conditions that must be fulfilled in order to be exempt. The following income is exempt from the tax:
- from the sale of a property (not registered as a commercial property) after 5 years have passed since the day it was acquired,
- from the sale of a property (not registered as a commercial property) acquired through inheritance (gradual inheritance) directly or by one of the spouses, after 5 years have passed since the day it was verifiably acquired or co-acquired by a testator (or testators),
- from the sale of a property registered as commercial property after 5 years have passed since it was removed from the commercial property register,
- from the sale of a property issued to an authorized person according to special regulations (i.e. legally restituted, e.g. according to law no. 119/1990 Coll. on Judicial Rehabilitation, as subsequently amended, law no. 403/1990 Coll. on the Moderation of Certain Property Injustices, as subsequently amended, law no. 319/1991 Coll. on the Mitigation of Certain Property and Other Injustices, law no. 87/1991 Coll. on Extrajudicial Rehabilitation, as subsequently amended, law no. 42/1992 Coll. on Adjustment of Ownership Relations Concerning Agricultural Property, as subsequently amended, and others).
If the income from the sale of a property is exempt from being taxed, the taxpayer does not need to file this income in his or her tax return.
VAT When Selling Real Estate
According to the VAT Act, real estate is any plot and/or building, or a part thereof (e.g. apartments, commercial space), that is connected to land and has solid foundations; the plots can be building plots, agricultural land, or forest land. VAT taxpayers from the sale of property are VAT payers. If a citizen sells his or her private property as a private person, the sale is not subject to the VAT Act. In terms of a sale, the income obtained from the sale, the number of properties sold, and in which period are all irrelevant. Such sales are considered private property transactions and, as such, a citizen does not have the status of a taxable person.
The VAT Act applies to citizens when they act as taxable persons when selling a property. In accordance with § 3 parag. 1 of the VAT Act, a taxable person is any person who independently carries out any economic activity under paragraph 2 irrespective of the purpose or results of that activity. In accordance with § 3 parag. 2 of the VAT Act, economic activity (hereinafter “business”) is understood as any activity that generates income. This includes the activities of manufacturers, entrepreneurs, and service providers, including mining, construction, and agricultural activities, any activities undertaken as part of a freelance job in accordance with special regulations, creative activity, and sports. The use of tangible and intangible assets for the purpose of obtaining income from such property is also considered as business; if the property is owned jointly by both spouses, its use for the purpose of obtaining income from a business is deemed to be the same for each spouse, unless the spouses agree otherwise.
When selling his or her private property, a citizen acts as a taxable person, and if, prior to the sale, he or she takes active steps to sell the property by using similar means as those used by business entities (manufacturers, entrepreneurs, companies that provide services). Such active steps may consist, inter alia, of the introduction of underground utilities networks on these properties, and the use of verified marketing services, i.e. activities that are not normally part of the usual management of private property. These matters are governed by judgment ESD C-180/10.
When selling his or her property, a citizen has the status of a taxable person when it comes to the repeated purchase and sale of real estate in order to obtain income of a consistent nature.