Reminder: Slovakia Implemented VAT Increase and New Tax Rates in 2025
As of January 1, 2025, Slovakia has enacted significant changes to its Value Added Tax (VAT) system, raising the standard VAT rate from 20% to 23%. This measure is part of broader fiscal reforms aimed at reducing the country’s budget deficit from 6% in 2024 to 4.7% by 2026.
Key VAT Adjustments
In addition to the standard rate increase, Slovakia has introduced two reduced VAT rates: a new 19% rate replacing the previous 10% rate and an unchanged super-reduced rate of 5%. Several goods and services previously subject to lower tax rates have now shifted to the standard rate. The revised VAT structure includes:
- Standard Rate (23%): Applies to most goods and services, including alcoholic beverages and certain catering services.
- Reduced Rate (19%): Covers non-basic foodstuffs, domestic electricity, and restaurant services involving low-alcohol beverages.
- Super-Reduced Rate (5%): Applies to essential goods and services such as basic food items, medicines, medical devices, books, newspapers, magazines, accommodation, and rental housing support.
Economic and Regional Context
Slovakia’s VAT increase aligns with efforts to stabilize public finances following economic strains caused by the COVID-19 pandemic and geopolitical tensions in Europe. The country’s previous VAT rate of 20% was below the EU average of 21.8% and lower than neighboring nations, including Hungary (27%), Poland (23%), and Czechia (21%).
Implications for Businesses and Consumers
The VAT changes are expected to impact businesses, particularly in sectors experiencing significant rate increases, such as catering and hospitality. Consumers may also face higher costs for certain goods and services. However, the retention of the 5% super-reduced rate for essential items aims to mitigate financial burdens on households.
For businesses operating in Slovakia, compliance with the new VAT structure is essential. Companies should review their pricing strategies, update financial systems, and ensure accurate tax calculations to align with the revised tax framework.
