Combating “False Self-Employment” May Become One of the Main Tasks for Slovak Authorities in 2026

06.01.2026

In 2026, the Slovak authorities intend to significantly tighten the fight against the Schwarz system – fictitious entrepreneurship and so-called “false self-employment”, where individuals effectively work as employees but are formally registered as self-employed.

This issue has become one of the key measures in the package to combat tax evasion, which the government is discussing as part of the next state finance consolidation package. As stated by the President of the Slovak Financial Administration, Jozef Kisha, the Schwarz system remains one of the most common ways to circumvent labour laws and taxes.

According to Kisha, it primarily concerns situations where a person works for a single client, follows their schedule, and uses their equipment, but is registered as an individual entrepreneur. From 2026, the authorities plan to strengthen both control and sanctions for such schemes.

Among the proposals are the creation of a public register of violators, exclusion of such individuals and companies from participating in state tenders, and the establishment of a channel for anonymous reports of abuses. These measures are expected to make the Schwarz system less attractive for both employers and the self-employed, according to the government.

Additional Taxes

Another discussed step is the introduction of a minimum tax for the self-employed. According to the Financial Administration, up to 65% of Slovak individual entrepreneurs pay less than 1,000 euros in tax per year, often regardless of their assets and actual standard of living.

For them, the authorities are considering setting a minimum tax burden, particularly for those who declare zero or symbolic income for years. The Austrian model, where tax obligations are related to the average salary in a specific sector, is cited as a reference.

According to Kisha, in certain sectors that have shown minimal tax burden for years — such as services, gastronomy, or car services — a fixed minimum tax amount may be introduced even with formally zero profit. Even a minimum tax of 1,000 euros for about 200,000 self-employed could significantly increase budget revenues, notes the head of the Financial Administration.

Additional pressure on the self-employed will also come from already approved consolidation measures. It should be noted that from the beginning of 2026, they will face an increase in mandatory social and medical contributions.

What is the Schwarz System

The Schwarz system (švarc-systém) is a form of fictitious self-employment, where workers are formally registered as self-employed (živnostníci) but actually continue to work as regular employees. Its name comes from the entrepreneur Schwarz, who was one of the first to apply this scheme in Czechoslovakia in the early 1990s.

The model quickly spread because it allowed employers to avoid high social and medical contributions, while workers received a higher net income and the opportunity to remain outside formal employment relationships.

According to estimates by the Labour Inspectorate and trade unions, elements of the Schwarz system affect tens of thousands of workers, primarily in construction, IT, logistics, gastronomy, and services. In certain years, 10–15% of inspected companies violated the ban on using fictitious self-employment. The Financial Administration also points out that the self-employed pay on average two to three times less in taxes and contributions than employees with comparable income levels, making this model particularly attractive for businesses.

The state first systematically addressed the problem more than ten years ago. In 2012–2013, the Labour Code introduced the definition of “dependent work”, which directly prohibits its performance through self-employment. In subsequent years, the authorities increased Labour Inspectorate checks and raised fines for illegal employment. After the pandemic, the issue of combating fictitious self-employment took a back seat. The state deliberately eased control to support employment and small businesses during the crisis.

The renewed focus on the issue is primarily due to the worsening state of public finances. According to the European Commission, in 2022, Slovakia’s total tax arrears approached 3 billion euros. Against this backdrop, the authorities increasingly view the fight against the Schwarz system as one of the tools for budget consolidation.