Parliament Abolishes Financial Transaction Tax for Self-Employed
02.10.2025
The National Council of Slovakia approved the abolition of the financial transaction tax for sole traders (živnostníci). The new rules will come into effect on 1 January 2026.
The initiative was led by the chairman of the Slovak National Party (SNS), Andrej Danko, whose position was supported by both the ruling coalition partners and some opposition MPs. An attempt to extend the benefit to companies with an annual turnover of up to 100,000 euros did not receive support.
The decision to abolish the tax will come into effect if the bill is signed by President Peter Pellegrini.
How does the tax work?
The financial transaction tax was introduced on 1 April 2025 as part of the government’s consolidation package and applied to a wide range of monetary operations, including cashless and cash payments. Main rules:
- a 0.4% commission for each bank transaction (maximum 40 euros);
- a 0.8% commission for cash withdrawals from an ATM or bank branch;
- a fixed payment of 2 euros when using a payment card at least once in a calendar year.
The main aim of introducing the tax was to increase budget revenues amid a growing deficit. However, business representatives and experts pointed out its negative impact on small enterprises and additional administrative costs.
Business Criticism
With the introduction of the financial transaction tax in April 2025, Slovak entrepreneurs faced a number of practical difficulties and contentious situations that, according to them, lawmakers initially did not consider.
One of the main problems was the emergence of double taxation. In the case of cashless payment for goods and services, the new tax is levied on the entire purchase amount, which already includes VAT and excises. This effectively leads to a situation where businesses pay a “tax on tax.”
Additional criticism was raised regarding the rules for refunds. Shops were obliged to pay the transaction tax even in the case of a refund to the customer. If the refund is made cashlessly, it also falls under the new tax.
Entrepreneurs also raised particular concerns about the differentiated approach to certain categories of taxpayers. For example, state schools were exempt from paying the tax, but private educational institutions were not. Church institutions received partial exemptions, but the church itself was obliged to pay the tax.
Businesses quickly found ways to minimise expenses. One of the most common solutions was the transition to cash payments, which are not yet taxed.
“Entrepreneurs increasingly use the so-called ‘chain principle’ — money received in cash is immediately used to pay suppliers and partners. This practice became widespread after the introduction of the tax,” said the president of the Association of Small and Medium Enterprises, Vladimir Sirotka.
However, this scheme has limitations: Slovakia has a cash transaction limit of 15,000 euros. The exception during the pandemic no longer applies, making the use of cash in large transactions difficult and risky.
According to experts, the new tax could increase annual business expenses by up to 2,400 euros.