Financial Crime World

Slovakia Enhances Financial Inclusion and Compliance

In a bid to strengthen its financial system and boost economic growth, Slovakia has introduced several key amendments to its Commercial Code, International Financial Reporting Standards (IFRS) adoption, and tax-related regulations. These changes are expected to enhance financial inclusion and compliance in the country.

Strengthening Mergers, Fusions, and Demergers

Slovakia’s Commercial Code has been amended to strengthen the legal and administrative requirements for carrying out mergers, fusions, and demergers of commercial companies. The key changes include:

  • Draft Contract Submission: A draft contract for a merger or demerger project must be submitted to the tax authorities at least 60 days before the date on which these transactions are approved by company bodies.
  • Fair Market Values: In-kind contributions, mergers, fusions, and demergers of commercial companies can only be performed for tax purposes using fair market values from 2018.

IFRS Adoption

Slovakia has adopted most of the principles of IFRS in its accounting law. The key changes include:

  • Financial Institutions: Financial institutions such as banks and insurance companies must prepare their statutory financial statements according to IFRS.
  • Company Thresholds: A company that meets two or more of the following conditions in two consecutive accounting periods must also prepare its statutory financial statements according to IFRS:
    • Total value of assets exceeding EUR 170 million
    • Net turnover exceeding EUR 170 million
    • Average number of employees exceeding 2,000

Tax Information Exchange Agreements (TIEAs)

Slovakia has entered into TIEAs with several countries, including:

  • Albania
  • Andorra
  • Antigua and Barbuda

These agreements enable the exchange of tax information between signatory countries to prevent tax evasion.

FATCA and CRIS

The Slovak Republic implemented FATCA into its legislation in 2016, with a first reporting deadline of June 30, 2016. The Common Reporting Standard (CRS) was also implemented into Slovak legislation in 2016, with a first reporting deadline to the Slovak tax authorities on June 30, 2017.

EU Mandatory Disclosure Rules (DAC6)

Slovakia has recently implemented provisions of the EU Directive 2011/16/EU on administrative cooperation in the field of taxation (DAC6) into its local law. This imposes a reporting obligation on intermediaries or clients (in case intermediaries are subject to professional privilege) in respect to cross-border reportable arrangements.

The amendments and regulations introduced by Slovakia are expected to enhance financial inclusion and compliance in the country, while also boosting economic growth and transparency.