The year 2025 brings several important changes in tax and accounting regulations.
These updates will primarily affect small and medium-sized businesses – sole traders (SZČO), limited liability companies (s.r.o.), and other firms.
Below you’ll find an overview of the key legislative changes effective from 2025, explained clearly and with practical examples.
Changes in Income Tax for Companies and Sole Traders
Consolidation Package 2025 introduces the following:
- Reduced tax rate for small companies (s.r.o.): From 2025, s.r.o. companies with taxable revenue under €100,000 per year qualify for a reduced corporate income tax rate of 10% (down from 15%). For example, a company with €95,000 in revenue and €60,000 taxable profit will pay €6,000 in tax instead of €12,600 (based on the former 21% rate). However, exceeding the €100,000 threshold even by €1 results in full taxation at the higher rate.
- Higher tax rate for large companies: Businesses with taxable revenue above €5 million annually will now pay 24% corporate tax. The standard 21% rate continues to apply to companies with revenue between €100,000 and €5 million.
- Sole traders (SZČO): The 15% income tax rate remains, but the income threshold has been increased from ~€60,000 to €100,000. Below this, the full base is taxed at 15%. Exceeding this threshold subjects the entire base to standard rates (19% or 25%).
Note: The 10% corporate tax rate does not apply to sole traders – it is for legal entities (s.r.o.) only. The intention is to promote incorporation and support small companies.
Changes to VAT (Value Added Tax)
- Standard VAT rate increased to 23% (from 20%).
- New reduced rates introduced:
- 5% VAT: Basic food, medicine, books, printed media, restaurant services, accommodation, and sports events.
- 19% VAT: Other food products and electricity.
- 23% VAT: All other goods/services.
- Revised VAT registration thresholds:
- Standard threshold remains €50,000 over 12 months.
- If exceeded late in the year, VAT registration applies from January 1 of the next year.
- If revenue exceeds €62,500 during the calendar year, immediate VAT registration is required.
- Lower limit for simplified invoices:
- Receipts (e.g. from cash registers) are only valid as invoices up to €400 including VAT. Previously: €1,000 cash / €1,600 card.
- Additional rules for VAT payers:
- Newly registered payers can deduct VAT on purchases made before registration only in their first tax period.
- Cross-border EU purchases allow VAT deduction even without a formal invoice, provided valid documentation exists (e.g. delivery note).
New Taxes and Levies in 2025
- Transaction Tax (Effective April 1, 2025):
- 0.4% on outgoing bank transfers (max €40).
- 0.8% on cash withdrawals (no limit).
- Applies to business accounts only. Sole traders must open a separate business account by March 31, 2025.
- Sugary Drink Tax (Effective January 1, 2025):
- Applies to manufacturers and distributors.
- First domestic sale is taxed based on sugar content.
- Will increase wholesale prices, affecting end prices for retailers and restaurants.
- Other Measures:
- Crypto terminology update: “Virtual currency” is now “crypto-asset”; clearer definitions and tax rules.
- Child tax bonus restrictions: High-income earners may lose eligibility for child tax bonuses.
- Higher minimum contributions for SZČO: Increased to €344.27/month (€237.02 social, €107.25 health). Total minimum for 2025 is ~€4,131.
Digitalization and Upcoming E-invoicing
Though e-invoicing is not yet mandatory in 2025, businesses should begin preparing for full implementation by January 1, 2027, when all VAT-registered entities will be required to issue and report invoices electronically in real time.
- Monitor developments: The Ministry of Finance is testing the system throughout 2025.
- Go digital: Adopt accounting software capable of e-invoicing now.
- B2G e-invoicing: Already mandatory since 2023 for invoices to government entities.
Summary
2025 brings sweeping changes aimed at increasing tax fairness and supporting small businesses. Entrepreneurs should adjust their planning to reflect:
- VAT changes (affecting pricing)
- Financial transaction taxes (affecting cash flow)
- Strategic business structures (e.g., switching from sole trader to s.r.o. for the 10% tax rate)
Stay informed, plan ahead, and consult your accountant to make the most of the new legislative landscape.
