Financial Directorate prepared auxiliary document for proving the status of the beneficial owner

The Slovak Income Tax Act (SITA) contains definition of the “beneficial owner” as of 1 January 2018. Also, it contains process in case the taxpayer is not able to prove who the beneficial owner is. In such situation it can lead to higher taxation at the end. However, the SITA, or any other legal act, does not stipulate the way, form and even the extent to which this “status” should be proven in practice. This has changed since the end of August 2023 and the Financial Directorate of the Slovak Republic has issued (auxiliary) information on the method of proving the status of the beneficial owner of income.

In this document you can find:

• The impact of the significance of risks and the extent of risk level on the individual transaction
• Indicators of risk level
• Categorization of transaction according to the risk level into three categories (containing brief description and examples)
• The way, form, extent and periodicity of proving the status of the beneficial owner for individual categories
• Draft of affidavit and draft of questionnaire applicable for certain categories of transactions
• Examples of other documents proving the status of the beneficial owner

Although this information is issued in the form of recommendation and as such is not legally binding, it is definitely a significant move forward in the process of proving the beneficial owner and application of individual double tax treaties. The complete version of document is available in the Slovak language on the website of the Financial Directorate.

Should you be interested in this topic, we are glad to discuss your situation.