Taxes
12 November 2018

Overview of the amendments of the Social Insurance Act

One of the most significant changes of the amendment is the introduction of prepayments for social insurance and the annual reconciliation of these prepayments. The aim of the amendment is to avoid the social insurance optimization.

Martina Čižmariková

The amendment of the Slovak Social Insurance Act has been approved on 23 October 2018. Currently, the amendment is on its way to be published in the Collection of Law of the Slovak Republic.

One of the most significant change of the amendment is the introduction of prepayments for social insurance and the annual reconciliation of these prepayments. The aim of the amendment is to avoid the social insurance optimization.

The social insurance of the employee and employer is changed as follows:

The prepayments for social insurance would cover:

  • Sickness insurance

  • Old-age insurance

  • Disability insurance

  • Unemployment insurance and

  • Insurance for reserve solidarity fund.

The Guarantee fund insurance and Accident insurance will not be settled through prepayments and, thus, will not be subject to annual reconciliation.

Thanks to introduction of the social insurance prepayments, there are also amendments of the provisions covering the assessment base for the employee and employer. Maximum monthly assessment base for the employee and the employer is cancelled. Only the maximum annual assessment base will be applicable in the amount of 7-times the average monthly wage in Slovakia reached two years before the current calendar year. For the employer, there continues to be no maximum assessment base for the Accident insurance.

As there is no maximum monthly assessment base anymore, the employee’s and employer’s social insurance prepayment should be paid monthly from the total amount of the assessment base. If there is a month in which the total amount of the monthly assessment bases from the beginning of the calendar year reaches the amount of the annual assessment base, the social insurance prepayments are not payable from the next month until the end of the calendar year. Maximum annual assessment base should be proportionally decreased in the case the insurance does not last for the entire calendar year (e.g. in the case of termination of the employment relationship before the end of the calendar year).

The Social insurance institution performs the annual social insurance reconciliation by 30 September, or by 31 October in the case the employee has extended deadline for filing his Slovak tax return.

The social insurance underpayment resulting from the annual reconciliation would be due within 45 days from the date when the decision of the annual reconciliation result becomes effective. The social insurance overpayment would be subject to tax withholdings applied by the Social insurance institution at the date of refund. If the amount of the underpayment or overpayment does not reach EUR 5, it would not be due/payable.

The annual social insurance reconciliation is performed by the relevant Social insurance institution branch.

The provisions introducing the social insurance prepayments and the annual reconciliation of the social insurance prepayments would be effective as of 1 January 2022. The Social insurance institution would perform the annual social insurance first in 2023 for the calendar year 2022.

Furthermore, the amendment introduces so called Insurance Deductible Item. Students working based on the Agreement on temporary job of student and pensioners working based on the Agreement on performance of work or Agreement on work activities (further only “agreement”) were exempted from social insurance from one agreement up to income amounting to EUR 200 per month. As per the amendment, their social insurance will be applicable from the start until the termination of the agreement, but at the same time, they would be eligible to Social Insurance Deductible Item. In other words, their assessment base from one agreement will be decreased up to EUR 200 per month.

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