The physical stay of many Ukrainian citizens in Slovakia is currently exceeding 183 days. If they perform employment activities for their Ukrainian employer in the territory of Slovakia, this brings certain income tax implications.
Ukrainian citizens with approved temporary protection status staying in Slovakia for more than 183 days, while performing employment activities for their Ukrainian employer remotely, need to consider their Slovak income tax obligations.
No specific statement of the Financial Administration of the Slovak Republic or Financial Directorate of the Slovak Republic has been issued yet. Neither any specific legislation simplifying the situation of these persons in Slovakia has been adopted. As a result, the persons need to proceed in line with the general provisions of tax legislation.
The Slovak Income Tax Act provides for a Slovak tax resident being a person who has permanent residency, residence, or habitual abode in Slovakia (183 days spent in Slovakia in 2022). As these persons may (from the beginning of the war conflict until now) exceed 183 days in Slovakia, their ultimate tax residency needs to be considered in line with the Double Tax Treaty concluded between Ukraine and Slovakia. We understand that if there was no war conflict in Ukraine, these persons would not enter Slovakia, they would not stay in the territory of Slovakia and their ties would in majority of cases lead to Ukraine.
In most cases, the move of tax residency status to Slovakia would not be in place for temporary protection holders. This is, however, very general conclusion and situation of each individual should be considered individually with due care, as even minimum change in their personal situation (e.g. loss of permanent home in Ukraine) might result into Slovak tax residency.
Even Slovak tax non-residents might have obligation to tax their income in Slovakia. For Slovak tax non-residents, income for employment activity performed in the territory of Slovakia (assuming that the income is paid by entity with its seat in Ukraine, whereas the entity does not have permanent establishment in Slovakia) is not taxable in Slovakia, unless this activity exceeds 183 days.
Nowadays, the criterion of 183 days was reached by many employees of Ukrainian entities working remotely in Slovakia. This may lead to tax implication not only for the individuals – employees, but also for their Ukrainian employers. Tax obligations need to be fulfilled on monthly basis, not only in annual personal income tax return filings. Therefore, we strongly recommend setting the monthly tax compliance of these persons in Slovakia properly.
Should you have any questions concerning the determination of tax residency status or concerning taxation of income of Ukrainian citizens in Slovakia, please do not hesitate to reach out to Global Mobility Services team at KPMG in Slovakia.
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