Slovakian Parliament Approves the GMT Amendment Law

On September 11, 2024, the government of Slovakia approved a draft bill on amendments to the law to reflect various aspects of the OECD Administrative Guidance. This was approved by Parliament on November 28, 2024.

Slovakia has made use of the derogation under Article 50(1) of the EU Minimum Tax Directive, which allows EU member states which have up to 12 in-scope UPEs in their jurisdiction to postpone the implementation of the income inclusion rule (IIR) and the under-taxed profits rule (UTPR) until up to December 31, 2029.

As such, the Slovakian GMT Law does not contain provisions for an IIR or UTPR, but does implement a domestic minimum tax (intended to be a Qualified Domestic Minimum Top-Up Tax) for accounting periods beginning on or after December 31, 2023.

Whilst the GMT Law is based on relevant provisions in the GloBE rules/EU Minimum Tax Directive, as the IIR and UTPR are not being implemented, numerous aspects are not included because they either relate to the IIR/UTPR or they are not relevant to Slovakia’s domestic tax regime. A number of aspects are, however, included in the  2024 Draft Law.

For instance, the Law does not include relevant GloBE provisions for:

-Partially-owned parent entities (included in the 2024 Draft Law)

-Intermediate parent entities (included in the 2024 Draft Law)

-IIR/UTPR

-Refundable tax credits (included in the 2024 Draft Law)

-Ultimate parent entities subject to a deductible dividend regime (included in the 2024 Draft Law)

-The stock-based compensation election (included in the 2024 Draft Law)

-The consolidation election (included in the 2024 Draft Law)

-The GloBE loss election (included in the 2024 Draft Law)

The 2024 Draft Law also includes amendments to the Transitional CbCR Safe Harbour for Purchase Accounting Adjustments (consistent reporting condition, goodwill impairment adjustment) and hybrid arbitrage arrangements, as provided in the December 2023 OECD Administrative Guidance.

Article 1(42) of the Draft Law also includes the NMCE Simplified Calculations Safe Harbour.