On September 21, 2016, the Government of the Slovak Republic approved an updated draft of the amendment to the Income Tax Act. Under the draft amendment, it is proposed that the lump-sum expenses of self-employed natural persons should increase from the current 40% to 60% and the maximum cap of lump-sum expenses should increase from EUR 5,040 to EUR 20,000.

The proposed changes also affect taxation of income from profits (dividends). In particular, it is planned that dividends received by natural persons originating from foreign sources will be taxed at a tax rate of 7% and the income of companies and self-employed individuals originating from tax payers from a “non-contracting country” (i.e., a country with which the Slovak Republic has not concluded a double taxation avoidance treaty or an agreement on exchange of information for tax purposes) will be taxed at a tax rate of 35%.

The updated draft of the amendment does not include the originally planned retroactive taxation of dividends unpaid in the period from 2004 to 2016. The new rules will be applicable only to dividends for future periods. Finally, the draft amendment also includes a decrease of the corporate income tax rate from 2017 from 22% to 21%.