Slovakia has adopted the OECD’s Base Erosion and Profit Shifting (BEPS) Action 13, implementing Country-by-Country Reporting (CbCR) requirements to ensure greater tax transparency among multinational enterprises (MNEs). This framework obliges MNE groups to report on their global operations, profits, taxes paid, and other key financial data for each jurisdiction in which they operate. This guide aims to assist CFOs and financial executives of MNEs in Slovakia by outlining the key aspects of CbCR regulations, including reporting requirements, penalties for non-compliance, and necessary steps for compliance.

Applicability of CbCR in Slovakia

Criteria for Reporting:

• The CbCR obligations in Slovakia apply to multinational enterprise (MNE) groups with consolidated revenues of at least €750 million in the preceding fiscal year.
• The ultimate parent entity of the group, if a tax resident in Slovakia, is required to file the CbC report.
• If the ultimate parent is not a tax resident of Slovakia, a Slovak constituent entity of the group may be required to file a CbC report under certain conditions, such as:
  • The parent’s jurisdiction does not have CbCR requirements,
  • There is no exchange of information agreement between Slovakia and the parent’s jurisdiction, or
  • There is a systemic failure in exchanging CbC reports.

Relevant Legislation:

• CbCR requirements in Slovakia are part of the Act on International Assistance and Cooperation in Tax Matters and are aligned with the OECD BEPS Action 13 recommendations as well as the EU Directive 2016/881 on automatic exchange of information.

Reporting Requirements

Information to be Reported:

• MNE groups must report financial information for each tax jurisdiction in which they operate, including:
  • Total revenue (distinguishing between related-party and unrelated-party revenue),
  • Profit or loss before income tax,
  • Income tax paid and accrued,
  • Stated capital and accumulated earnings,
  • Number of employees,
  • Tangible assets (excluding cash and cash equivalents).
• Additionally, the report must include a list of all constituent entities within the group, with details on their tax residency and principal business activities.

Form and Submission:

• The CbC report must be prepared in the OECD-prescribed XML format, ensuring consistency and compatibility for international data exchange.
• The report is submitted electronically to the Financial Directorate of the Slovak Republic (Finančná správa Slovenskej republiky), which is the competent tax authority for CbCR in Slovakia.
  • More information on electronic submission can be found on the Slovak Financial Directorate website.

Filing Deadlines

• The CbC report must be filed within 12 months of the end of the fiscal year of the MNE group. For example, for fiscal years ending on 31 December 2023, the report must be submitted by 31 December 2024.
• Additionally, Slovak entities within an MNE group must notify the Slovak tax authorities of the identity of the reporting entity (whether it is the ultimate parent entity or a surrogate parent entity) by the last day of the fiscal year.

Penalties for Non-Compliance

Penalties:

• Slovakia imposes fines for non-compliance with CbCR obligations, including:
  • Failure to submit the CbC report or delays in filing can lead to fines ranging from €3,000 to €10,000.
  • Providing incomplete or inaccurate information in the CbC report may also result in penalties.
  • Failure to notify the authorities about the identity of the reporting entity can lead to further administrative fines.

Defences:

• MNEs may be exempt from penalties if they can demonstrate justifiable cause for non-compliance, such as administrative errors or exceptional circumstances. However, compliance with the submission deadlines and accuracy in reporting is crucial to avoid these fines.

Confidentiality and Use of Information

Data Protection:

• The CbC reports submitted to the Slovak Financial Directorate are used exclusively for tax risk assessment purposes and are treated with the highest level of confidentiality.
• Slovakia is a signatory to the Multilateral Competent Authority Agreement (MCAA), allowing for the automatic exchange of CbC reports between tax authorities under strict confidentiality and data protection provisions, in line with OECD guidelines.