Bad transaction tax law and attempts to “correct” it by interpretation – Peter Varga for Denník N

Peter Varga gave an interview to Denník N on an issue that has been causing considerable debate among the professional public in recent months, namely the Financial Transaction Tax Act (FTT). This law, effective from 1 January 2025, not only introduces a new tax, but also brings with it significant legal uncertainty. This stems in particular from the unclear interpretation of the term ‘foreign person carrying on business in the domestic territory’.

As Peter Varga pointed out, the law does not further define this concept, which creates room for inconsistent interpretation and interventions of the financial administration, which, according to him, exceed the framework of constitutionality. However, in our opinion, the Ministry of Finance’s attempt to clarify the rules in the form of guidelines exceeds the competence of the executive and goes beyond the scope of the law itself – and this is unacceptable in a state governed by the rule of law. If someone is to be a taxpayer, it must be solely on the basis of the law, not the Ministry’s internal guidelines.

We have been warning about the risks associated with the adoption of the ZDFT ever since the wording of the law was known. Moreover, the vagueness of the legislation and unclear guidelines significantly complicate the situation, especially for foreign entities that are unsure whether, when and on what transactions they are liable for tax. In its current setting, the law allows for an absurd interpretation according to which a foreign entity could be obliged to tax also transactions carried out outside Slovakia.

As part of our initiative, we are actively advocating for a restrictive interpretation in favour of taxpayers. We communicate the issue not only through the media, but also through direct discussion with the Ministry of Finance and the Financial Administration in order to support the adoption of legislative amendments that will strengthen legal certainty and protection of the business environment. The full interview can be found at: https://e.dennikn.sk/4599885/zly-zakon-o-transakcnej-dani-sa-financna-sprava-pokusila-zmenit-vykladom/

If you are interested in this topic, please do not hesitate to contact us:

• Peter Varga, e-mail: peter.varga@highgate.sk

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