Trade vs. employment

Trade vs. employment Starting with Matović’s unrealized tax reform to the announced statements of the current leadership of the Ministry of Labour, Social Affairs and Family about the problem of “forced trades in Slovakia” and the fight against them, the topic of the so-called “shvarc system” and its impact on public finances is more and more frequently discussed in the public debate in Slovakia. “Slovakia has a high proportion of so-called bogus tradesmen on the labour market, as evidenced not only by data from Eurostat or the OECD, but also from the Social Insurance Institution. According to statistical data, the number of fictitious tradesmen in Slovakia has increased from 84 thousand to almost 110 thousand in the last ten years.” (press release of the Supreme Audit Office of the Slovak Republic, source: https://shorturl.at/rwEF3)– “In Slovakia, the number of self-employed tradesmen is growing by coercion. These are people who are forced by their employers to leave their employment and work as an external contractor after the labour law reform.” (source: https://shorturl.at/jkovQ)– “Minister goes after forced tradesmen, threatens fines. These measures will not be welcomed, warns Mihál.” (source: https://shorturl.at/btKN3) According to the Statistical Office of the Slovak Republic, there were 376,745 sole traders in Slovakia as of 31 December 2023 (source: https://shorturl.at/lsNPX). The above-quoted SAO press release also states that “According to the data of the Social Insurance Institution, the share of sole traders paying contributions from the minimum assessment base is growing every year. Since 2017, this share has increased from 72% to more than 81% in 2021 (on average 148 thousand sole traders).” Therefore, given the deteriorating state of public finances in Slovakia, it is reasonable to assume that the government will seek to crack down on ‘bogus traders’. The line between a sham trade (the shvarc system) and one where the practice of a trade is legally legitimate is not clear. However, the need for a clearer definition and knowledge of this seems to be growing for those concerned in the coming period. We will be discussing the shvarcy system and its legal and tax implications at a conference(https://lnkd.in/eHqtUCj4) we are organising at Highgate Law & Tax in two weeks’ time. The speakers will be Peter Varga, Katarina Matulnikova, Martin Vlachynsky and Tomas Strémy.