Changes to Slovak Labour Laws 2013 in English

There are important changes concerning taxes coming in 2013, here are the most important ones.

Slovak labour laws 2013: the guy with all the bright ideas
Prime Minister Rober Fico © AmCham Slovakia

Students

2013: Employer has to pay social deductions even for student contracts if they earn more than 155 EUR. If they earn less, he doesn’t have to pay nothing except injury and garance insurance the same way it has been till today.

2012: Employer doesn’t have to pay social deductions for any kind of a student contract.

CONSEQUENCES: If you are a student and you DO NOT earn more than 155 EUR, your employer doesn’t have to pay almost anything except 1,05 injury and garance insurance.

2013: If a student earns more than 155 EUR, the employee has to pay 7% from the sum above the 155 EUR as social deductions (deducted from the salary by the employer). In the same way the all other kinds of insurance (as with standard full-time employees) have to be paid now. 1,05% from the whole salary, and 21,75% from the sum above 155 EUR paid by the employer.

2012: Employer doesn’t have to pay social deductions for any kind of a student contract.

CONSEQUENCES:  If you are a student and you DO earn more than 155 EUR, you will pay 7% social deductions and your employer 22,80%.

Contractors (Dohoda o Vykonaní Práce – 350 hodín) 

2013: Contractor with regular income pays 13,4%, employer 35,20%

2013: With a non-regular income he pays 11%, employer 32,80%

2012: Contractor pays 0%, employer 1,05%.

CONSEQUENCES: If you are a contractor, you will be obliged to pay social deductions based on a fact if you have regular, or non-regular income. If regular, you will pay 13,4% from your income and your employer 35,20%. If non-regular, you will pay 11% and your employer 32,80. This is completely different than before, as you and your employer didn’t have to pay anything before.

2013: If a contractor doesn’t receive salary on a regular basis, he pays social deductions at the termination of his contract.

2012: Contractor doesn’t pay social deductions.

2013: Income tax FOR EVERYONE is 19% until you hit 3311 EUR monthly tax base. If you do, you pay 23% income tax.

2012: Income tax FOR EVERYONE IS 19%. Always.

OTHER IMPORTANT CHANGES:

– Student contract can now be signed only by people max 26 years old. You could be an older student before.

– Students and contractors have to have their working time evidenced, so it’s clear when they started and finished working. This wasn’t needed by law until now.

FULL – TIMERS

– If someone is employed for a specified time – max 2 years. Before it was 3 years.

– A fired employee has to be paid compensation money based on time he worked for the employer. Before the amount was chosen by employer.

PART – TIMERS

– Part – time is exactly the same type of contract as the full-time one. Conditions, deductions and income tax all apply the same way, the only difference between these two types of contract being that under part-time you are allowed to work less hours than a full-timer and your employer has to provide the same benefits. Please note that your sick days and holidays will be based on the amount of work hours – so in the end you will have less sick days and holidays available than a full timer.

SELF – EMPLOYED (Živnostníci)

– You cannot employ self-employed people if ALL of these conditions apply:

– hierarchy between the employer and employee
– work is done individually by the employee for the employer
– work is done by employer’s instructions
– in the name of the employer
– in work time set by employer
– for salary or a reward

Income tax for self-employed people is raised to 23%. Before it was 19%.

PART-TIME (FULL-TIME) vs 350 CONTRACT COMPARISON

Lastly, let’s have a look at some math. We will be comparing a salary of 700 EUR for easy counting. (Please note that the same tax and social deduction conditions apply for part-time and full-time contract types and income tax is higher ONLY after getting a minimum 3311 EUR tax base – brutto salary minus social deductions.)

700 EUR brutto Part – time / Full time

– Health insurance 4% = – 28 EUR

– Social Insurance 9,4% = -70 EUR

SOCIAL DEDUCTIONS TOTAL 13,4% = -93,8 EUR

Now you have a monthly tax base. Let’s calculate your income tax.

Monthly tax base = 606,2 EUR (700 – 93,8)

Monthly untaxable tax base part is 311,32 so 606,2 – 311,32 = 294,88 EUR. This is the number we will deduct income tax from.

Income tax is 19%, from 294,8 that gives us 56,02 EUR. 

We don’t have any children (if we did there is a small tax bonus) so we will do the math. 606,2 minus 56,02 is 550,18 EUR. This is what you get on your bank account!

Now for the contractors.

If you’ve read through the whole article, the next piece of information shouldn’t come as a big surprise – the whole process mentioned above is exactly the same, with one BIG exception. 

Contractors with a non-regular income won’t pay 13,4% social deductions, but only 11%. They won’t pay it monthly as the other contract types, but at the termination of their contracts.

According to Slovak laws, if you have a contract for an unspecified period of time and you receive non-regular income, you don’t pay any social deductions if your contract never expires.

Income tax stays the same.

To sum it up – There is no difference between a part-timer/full-timer and a 350 contractor with a regular income. Difference between a part-timer/full-timer and a 350 contractor with a non-regular income is 2,4% and the payment interval.

Total employer’s expense on you in this case is 946,40 EUR. This is the total sum of money your employer has to pay for you to get your 550,18 EUR.