You may have received an email notification into your mailbox about Your Individual Tax Reliability Index or your company's tax reliability index.

What is the tax reliability index and what has changed in its adjustment since 1 January 2022?

The tax reliability index is an evaluation of a tax entity, an entrepreneur registered for income tax by the financial administration, on the basis of which the tax administrator either provides the assessed tax entity with certain benefits or imposes restrictions prescribed by law (these are listed at the end of the article).

The following changes have taken place in the index since the beginning of 2022:

• public - the index is public information, the list of tax entities with their index will be published on the website of the Financial Directorate of the Slovak Republic no later than September 30, 2022,
• transparency - the notification should include the reasons that led to the determination of the index
• objection - although the index is sent to the taxable person in the form of a notification, the taxable person may file an appeal in the form of an objection in case of disagreement with the assessment.
• methodology - in addition to the criteria, which are the fulfillment of obligations to the financial administration according to the Tax Code or special regulations in the field of taxes and customs, the evaluation also includes the evaluation of the fulfillment of economic indicators

The criteria that enter into the evaluation of the tax subject are determined by the Decree of the Ministry of Finance of the Slovak Republic no. 544/2021 Z.z. on the criteria for determining the tax reliability index. For each criterion in accordance with the published methodology, the tax administrator assigns the number of points to the evaluated entity. The fewer points the tax entity obtains, the better the evaluation of the Index.

The tax administrator then assigns a rating as:

• highly reliable - if the tax entity has been allocated a maximum of 10 points, inclusive, and at the same time meets the condition of the economic indicator, t. j. the calculated effective tax rate is greater than the effective tax rate threshold
• reliable - if the tax subject is allocated more than 10 and at the same time less than 25 points or if the tax subject is allocated a maximum of 10 points inclusive and at the same time the condition of the economic indicator is not met
• unreliable - if the tax subject is allocated 25 points or more

If you do not agree with the assigned index or its practical implications on your business, let us know. We will help you verify whether the assigned Index has been issued according to the set criteria, we will identify the relevant arguments, prepare and file an objection to the assigned tax index for you, and we will check the possibilities of further action in your case.

Benefits and maluses arising from the assigned tax reliability index:

When evaluating a tax entity with a rating of "reliable", the tax entity can count with the following tax benefits:

• granting a request for payment of advances on corporate income tax otherwise in justified cases in accordance with the request of the entity in compliance with the relevant legal provisions
• granting a request for payment of advances on personal income tax otherwise in justified cases in accordance with the request of the entity in compliance with the relevant legal provisions
• granting a request for payment of advances on motor vehicle tax otherwise in justified cases in accordance with the request of the entity in compliance with the relevant legal provisions
• issuance of a confirmation of the balance of the personal account within 15 days
• prioritization of other acts in order to ensure payment of tax arrears before the commencement of tax enforcement proceedings
• compliance with the request for consent to dispose of the subject of the lien in compliance with the conditions specified by the tax administrator
• prioritizing the conduct of a local survey over a tax audit for the purpose of verifying the right to a refund of the excess deduction
• conducting a local survey and oral hearing on the day agreed with the tax subject, with the exception of checking compliance with the law on the use of electronic cash registers
• determination of the date of commencement of the tax audit to determine the legitimacy of the right to a refund of the excess deduction or part thereof in agreement with the tax entity
• agreeing the place of tax control with the tax subject
• refund of excise duty within the statutory period without carrying out a tax audit, if the claimed right to a refund of excise duty does not exceed EUR 1,000
• granting the request for a reduction of the excise security lodged after meeting the conditions stipulated by law

When evaluating a taxable person with a rating of "highly reliable", the taxable person may, in addition to the above-mentioned benefits for "reliable", also count with the following tax benefits:

• preparation of a partial protocol within the tax audit to determine the legitimacy of the right to a refund of the excess deduction or part thereof, if the legal conditions under § 47a of the Tax Code are met
• setting a time limit of at least 15 days in the call in connection with the performance of a tax audit or the performance of a local survey
• halving the fee for issuing a binding opinion
• reduction of the amount of payment for the issuance of a decision on the approval of the use of a specific method of determining the tax base of a permanent establishment pursuant to § 17 par. 7 and decisions on the approval of the use of the valuation method according to § 18 par. 4 of Act no. 595/2003 Coll. on income tax, as amended, by half
• compliance with the application for permission to pay tax or tax arrears in installments if the conditions stipulated by law are met
• compliance with the request for permission to defer payment of tax or tax arrears if the conditions stipulated by law are met

The only limitation in assessing "unreliable" is (so far) a limitation where the tax administrator sets a time limit of eight days to comply with a specified obligation in connection with carrying out a tax audit, levying procedure or local investigation; however, at the reasoned request of the taxable person, this period may be extended.