Taxation of real estate, business shares, shares and other capital income

Taxation of cryptocurrencies

With the rising value of cryptocurrencies, the demand for tax and legal advice related to the taxation of cryptocurrencies and possibly finding legal avenues to reduce tax and levy liability is also naturally increasing .

In the basic setup, individuals who are both tax and levy residents of Slovakia are taxed at a tax rate of 19% and 25% respectively on profits from the sale of cryptocurrencies. At the same time, this profit is also subject to health levies. For legal entities, the tax base is taxed at a 15% or 21% tax rate. However, despite the relatively clear rules, the area of cryptocurrencies is in practice a very complex not only tax but also accounting topic.

For example, we work with clients on:

• what is included in tax expenses when trading cryptocurrencies;
• how trading via different platforms outside the disposition of a particular taxpayer is assessed;
• how non-monetary deposits with natural or legal persons at home or abroad are treated;
• the use of foreign companies in cryptocurrency trading;
• what if the taxpayer does not know exactly how to calculate the tax base;
• the acquisition value of cryptocurrencies on donations, deposits, mergers or liquidations;
• cryptocurrencies and VAT (it is not absolutely true that cryptocurrencies are outside the VAT regime).

For more on cryptocurrency taxation, see our articles and videos. You can find them on the Highgate Group website .

In connection with the taxation of cryptocurrencies, we provide the following services:

• analysis of options for legal tax and/or levy optimisation;
• implementation of foreign solutions;
• representation in tax proceedings;
• Analysis of the limits of criminal liability in the context of specific cases.

Taxation of financial instruments

Financial instruments include, in addition to securities, derivatives, holdings in collective investment undertakings, financial contracts for differences and, in some cases, cryptocurrencies. The taxation and ‘tax treatment’ of financial instruments is not harmonised and, therefore, the specific level of taxation and, where applicable, the obligation to pay compulsory social or health insurance depends on the type of financial instrument as well as the type of income that accrues to the individual in relation to it.

For corporations, the tax situation is a bit simpler. However, especially with derivatives and derivative cryptocurrencies, the accounting is significantly more difficult.

It is important to note that the topic of accounting and taxation of more complex financial instruments and cryptocurrencies is generally not harmonised in the European Union, and thus countries create their own tax and accounting frameworks.

This has implications especially for smaller countries like Slovakia, which naturally does not have the capacity to comprehensively grasp these issues.

Taxation of real estate

In addition to income tax and levies, VAT also plays a big role in property taxation. The topic is not only of interest to real estate entrepreneurs by default, but also to current non-business individuals who use real estate for the appreciation of their assets.

Cases of individuals buying investment properties are frequent. Based on our experience, clients are particularly interested in these topics:

• VAT is deductible on the purchase of the property;
• it is better to rent the property through an LLC or as a natural person;
• entrepreneur/non-entrepreneur and taxable/non-taxable person;
• when dealing with real estate is perceived as a business;
• if the property is purchased without VAT, it is possible to obtain a VAT deduction when it is subsequently sold with VAT;
• it is possible to sell the property without VAT if it was bought with VAT.

We advise clients in structuring their real estate business.

This is not only the case for the larger development projects we handle as Highgate Group, but clearly individuals as individual (and smaller) investors also find added value in this advice.