Slovakia Digital Services Tax proposal

Slovakia mulls Digital Services Tax on global tech giants

Slovakia’s Investment Ministry is pushing for the country to adopt a domestic digital services tax as part of efforts to strengthen public finances.

The proposal could generate between €30 million and €100 million annually, depending on the tax rate and the companies affected. Slovakia would be joining countries like France, Austria, the UK and Italy, which have already introduced similar digital taxes.

US targets worldwide DST’s

But such a proposal could raise tensions with the US, home to most of the digital platforms that would be subject to such a tax. In February, President Trump ordered a retaliatory tariff review on DST’s which he considers discriminatory. He pulled the US out of OECD Pillar 1 talks which sought to change the territorial taxing rights on digital services and avert the need for DST – seen as an inefficient tax.

The tax would target large global digital companies like Facebook, Google, YouTube, TikTok, Airbnb, Uber, Amazon, Netflix, and others. These companies earn significant revenue in Slovakia but currently pay little or no taxes there.

Tax on digital interfaces, advertising and user data sales

The Slovak DST will likely apply to any company generating revenue arising from the following services:

1. the placing on a digital interface of advertising targeted at users of that interface;
2. the making available to users of a multi-sided digital interface which allows users to find other users and to interact with them, and which may also facilitate the provision of underlying supplies of goods or services directly between users; and
3. the transmission of data collected about users and generated from users’ activities on digital interfaces.

The DST will be only be applicable to entities that exceed the following thresholds:

1. the total amount of worldwide income reported by the entity for the relevant financial year exceeds €750m; and
2. the total amount of taxable income obtained by the entity in Slovakia from digital activities during the relevant financial year exceeds €25m.