5.3. Living wage

The subsistence minimum is defined as the socially recognized minimum income threshold for a natural person under whom a state of material need arises. The subsistence sums are adjusted each year to July 1 of the current calendar year. If the legislation does not change, to 30.6. it is repeat date every year by the Ministry of Labour, Social Affairs and the family of the Slovak Republic [5, 9, 10]. The sum of the subsistence minimum is a relatively important reference (Figure 5).

The subsistence sums help in a universal way to find out in what financial situation the persons under review are located. The subsistence amount for one adult physical person, or the coefficient increasing this amount affects a number of other indicators in the tax and social spheres. These include, for example, the amount of the tax bonus, the amount of nontaxable portions of the tax base, the amount of the tax base, after which the individual has to apply a higher rate of income tax (25%), the amount of the allowance and the surcharge for the child allowance, the amount of the unreachable amount for the execution charges [6, 9, 10]. The above minimum subsistence also affects the entitlement to early retirement or the minimum retirement age (Table 7).

5.4. Minimum wage

Table 7. Living wage in Slovakia.

Source: Ref. [10].

Figure 5. Trend of living wage in Slovakia. Source: Ref. [10].

Adult Adult

 198.09 € 138.19 € 90.42 € 198.09 € 138.19 € 90.42 € 198.09 € 138.19 € 90.42 € 198.09 € 138.19 € 90.42 € 198.09 € 138.19 € 90.42 € 194.58 € 135.74 € 88.82 € 189.83 € 132.42 € 86.65 € 185.38 € 129.31 € 84.61 € 185.19 € 124.81 € 81.66 €

Jointly assessed person

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Child Dependent

Years Living wage

The minimum wage is determined on the basis of key factors that affect it. Basic factors influence determination of minimum wage are economic and social situation in the country, consumer price developments, employment developments, average monthly wage developments in the national economy, and the development of the subsistence minimum. The concept of the minimum wage is the lowest possible wage that must be paid to the employee for a work-related or similar employment relationship to ensure the minimum level of employee's

Figure 5. Trend of living wage in Slovakia. Source: Ref. [10].


Table 7. Living wage in Slovakia.

#### 5.4. Minimum wage

base affects the amount of tax liability of business entities and individuals. This is a legal form

The taxpayer is entitled to claim a non-taxable portion of the tax base only from the sub-base of the tax on income from dependent activity, business income, other self-employment, rental,

The subsistence minimum is defined as the socially recognized minimum income threshold for a natural person under whom a state of material need arises. The subsistence sums are adjusted each year to July 1 of the current calendar year. If the legislation does not change, to 30.6. it is repeat date every year by the Ministry of Labour, Social Affairs and the family of the Slovak Republic [5, 9, 10]. The sum of the subsistence minimum is a relatively important

The subsistence sums help in a universal way to find out in what financial situation the persons under review are located. The subsistence amount for one adult physical person, or the coefficient increasing this amount affects a number of other indicators in the tax and social spheres. These include, for example, the amount of the tax bonus, the amount of nontaxable portions of the tax base, the amount of the tax base, after which the individual has to apply a higher rate of income tax (25%), the amount of the allowance and the surcharge for the child allowance, the amount of the unreachable amount for the execution charges [6, 9, 10]. The above minimum subsistence also affects the entitlement to early retirement or the mini-

of tax deduction, which the taxpayer optimizes the tax base.

Figure 4. Trend of non-taxable portion in Slovakia. Source: Ref. [9].

use of the work and artistic performance.

5.3. Living wage

50 Taxes and Taxation Trends

reference (Figure 5).

mum retirement age (Table 7).

The minimum wage is determined on the basis of key factors that affect it. Basic factors influence determination of minimum wage are economic and social situation in the country, consumer price developments, employment developments, average monthly wage developments in the national economy, and the development of the subsistence minimum. The concept of the minimum wage is the lowest possible wage that must be paid to the employee for a work-related or similar employment relationship to ensure the minimum level of employee's income for the work done but also for the natural persons performing for the employer under one of the agreements on work performed outside the employment (work agreement, agreement on students' brigade work) [11]. The amount of the minimum wage is set by the Government of the Slovak Republic each year by two amounts: in euros per month (monthly minimum wage) and in euro per hour worked (hourly minimum wage). The amount of the monthly minimum wage applies only to employees who are remunerated in the form of a monthly wage. Employees who are remunerated by another form of wage, such as monthly wages (hourly wages), are based on the hourly minimum wage when assessing their legal entitlements to wage levels. If the employee has a shorter than the prescribed weekly working time or does not work all the working days or hours in the month, the monthly minimum wage is reduced in proportion between the actual times worked and the monthly working time fund. The amount of the minimum wage in euro per month is rounded to the nearest 10 eurocent (Table 8) [11].

The minimum wage is not established in Finland, Austria, Denmark, Italy, Malta and Cyprus. Among the most advanced countries where the minimum wage is the highest are Luxembourg, Ireland, the Netherlands, Belgium, Germany and France (Table 9).

The purpose of setting a minimum wage is to protect employees and employers. The minimum wage fulfills two basic functions—social protection—the minimum wage must ensure to employee socially acceptable of wage - minimum in height of living wage. And ensures wage


competition - adequate labor assessment economically critical - the minimum wage motivate people to work, not to take social benefits, to protect employees againts unfair competition on the labor market. The minimum wage in Slovakia has been growing steadily since 2003 (Figure 6). The national minimum wage has 22 states from the 28 EU Member States, with the exception of Denmark, Italy, Cyprus, Austria, Finland and Sweden. When comparing EU countries and outside the Eurozone, the minimum wage is influenced mainly by the level of the exchange rate between the national currency and the Euro. The differences between the minimum wage levels in the EU countries are striking. The maximum difference in the minimum wage recorded in the EU countries is € 1729. Within EU countries, it is not always clear that the minimum wage is

Country Minimum wage

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Luxembourg 1999 € Ireland 1563 € The Netherlands 1552 € Belgium 1533 € Germany 1486 € France 1482 € England 1400 € Spain 825 € Slovenia 804 € Malta 735 € Greece 684 € Portugal 650 € Estonia 470 € Poland 454 € Slovakia 435 € Hungary 410 € Croatia 410 € The Czech Republic 408 € Latvia 382 € Lithuania 381 € Romania 274 € Bulgaria 220 €

valid on a monthly basis; some countries may have it on an hourly or weekly basis.

Source: Eurostat.

Table 9. Minimum wage in Europa.

Table 8. Minimum wage in Slovakia.



Table 9. Minimum wage in Europa.

income for the work done but also for the natural persons performing for the employer under one of the agreements on work performed outside the employment (work agreement, agreement on students' brigade work) [11]. The amount of the minimum wage is set by the Government of the Slovak Republic each year by two amounts: in euros per month (monthly minimum wage) and in euro per hour worked (hourly minimum wage). The amount of the monthly minimum wage applies only to employees who are remunerated in the form of a monthly wage. Employees who are remunerated by another form of wage, such as monthly wages (hourly wages), are based on the hourly minimum wage when assessing their legal entitlements to wage levels. If the employee has a shorter than the prescribed weekly working time or does not work all the working days or hours in the month, the monthly minimum wage is reduced in proportion between the actual times worked and the monthly working time fund. The amount of the minimum wage in euro per month is rounded to the nearest 10

The minimum wage is not established in Finland, Austria, Denmark, Italy, Malta and Cyprus. Among the most advanced countries where the minimum wage is the highest are Luxem-

The purpose of setting a minimum wage is to protect employees and employers. The minimum wage fulfills two basic functions—social protection—the minimum wage must ensure to employee socially acceptable of wage - minimum in height of living wage. And ensures wage

Years Minimum wage/Monthly wage (€)

bourg, Ireland, the Netherlands, Belgium, Germany and France (Table 9).

2017 435 2016 405 2015 380 2014 352 2013 337.70 2012 327.20 2011 317 2010 307.70 2009 295.50 2008 269 2007 269 2006 252 2005 229 2004 216

eurocent (Table 8) [11].

52 Taxes and Taxation Trends

Source: Ref. [11].

Table 8. Minimum wage in Slovakia.

competition - adequate labor assessment economically critical - the minimum wage motivate people to work, not to take social benefits, to protect employees againts unfair competition on the labor market. The minimum wage in Slovakia has been growing steadily since 2003 (Figure 6).

The national minimum wage has 22 states from the 28 EU Member States, with the exception of Denmark, Italy, Cyprus, Austria, Finland and Sweden. When comparing EU countries and outside the Eurozone, the minimum wage is influenced mainly by the level of the exchange rate between the national currency and the Euro. The differences between the minimum wage levels in the EU countries are striking. The maximum difference in the minimum wage recorded in the EU countries is € 1729. Within EU countries, it is not always clear that the minimum wage is valid on a monthly basis; some countries may have it on an hourly or weekly basis.

Figure 6. Trend of minimum wage in Slovakia.

#### 5.5. Tax bonus

We understand the tax bonus as a tax concession or tax benefit, which is provided to a taxpayer who is living with a child, in the form of a reduction in income tax or tax advances that the taxpayer would otherwise have to pay. For the purposes of the tax bonus, a child may not have the same permanent residence as a taxpayer. The temporary stay of a child outside the household (e.g., a child studying in another city and staying on board) does not affect the application of the tax bonus. The law does not require the same taxpayer's and child's residence, but that the taxpayer and the child live in one household. In accordance with Section 115 of the Civil Code, households are natural persons who live together and share the costs of

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The amount that a taxpayer reduces the tax can be seen as a tax credit or tax benefit to the person who receives it after the specified conditions have been met, the amount of the tax bonus is reduced by the tax (not the tax base). It can be claimed by a taxpayer who has had taxable income in the taxable period: from dependent activity, at least six times the minimum wage or from business, other self-employment and from renting six times the minimum wage and reported the tax base (the tax base from of revenue); only one taxpayer may apply if the conditions for applying the tax bonus are met by more taxpayers and, unless otherwise agreed, the tax bonus for all dependent children is applied or awarded in the following order: mother, father, other eligible person; the taxpayer can apply the tax bonus even if the child has a temporary residence outside the household, for example, if the child is studying at secondary school outside of his/her

The business environment is characterized by constant changes in the law, resulting in legislative uncertainty. Businessmen in Slovakia must constantly observe what changes they are about and how they will affect their business. Their attention is not entirely entrepreneurial because they have to deal with different bureaucratic requirements, but also with accounting and legal problems. Business costs are increasing, which negatively affects their competitiveness and leads to

permanent residence, and he/she is staying at the boarding school (Figure 7).

their needs together (Table 10).

Figure 7. Trend of tax bonus in Slovakia. Source: Ref. [9].

6. Impact of taxes to business sector


Table 10. Tax bonus in Slovakia.

Figure 7. Trend of tax bonus in Slovakia. Source: Ref. [9].

5.5. Tax bonus

54 Taxes and Taxation Trends

Source: Ref. [9].

Table 10. Tax bonus in Slovakia.

Figure 6. Trend of minimum wage in Slovakia.

We understand the tax bonus as a tax concession or tax benefit, which is provided to a taxpayer who is living with a child, in the form of a reduction in income tax or tax advances that the taxpayer would otherwise have to pay. For the purposes of the tax bonus, a child may not have the same permanent residence as a taxpayer. The temporary stay of a child outside the household (e.g., a child studying in another city and staying on board) does not affect the

Years Tax bonus (€)

2017 21.41 2016 21.41 2015 21.41 2014 21.41 2013 21.41 2012 21.03 2011 20.51 2010 20.02 2009 20.00 2008 19.32 2007 18.42 2006 17.92 application of the tax bonus. The law does not require the same taxpayer's and child's residence, but that the taxpayer and the child live in one household. In accordance with Section 115 of the Civil Code, households are natural persons who live together and share the costs of their needs together (Table 10).

The amount that a taxpayer reduces the tax can be seen as a tax credit or tax benefit to the person who receives it after the specified conditions have been met, the amount of the tax bonus is reduced by the tax (not the tax base). It can be claimed by a taxpayer who has had taxable income in the taxable period: from dependent activity, at least six times the minimum wage or from business, other self-employment and from renting six times the minimum wage and reported the tax base (the tax base from of revenue); only one taxpayer may apply if the conditions for applying the tax bonus are met by more taxpayers and, unless otherwise agreed, the tax bonus for all dependent children is applied or awarded in the following order: mother, father, other eligible person; the taxpayer can apply the tax bonus even if the child has a temporary residence outside the household, for example, if the child is studying at secondary school outside of his/her permanent residence, and he/she is staying at the boarding school (Figure 7).
