Tax Planning Before the End of 2026

1. Estimate of Net Income and Tax Base

The first step should be a tax forecast, i.e., an estimate of the tax base and expected tax liability for 2026. The accounting net income does not automatically represent the tax base. We should therefore identify the most significant taxable and deductible items, one-time transactions, and other adjustments that could significantly impact the final tax liability. For companies with revenues around the 5-million-euro threshold, this forecast is particularly important given the application of the 24% tax rate.

2. Tax Deductibility of Expenses

Before preparing the financial statements, we recommend reviewing significant expense accounts and identifying items for which tax deductibility may be limited or subject to compliance with statutory conditions. We pay particular attention to entertainment expenses, marketing and consulting services, employee benefits, expenses paid to foreign suppliers, and other non-standard items. The goal is not only to calculate the tax correctly but also to identify, during the closing process, transactions that could raise questions during a potential tax audit.

3. Reserves, Allowances, and Uncollectible Receivables

We should not view older receivables merely as an accounting or cash flow issue. Before the end of the year, we recommend analyzing their aging profile, collection status, and the possibilities for creating tax-deductible allowances or writing off receivables for tax purposes. Provisions deserve similar attention. The creation of a provision for accounting purposes does not automatically mean that the related expense will be tax-deductible.

4. Assets, Investments, and Tax Depreciation

If a company makes significant investments, we recommend verifying their classification, date of commission, acquisition cost, and applicable depreciation class before the end of the year. For tangible assets, it is also necessary to correctly distinguish between repairs and technical improvements. For planned investments, we therefore recommend assessing the tax implications before the transaction is carried out, rather than when preparing the tax return. Special attention should also be paid to assets that were sold, disposed of, damaged, or are no longer used for business activities during the year.

5. Tax Losses from Previous Periods

Companies that have reported tax losses in the past should verify their availability and the conditions for their deduction. Year-end tax planning should include a record of individual tax losses, the periods in which they arose, amounts already claimed, and the remaining potential for their utilization. In the event of reorganizations, changes to the business model, or significant transactions, we also recommend verifying whether the planned structure will affect the possibility of their future utilization.

6. Transfer Pricing and Year-End Adjustments

For Slovak companies belonging to international groups, transfer pricing is one of the most important areas of year-end tax planning. We recommend verifying whether the Slovak entity’s reported profitability is consistent with the group’s transfer pricing policy and the arm’s-length principle. A typical example is Slovak distribution, manufacturing, or service companies with a predetermined target margin. If the actual result deviates from the target range, it is necessary to analyze the causes and the potential need to adjust transfer prices at year-end before closing the books.

7. Intra-group Services and Financing

Fees for management, IT services, licenses, interest, or other cross-border payments are regularly subject to tax audits. Therefore, an invoice alone is not sufficient. We recommend reviewing the contractual documentation, the economic rationale for the transaction, the method of calculating the fee, and evidence that the service was actually provided to the Slovak company and yielded an economic benefit. For cross-border payments, it is also necessary to verify any withholding tax and the application of the relevant double taxation treaty.

8. VAT – Company Vehicles in Particular

The year 2026 brought a significant change regarding the deduction of VAT on passenger motor vehicles. For vehicles used for both business and private purposes, a 50% flat-rate VAT deduction has applied since January 1, 2026. The rules also apply to related goods and services, such as fuel, maintenance, and replacement parts. If a company claims a 100% VAT deduction, it should verify whether it can prove the vehicle’s exclusive use for business purposes and whether it is complying with the related record-keeping and reporting obligations. A year-end review is also an appropriate time to verify the accuracy of VAT calculations for significant or non-standard transactions carried out during the year.

9. Expenses Tax-Deductible Only Upon Payment

One area that can significantly affect the difference between the accounting profit and the tax base is expenses whose tax deductibility, under the Income Tax Act, is contingent upon payment. In practice, these may include, for example, certain costs for consulting and legal services, rent, license fees, and other items defined by law. Before the end of the year, we recommend preparing an overview of relevant liabilities and verifying which of them remain unpaid. Simply recording an expense may not be sufficient for it to be included in the tax base for 2026. For significant items, the timing of payment can have a direct impact on the company’s current tax liability. At the same time, it is necessary to assess each category of expenses individually and verify the conditions set forth by law.

10. Documentation Before Filing the Tax Return

The final area is often the simplest, yet also the most underestimated: documenting tax positions. For significant or non-standard transactions, we recommend preparing contracts, calculations, internal analyses, and other supporting documents explaining the chosen tax treatment as early as the financial closing. Several years later, during a tax audit, it can be significantly more difficult to reconstruct why the company recorded a specific transaction or treated it for tax purposes in a certain way.