For an individual selling a business share, the difference between proceeds and acquisition cost or contribution is taxed as other income under Section 8 of the Income Tax Act. For shares acquired from 1 January 2004, the holding period alone generally does not confer an exemption; older shares are assessed under transitional Section 52(21). The standard exemption up to €500 and any historical limit must be checked against the date and method of acquisition. A legal entity has an exemption under Section 13c after holding at least 10% for 24 months. A gratuitous transfer is generally outside the recipient's income tax, and a business share transfer is not subject to VAT.
How is an individual’s share sale taxed?
If an individual sells a business share in an s.r.o., the proceeds are other income under Section 8(1)(f) of Act No. 595/2003 Coll., the Income Tax Act. Tax applies to the difference between income and expenses, rather than the full amount received. Under Section 8(7), the expense is the contribution or acquisition cost. For an inherited or gifted share, the value determined under Section 25 at acquisition is used. Selling at acquisition cost produces no taxable gain. Only a positive difference enters the individual’s tax base and is subject to income tax, generally with health insurance contributions to consider too.
Is there a holding-period exemption for business shares?
This is the commonest misconception. Securities admitted to a regulated market have an exemption after one year of holding (Section 9(1)(k)). For a business share acquired from 1 January 2004, the holding period alone generally does not confer a general exemption. Shares acquired before that date must be assessed under Section 52(21), which preserves the historical five-year exemption where the conditions of Section 4(1)(h) of Act No. 366/1999 Coll. are met. The acquisition date may also affect the transitional value limit. Under the ordinary current regime, aggregate annual net income after expenses from these transfers is exempt up to €500 (Section 9(1)(i)). Above that amount, only the excess is taxed. The exemption does not apply to a share that was a business asset.
When is a legal entity’s sale exempt?
If a legal entity sells the share, income may be exempt under Section 13c if (a) it arises no earlier than 24 months after acquisition of a direct holding of at least 10% of share capital, and (b) the taxpayer performs substantial functions in Slovakia, manages and bears risks, and has the necessary personnel and material resources. The exemption does not apply if the company or seller is in liquidation, bankruptcy or restructuring. This is often confused with the non-existent three-year test for individuals. They are different matters, so the ownership structure deserves advance planning, for example through a holding structure.
Gifts and VAT
In a gratuitous transfer or gift, the donor receives no consideration and therefore has no taxable income. The recipient’s income acquired by gift is generally outside the scope of income tax (Section 3(2)), except gifts connected with business or employment. If the recipient later sells the share, the expense is its value under Section 25 at acquisition. The business share transfer itself is not subject to VAT.
This is a general explanation of the legal and tax framework, rather than tax advice for a particular case. The outcome depends on acquisition cost, the transfer form and your circumstances. We assess taxation alongside preparation of the business share transfer or as part of a company sale or acquisition.
This answer provides general information on the law as at 10 September 2026. It does not constitute legal services or replace an assessment of an individual case. The details of your situation may differ. Book a consultation to discuss them.
