Therefore, instead of security tax, which should have been introduced on the temporary basis until the end of year 2028, now the increase of VAT rate from 22% to 24% will be effective indefinitely from 1 July 2025.
In addition, there will not be introduced any 2% corporate tax on companies’ profits on a temporary basis. Instead, both the individual income tax and corporate tax rate will be increased indefinitely from 22% to 24% from 1 January 2026. However, there will be abolished the 2% taxation of individuals without any allowed deductions, which should have been effective also from 1 January 2026 as one component of the security tax.
According to the income tax amendment adopted by the Parliament in 2023, from 2026 the annual tax exempt basic allowance of the resident individual will increase generally to EUR 8 400, regardless of the amount of taxable income derived by the individual. However, for individuals who have reached the retirement age, the annual tax exempt basic allowance will remain in the amount of EUR 9 312.
Along with the increase of income tax rate, from 1 January 2026 the general tax rate applicable to entrepreneur account of individuals will be increased from 20% to 22%, if the user of the entrepreneur account has not joined the II pillar accumulative pension scheme. However, if the user of the entrepreneur account has joined the II pillar accumulative pension scheme, then the applicable tax rate from 2026 will be either 24%, 26% or 28%, subject to the rate of pension contributions chosen by the respective individual.
