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Two legal forms of business side by side
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Sole trader or limited company in Slovakia in 2026

· 2 min read · PRO Accounting, s.r.o.

In brief

  • A sole trader pays 15 % on taxable income up to €100,000, and 19 to 35 % above that.
  • A shareholder pays no contributions on profit distributions, worth thousands of euros a year at higher profits.
  • A sole trader is liable with all their assets; a shareholder only up to any unpaid capital.
  • There is no universal threshold — it depends on profit, risk and headcount combined.

Higher contributions and new tax bands have shifted the point where a company pays off.

This is the question we are asked most often. The answer shifted in 2026 — higher contributions and new tax bands change the point at which a company starts to pay off.

Taxation

A sole trader pays 15 % on taxable income up to €100,000. Above that threshold the 19 / 25 / 30 / 35 % scale applies.

A limited company pays corporate income tax, and profit distributed to a shareholder is additionally subject to withholding tax on dividends. The overall burden must be calculated across both levels.

Social and health contributions

In 2026 this matters more than the tax itself. A sole trader pays contributions from an assessment base derived from income, and the minimum base has risen.

A shareholder who takes no salary and draws profit as a distribution pays no contributions on it. At higher profits that is a difference of thousands of euros a year — but it has a downside: a lower pension and no sickness benefits.

Liability

A sole trader is liable with all their assets, including personal ones. A shareholder is liable only up to any unpaid capital contribution. In manufacturing, transport or construction this is often a stronger argument than the tax saving.

Costs and administration

Sole traderLimited company
Formationlow costhigher, with registration
Bookkeepingsingle-entrydouble-entry, mandatory
Annual accountssimplerwith notes, filed publicly
Closing downnotificationliquidation, takes months

When to make the move

There is no universal threshold. It is worth considering when:

  • profit consistently exceeds several tens of thousands of euros a year
  • the work carries a risk of loss you could not personally absorb
  • you are taking on employees
  • business partners require a legal entity
  • you plan to sell the business or bring in a partner

Časté otázky

Is it worth switching from a trade licence to an s.r.o.?
There's no universal threshold. It's worth considering once profit consistently exceeds several tens of thousands of euros a year, when the activity carries a risk of damage you couldn't personally cover, or when you start hiring employees.
What's the difference in taxation between a sole trader and an s.r.o.?
A sole trader pays 15% on taxable income up to €100,000, and a 19–35% scale above that. A company pays corporate income tax, and profit paid out to the owner is additionally taxed with withholding tax on dividends.
Does an s.r.o. owner pay levies?
Not on their share of profit. At higher profits, that's a difference of thousands of euros a year — but it cuts both ways: unpaid levies mean a lower pension and no sickness benefits.
What about liability?
A sole trader is liable with their entire assets, including personal ones. An s.r.o. owner is liable only up to the unpaid portion of their capital contribution. For higher-risk activities, this is often a more important factor than the tax saving.
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