Working in the IT sector in Slovakia means earning an above-average salary. The average wage in the sector reached nearly €3,000 in March of this year. For comparison, people working in restaurants and hospitality did not earn even €900.
On the other hand, the state’s tax and social contribution system focuses particularly on employees with higher incomes. In the example mentioned, an IT specialist pays €432 from their gross salary to the insurance funds—€150 to health insurance and €282 to social insurance.
When income tax of approximately €411 is added, the employee receives around €2,157 in their bank account. Compared to the gross salary, that is almost 30% less.
However, these unpleasant obligations also apply to the employer. In such a case, the employer’s additional costs amount to nearly €1,086. The IT specialist’s total employment cost (sometimes called the “super-gross salary”) approaches €4,100.
IT workers are becoming limited companies. Is it worth it?
Many people in the sector have therefore been thinking in recent months about how to earn more without requiring their employers to raise salaries. They have found a solution. Large numbers are leaving traditional employment contracts and switching to sole proprietorships (self-employment) or single-person limited liability companies (s.r.o.).
When this happens, the worker earns more, and the company may save money as well. For example, if the company paid €3,500 under a service contract, it could save around €600. The former employee could also earn significantly more. If they become self-employed, they would pay minimum monthly social and health contributions of €425. This would leave them with approximately €3,000 per month—about €900 more than before.
On the other hand, they also have tax obligations that must be settled by filing a tax return by the end of March of the following year. However, these taxes can be reduced through mechanisms such as lump-sum expenses of up to 60% or other benefits like the child tax bonus. Even then, they may still come out several hundred euros ahead each month.
They can also switch to claiming actual business expenses and, after tax optimization, may end up paying little or no income tax. The state does not like this situation. Prime Minister Robert Fico has repeatedly pointed out that two-thirds of sole traders pay no income tax. Measures in this area are also being pursued by Erik Tomáš.
In the case of a limited liability company (s.r.o.), the entrepreneur must keep double-entry accounting records and usually needs an accountant, whose fees start at around €50 per month. In this way, the former employee may avoid social insurance contributions while also optimizing taxes. Compared with regular employment, the net income of an IT specialist operating through an s.r.o. can increase by as much as 50%.
