A software company can deduct almost any cost that provably relates to building software and helps generate taxable income — hardware, software licences, cloud services, developer salaries, training and part of home-office costs. The core rule is the same in Slovakia and Czechia, but the thresholds, depreciation and R&D incentives differ, so the two countries are worth comparing side by side.
What counts as a tax-deductible cost?
In both countries a cost is deductible only if it was provably incurred to earn, secure and maintain taxable income, and is documented and properly recorded. In Slovakia the rule sits in the Income Tax Act (Act No. 595/2003); in Czechia in Section 24 of Act No. 586/1992. The logic is identical — evidence, business purpose and correct timing decide.
The corporate income tax that these deductions reduce differs, though. Czechia applies a flat 21 % corporate rate. Slovakia is tiered for 2026: 10 % for companies with taxable income up to €100,000, 21 % above that, and 24 % for income over €5,000,000. For a small dev shop the Slovak 10 % band lowers the overall burden, even if each deduction saves less in absolute terms.
If you are deciding where to base the company, our overview of Slovak tax advisory for companies is a useful starting point.
How is hardware treated?
Computers, monitors, servers and phones are everyday costs, but the line between an immediate expense and a depreciable asset differs. In Slovakia, tangible assets are depreciated above €1,700; below that a device can be expensed at once. In Czechia the threshold is CZK 80,000.
Depreciation periods differ too. Computing equipment falls into the first depreciation group in both countries, but that means four years in Slovakia and three years in Czechia. Expensive workstations and test rigs are therefore written off faster in Czechia.
Is software a cost or an asset?
This is where the two systems diverge most. In Czechia the tax category of intangible assets was abolished in 2021 — software now follows its accounting treatment, and accounting amortisation is automatically tax-deductible. In Slovakia software above €2,400 with a useful life over one year is a long-term intangible asset, amortised in line with accounting under Section 22(8) of the Income Tax Act.
Purchased licences and subscriptions (IDEs, design tools, APIs) are ordinary operating costs in both countries and reduce the tax base as they are incurred.
What about cloud and operating services?
Cloud infrastructure (AWS, Azure, Google Cloud), hosting, domains, monitoring and SaaS subscriptions are standard deductible costs in both countries, recognised in the period they relate to. Prepaid annual subscriptions are spread over time. Buying services from foreign providers also triggers reverse-charge VAT obligations in both jurisdictions — a point IT firms often overlook.
How are salaries and contractors handled?
People are usually the largest cost. Salaries of developers, testers and project managers, including employer contributions, are fully deductible in both Slovakia and Czechia, as are invoices from freelancers and contractors where the work genuinely relates to the business and is documented. Professional training, certifications and conferences are deductible too.
What R&D relief can an IT company use?
Both countries reward genuine research and development, but the mechanics differ. Slovakia offers a super-deduction of an additional 100 % of eligible R&D costs (unchanged since 2022). From 1 January 2026 Czechia became more generous (Act No. 360/2025 Coll.): an additional 150 % of eligible costs up to CZK 50 million, and 100 % above that, under Section 34 — with unused amounts now carried forward for up to five years. So the same costs are effectively claimed more than twice in Czechia up to the cap, and twice in Slovakia.
The catch is identical: the activity must show a genuine element of novelty and technical uncertainty, not routine development. A written R&D project and separate cost records are required in both countries.
Which costs are most often claimed incorrectly?
Mistakes go both ways in either country — legitimate costs left unclaimed, or private-use items deducted in full without apportionment. Client entertainment (representation) is typically non-deductible in both. Good record-keeping and timely advice cost less than a tax reassessment. For the accounting foundations, see our note on professional accounting in Slovakia.
Not sure which of your software company’s costs are genuinely deductible — or whether you qualify for R&D relief in Slovakia or Czechia? Let’s go through it together.
FAQ
Can a software company deduct a computer the director also uses privately?
Yes, but only the proportion that corresponds to business use. If a laptop is used, say, 80 % for work and 20 % privately, 80 % of the cost is deductible. The split must be reasonable and defensible. If the device is used solely for the business, the full amount is deductible. This applies in both Slovakia and Czechia.
Are cloud and software subscriptions a one-off cost?
Monthly and annual subscriptions are ordinary operating costs that reduce the tax base as incurred. Amounts prepaid for a longer period are spread over time. One-off software above the intangible-asset limit is amortised in Slovakia; in Czechia software simply follows accounting treatment since 2021.
Does every software company qualify for R&D relief?
No. R&D relief — an extra 100 % of eligible costs in Slovakia, and from 2026 an extra 150 % up to CZK 50 million (100 % above) in Czechia — applies only to activity with a genuine element of novelty and technical uncertainty, not to routine development. A written R&D project and separate cost records are required in both countries. Ordinary custom software work without innovation does not qualify.