On 3 July 2026, the Council of the European Union published a recommendation outlining specific economic, social, employment, structural and budgetary policies for Slovakia. The document, adopted by the Council, addresses identified challenges including macroeconomic imbalances and fiscal sustainability, and sets out policy priorities for the coming years.
The recommendation calls on Slovakia to ensure net expenditure growth complies with the recommended maximum rates: 3.8% in 2025, 0.9% in 2026, 1.6% in 2027, and 1.5% in 2028. The 2026 projection of 2.9% exceeds the recommended rate by 0.8% of GDP, indicating a need for fiscal tightening. To accommodate higher defence spending without endangering fiscal sustainability, the Council advises using the national escape clause, activated for 2025-2028, to reprioritise expenditure.
On tax reform, the Council recommends reducing the tax wedge for low-income earners and shifting taxation toward recurrent property taxes—currently area-based rather than market-value—and environmental taxes. It also calls for broadening the VAT base by reducing reduced rates. The recommendation urges better implementation of spending reviews to generate savings.
Addressing the severe housing shortage—Slovakia has the lowest housing stock per capita in the EU—the Council recommends implementing the new Building Act to streamline permitting and expanding rental and social housing, which currently accounts for only 2.5% of total stock. Social welfare benefits, such as the 13th pension and energy subsidies covering 90% of households, should be better targeted to vulnerable groups.
The Council also calls for accelerating implementation of EU cohesion funds—ERDF, JTF, ESF+, and CF—which remain below the EU average, and ensuring swift deployment of investments from the mid-term review. On macroeconomic imbalances, the recommendation highlights limited progress in addressing vulnerabilities in external and government balances, competitiveness, housing market, and household debt.
Slovak taxpayers may face higher property and environmental taxes, while low-income earners could benefit from a reduced tax wedge. The housing sector would see regulatory changes aimed at increasing supply, potentially benefiting renters and homebuyers. Social welfare recipients may experience more targeted benefits, possibly reducing universal subsidies. EU fund beneficiaries, including regional development projects, could see faster disbursement of cohesion funds.
The recommendation is non-binding but forms part of the European Semester cycle. Slovakia is expected to report on progress in its National Reform Programme and Stability Programme. The Council will review implementation in subsequent years.