This paper is intended to guide foreign investors through the business environment in the Slovak Republic. In addition to general information about the Slovak Republic, this paper includes information on establishing a business, investment incentives, employment, competition, intellectual property, taxation, real estate (including construction) and enforcement of law.
Section 1, General Information, contains some fundamental information about the Slovak Republic and points out that it is a member state of majority in all relevant European and international institutions and organizations.
In Section 2 on Establishing a Business, we point out that a company in Slovakia can be registered in two business days. While there are a number of possible corporate structures that can be established in the Slovak Republic (as well as European forms, such as Societas Europea, etc.), the most frequently used entity to perform business in Slovakia is the limited liability company (SRO), which requires as a minimum EUR 5,000 in registered capital. In general, its shareholders are not liable for the company’s obligations.
In Section 3 on Investment Incentives, you will note that investors are able to request investment aid provided they fulfil statutory requirements. The most important aid is not applicable in the Bratislava region. Once the formal procedure is completed, the Slovak government grants the aid upon a motion from the Ministry of Economy of the Slovak Republic. There is, however, no legal entitlement on granting the investment aid.
Section 4, Employment, points out that principle of free movement of labour applies to all EU, EEA and Swiss nationals working in the Slovak Republic. Employees can be represented by trade unions, work councils or work trustees; however, the creation of these bodies is not mandatory. As a general rule, the employer can terminate the employment relationship with an employee with a one to three months’ notice and only if there is a statutory reason for termination.
Slovak competition law (Section 5 – Competition) is compliant with European competition rules. It covers merger control as well as agreements restricting competition and abuse of dominant position. The Slovak competition authority has broad powers to investigate (e.g. dawn raids) and is able to exchange a variety of information through its membership in relevant European and international competition networks.
Section 6 on Intellectual Property summarizes that Slovak IP regulation is consistent with European law. The Slovak Republic is a party to all relevant international treaties, such as the Madrid Agreement or Paris Convention for the Protection of Industrial Property. Particular IP rights are covered by separate legislation on trademarks, designs, patents, and copyright (for the latter no formal requisites need to be fulfilled for protection to arise).
Section 7 on Taxation contains basic information on the Slovak tax system. The Slovak Republic has a standard set of direct and indirect taxes. It is notable that the Slovak corporate income tax is flat – 21% and in certain circumstances dividends are subject to taxation. Transfer pricing principles and thin capitalization rules apply both in domestic and cross-border transactions. The Slovak VAT scheme is in compliance with the relevant EU directives. VAT has two rates – basic 20% rate and reduced 10% rate.
Section 8 on Real Estate and Construction point out that Slovak real estate law does not adhere to the old Roman principle of superficies solo credit. While there are some restrictions on foreigners acquiring certain plots of land, some structures exist to address this issue, for example establishing a Slovak-based business company, such as an SPV, for acquisition. In any event, before acquiring any real estate a due diligence review is strongly recommended.
In Section 9 (Enforcement of Law) we briefly point out that in addition to the Slovak court system, parties to transactions may opt for an arbitration body to have potential disputes resolved. Enforcement of decisions is generally done through private enforcement bodies, known as executors. Insolvency is governed by a separate law and except for bankruptcy it also enables restructuring. It is notable that under certain circumstances prescribed by the bankruptcy law the statutory bodies of companies must declare bankruptcy; otherwise, they may be liable for damage and/or imposed sanctions.
This paper reflects legal status as of 1 January 2018. Please note that it contains only general information and in no event constitutes legal advice. It is of an informative nature only and may not be relied upon or copied by any person. In order to conduct business in the Slovak Republic, specific legal advice should be sought.
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