Doing business in Slovakia
Slovakia and Investments
Doing business in Slovakia
According to the evaluation the World Bank's "Doing Business 2014" is the business environment in Slovakia the best of all Eastern European countries. Slovakia is a very attractive location for investors and entrepreneurs.
Slovakia is on top of economic growth. Slovakia is belong to states with the highest economic growth despite the economic crisis. The economic analytics confirm this fact.
Slovakia offers favorable conditions for conducting business in terms of legal, tax and personnel resources. Travelling to other major capital cities is quick and easy (Vienna 60 km, Budapest 200 km, and Prague 300 km). Many international companies chose Bratislava as a location for the competence centers (e.g. Lenovo, Dell, Amazon) due to skilled personnel available and lower salary levels as in older member countries of EU. Automotive industry is one of the leading in the country with Volkswagen located also in Bratislava. Well-developed infrastructure with available quality office space, high speed networks, flight connectivity form Vienna airport, and extensive banking environment are fact important for investors to choose Bratislava for their business.
General information about Slovakia
Slovakia became an independent state in January 1993 after Czechoslovakia split into its two constituent parts. The Slovak Republic lies in Central Europe. Slovakia covers 49,035 sq. km (18,933 sq. miles) with 5,4 million population. Slovakia borders with Hungary, Poland, Czech Republic, Austria and Ukraine. Euro currency is used in Slovakia (since 2009). Slovakia is a member of the European Union, NATO, OECD, WTO, OSN, OBSE, FAO, ILO, V4 and other international organizations. Slovakia is a member of the Schengen area since 2007.
Slovakia’s market reforms and pro-business outlook have made it an attractive opportunity for foreign investors. Its low-cost, skilled labor force and its central location have also contributed to its success.
Slovakia’s services sector represents almost half of the country’s GDP. Banking and investment are important sub-sectors and research and development, especially information technology, grows.
Manufactured products include vehicles, metals, chemicals, electrical goods, and machinery. The country also produces food, beverages, paper, textiles, and ceramics. Slovakia’s agricultural includes products such as hops; sugar beet, potatoes, and fruit and forest products.
Germany buys 22 percent of Slovakia’s exports; other major export partners include the Czech Republic, Poland, Hungary, France, Austria, and Italy. Machinery, transportation and electrical equipment, vehicles, mineral products, chemicals, plastics, and base metals comprise Slovakia’s export commodities. The Germany also leads the list of Slovakian import partners at 19 percent of the market, followed by the Czech Republic, Russia, Austria, Hungary, Poland, and South Korea. Slovakia’s import commodities include machinery and transportation equipment, plastics, chemicals, vehicles, mineral products, and base metals.
Slovakia’s economy offers a number of attractive opportunities for foreign investors. Foreign investors may repatriate profit and capital and can own Slovakian businesses entirely, although certain sectors bear restrictions and bans. Austria, the Czech Republic, Luxembourg, Russia, Great Britain, and Poland have invested heavily in Slovakia. The automotive industry, consultation and education, textiles, aquaculture, environmental products, and food and beverage manufacturing all represent excellent foreign investment opportunities.
Types of business entities in Slovakia
Doing business in Slovakia is available for individuals (natural persons) or business companies (legal persons). Generally it takes 10 business days to start your business in Slovakia. It is relatively easy to start your business in Slovakia and fast.
Joint-Stock company (akciová spoločnosť – a.s.)
• A business name must include an abbreviation “a. s.”
• The minimum registered capital is EUR 25,000
• At least 30% of the monetary contributions must be paid prior to the registration of the company. The company must set up a reserve fund of at least 10% of the registered capital and must maintain this fund annually with a contribution based on annual profits.
• Own capital is composed of shares, that have a certain nominal value. This value must be paid for strict time.
• Joint-stock companies may be founded by a single legal entity or by two or more individuals or legal entities.
• If the company is established by a sole shareholder, a foundation deed must be executed too. The foundation agreement and the foundation deed must be made in the form of a notarial deed on a legal act.
• The company is liable with its total assets for failure of its debts. The shareholders aren’t responsible for debts of the company.
• A joint-stock company is liable with its entire property for any breach of its obligations. The shareholders are not liable for the obligations of the company.
• Mandatory establishment of three bodies – Board of Directors; General Meeting of Shareholders; and Supervisory Board
Limited Liability Company (spoločnosť s ručením obmedzeným – s.r.o.)
• A business name must include an abbreviation “s. r. o.” or “spol. s r. o.” .
• It may be founded by one or more (up to 50) individuals or legal entities (known as ‘partners’).
• An individual cannot be the sole partner in more than three companies
• The minimum registered capital is 5 000 EUR, with the minimum percentage of the member at least 750 EUR. Unlike other countries, there is no need to place the registered capital at the company’s bank account.
• At least 30% of each individual contribution must be paid up prior to registration with the Commercial Register.
• The company is liable with its total assets for failure of its debts.
• Mandatory establishment of two obligatory bodies – General Meeting of Shareholders and Executives. A Supervisory Board is not required
General partnership (verejná obchodná spoločnosť - v.o.s.)
• A business name must include an abbreviation “ v.o.s.”
• No minimum capital or audit is required.
• A general partnership is a company in which two or more individuals or legal entities (partners) carry out business activities under a common business name.
• Partners are liable for failure of its debts with their entire property jointly and severally.
• Unless stated otherwise in the Memorandum of Association, each partner is empowered to act on behalf of the partnership.
Limited partnership (komanditná spoločnosť - k. s.)
• A business name must include an abbreviation “ k.s..”
• A Limited Partnership is a hybrid of a Limited Liability Company and a Public Trading Company
• A limited partnership must be founded by at least one limited partner and at least one general partner.
• The partners may be individuals or legal entities.
• In limited partnership must be one or more partners which are liable for the partnership´s obligations up to the amount of the unpaid parts of their contributions as recorded in the Business register /limited partners/ and one or more partners are personally liable for the partnership’s obligations from all of their assets /general partners/,.
• The minimum contribution of a limited partner is €250.
• A co-operative is a partnership of an unlimited number of persons (at least 5 natural persons or 2 legal entities) who founded it in order to do business or to satisfy their economic, social or other needs.
• A co-operative may be formed by at least five natural persons, or at least two legal entities.
• The minimum requirement for registered capital is €1250.
• The main purpose of a co-operative is to facilitate the business activities of its members.
• A co-operative is liable for any breach of its obligations to the extent of its assets
• In generally the members of the co-operative shall not bear liability for the obligations of the cooperative.
Taxes in Slovakia
In order to reduce the government budget deficit the new government in December 2012 approved an amendment to Act. No. 595/2003 Coll. on Income Tax which abolished the previously valid 19% flat tax and introduced a progressive personal income tax with two rates. The range of rates was further extended by an additional special tax rate of 5% for selected state officials, an increased rate for legal entities, and by the reintroduction of taxation of dividends. The amendment came into effect on January 1, 2013. Since January 1, 2014, Corporate Income Tax in Slovakia has been reduced to 22%.
Social security contributions in Slovakia are paid by both the employer and employee. The basis for the calculation of the amount of the contributions consists of the gross salary of the respective employee. Individual entrepreneur is also obliged to pay social security contributions.
The employee pays the social insurance 9.4% of their gross salary. Social insurance includes contributions to sickness Insurance, pension insurance, disability insurance and unemployment insurance. Employers are liable for social insurance 25.2% of the gross salary of the employee.
Health insurance in Slovakia is not included in the scope of social insurance. The healthcare system in Slovakia falls under the competence of the Ministry of Health of the Slovak Republic.
Employee pays for health insurance 4% of their gross salary. The employer pays for health insurance, 10% of the gross salary of the employee.
Value Added Tax (VAT)
The basic VAT rate is 20%. Slovakia has increased the standard VAT rate from 2011 (from 19%).
Certain supplies are exempt: healthcare (except for supplies of pharmaceuticals and health aids), public radio and television broadcasting (except for broadcasting of commercials and sponsored programs), education, financial services, cultural services, lotteries and similar games, Insurance and reinsurance services, exported goods, intra-Community supplies of goods, international transport of persons.
Other Consumption Taxes.
There are consumer taxes on alcohol, beer, wine, tobacco and petrol.