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Business in Slovakia

1. Tax The tax system of the Slovak Republic is compliant with the systems of taxation in other EU

Member States and includes corporate and personal income tax, standard value added tax

(VAT), special taxes imposed on certain assets (such as real estates, vehicle-road tax) as well

as a system of excise taxes levied on specific goods such as alcohol or tobacco products.

Corporate income tax is paid at a flat rate of 19%.

Tax is paid on the taxable profit shown in a company’s financial accounts, which must

comply with Slovakian accounting standards.

There are no local business taxes in Slovakia.

The standard VAT rate is 20%.

Excise duties are payable on alcohol, tobacco, leaded and unleaded fuel, and industrial and

commercial fuel.

2. Permits As a matter of Slovak law, the setting up of a company is divided into two stages, as follows:

1. establishment;

2. incorporation.

1. The establishment of a Limited Liability Company is deemed to be the moment when the

founders sign the foundation documents. This does not give the legal personality to the

established company and, therefore, it is not yet entitled to perform any business activity.

The documents to be executed upon the establishment of a company include:

a.) Memorandum of Association or Foundation Deed in the form of a notarial deed (if

there is only one participant in the company);

b.) Articles of Association . The Articles of Association must be notarised

Checks must be made to ensure the company name is not already in use.

The next step after the company establishment is to make an application for trade licences,

tax registration and health insurance; this can be done on a single, composite application

and can take anything between five and 10 days. Personal identification and a passport are

required as proof of identity. Opening a new bank account is also essential where capital is to

be paid up.

Trade licence or certificate can be obtained at the Trade License office.

Trade “certificates” are issued for “notifiable” trades, which fall into three different

categories:

1. Crafts - requiring an apprenticeship period (i.e. metalworking, motor vehicle repair,

glass cutting, cosmetic production, brewing, masonry, carpentry, etc.)

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2. Regulated Trades - generally requires a higher level of education than an

apprenticeship period (i.e. travel agency, catering, accommodation services , medical

supplies, electrical equipment, tourist guide, foreign language teacher, etc.)

3. Unregulated Trades - no professional qualifications, other than the minimum age

requirement (18), mental competence, and good character required for all entrepreneurs.

Additional documentation required for the Trade License Office is as follows:

a. documents proving the executive director’s/responsible representative’s qualification

(usual documents include: graduation certificate, confirmation of professional practice);

For travel agency it is necessary to have a graduation certificate from the

University which provides education in tourism and confirmation of 3 years of

professional practice or a graduation certificate from the secondary vocational

school in the field of tourism and 5 years of professional practice.

b. a copy of the temporary residence permit/permanent residence permit for the executive

director/responsible representative (if applicable) unless he is a citizen of an EU/OECD

Member State; and

c. an extract from the criminal records for the home jurisdiction of the executive

director/responsible representative (if applicable).

2. Incorporation

After the foundation of the company as described above, with a trade certificate in the hand,

the next step is a trip to the Commercial Registry, located in the district court in the regional

court seat where the company’s place of business will be located. Registration will take about

5 days. Finally, registration for pension, sickness and unemployment insurance is also

mandatory.

The business’ official existence, and the authorization to conduct business, begins as of the

date the business is incorporated in the Commercial Registry. The registration documents are

a matter of public record.

Certain documents and information are required to incorporate a Limited Liability Company

in Slovakia, namely:

The full name of each shareholder;

The company name;

The full name, date of birth and nationality of the person setting up the new company;

The principal objectives of the new company and the type of business;

Details of the paid-up capital and shareholding of each member.

It is not necessary to have a business plan, but it is recommended.

Elements of a business plan:

1. Executive summary (objectives, mission, keys to success)

2. Company description(ownership, history, location, facilities)

3. Management team (organizational structure, management team, personnel plan)

4. Market analysis (segmentation, target market, main competitors)

5. Products (description of product or service, technology)

6. Marketing plan (price policy, distribution, sales strategy)

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7. Financial plan (break-even-analysis, projected profit and loss, projected cash flow,

projected balance sheet, long-term plan)

8. Enclosures

Costs for the permits: 331,50 – registration to Commercial Registry.

Other application can be done online and it is free.

3. Finance Interest for business loans - between 4,6 % and 8 %

Funding from government

People who are unemployed last 3 months can get maximum 3700€ for starting own

business. It is necessary to have a business plan and present it to the profesional board.

Business plan has to prove that received money will be used effectively. Besides, it is

necessary to run business at least 2 years. If not, money must be paid back.

4. Running costs Costs per employee ( 1 high trained person)

- Income average 765 € brutto

- Tax 19%

Minimal wages – 327 €

Insurance - both employers and employees are subject to social security taxes on an

employee's gross monthly pay. The rates are 35.2% for employers and 13.4% for

employees. However, contributions are capped at a maximum of 825.41€ for employers and

308.04 € for employees per month

Costs to rent an office per m2

- around 10€

Advertising costs – monthly: Billboard cca 200€

Journal, newspaper - 23€/ 1 cm2

TV – 30 s promo: 500 – 3 200€ (depending on time, television)

5. Rights for employees (hire and fire)

Employment is based on a written employment contract between the employer and

employee, which may be concluded for a fixed or indefinite period. Employment for a fixed

period may be agreed for up to three years. Within these three years it may be extended or

renewed once. Contract is drawn up in two copies, one of which is for the employee.

An employment contract must include (otherwise it will be invalid):

type of work involved,

place where work will be performed,

start date of the work,

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pay conditions, unless agreed in a collective agreement.

In the case of work performed without an employment relationship, the employer and

employee must conclude a work agreement.

It is also possible to agree other terms in an employment contract, such as material

benefits or a trial period. A trial period may last up to three months and may not be

extended.

There are minimum social rules to follow, especially about non-discrimination, gender

equality and health and safety.

Employer has:

to sign up to the Social Insurance Agency's Register of Employers within eight days of the

day on which it starts to employ at least one employee,

to sign up to the Insurance Register and the Register of Pension Scheme Contributors

One of the main duties of an employer is to keep records of employees for the purposes of

social insurance and pension fund contributions.

An employer may only employ foreigners:

who have an employment permit and a temporary residence permit for the purposes of

employment

who are applying for asylum and who are allowed to seek work under the specific legislation

Employee can work up to 40 hours a week. Employees working a two-shift system may

work up to 38 ¾ works a week. Employees working a three-shift system or who are involved

in uninterrupted work may work up to 37 ½ hours a week.

The minimum basic holiday allowance is four weeks.

An employment contract may be terminated by agreement, by the serving of notice, by

immediate notice or by termination during a trial period.