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Exporting To Slovakia

Overview

Slovakia is one of 9 Central and East European (CEE) markets. It has enormous growth potential.

Over 100 UK owned companies operate in Slovakia. Tesco is Slovakia’s top retailer and one of the main employers in the country. Other major UK investors include Shell, Provident Financial, CP Holdings, Amec, Tate and Lyle, BAE Systems, GlaxoSmithKline and Allen and Overy.

Benefits for UK companies exporting to Slovakia include:

• English accepted as a business language
• gateway to emerging markets of eastern Europe
• one of a few countries in CEE to use the euro
• direct international air services
• English widely spoken

Strengths of the Slovak market include:

• stable economic and political environment
• strategic geographical position
• excellent telecommunications infrastructure
• highly skilled and flexible labour force
• high labour productivity with favourable labour costs

Challenges

Slovakia is a member of the European Union (EU) so European business practices and standards generally apply. There are no major cultural differences to consider.

The main challenges to doing business in Slovakia include:

• bureaucracy
• corruption
• non-transparent public tenders
• e-government readiness
• Slovakia is in the top 25% in the World Bank’s ‘Ease of Doing Business’ ranking

You should ensure you take the necessary steps to comply with the requirements of the UK Bribery Act.

Growth potential

Economic growth

The Slovak Republic’s economy is converging rapidly towards the living standards of advanced Organisation of Economic Cooperation and Development (OECD) economies.

The Institute for Fiscal Policy (IFP) forecasts Slovakia’s Gross Domestic Product (GDP) will grow by around 2.4% in 2014 from 0.9% in 2013. The growth will be driven mainly by increased consumption and investment. In 2015 the economic growth should slightly accelerate and reach 2.6%.

Trade agreements

Slovakia is a member of the EU and the World Trade Organization (WTO). Goods manufactured in the UK are exempt from import duties.

Contact the SOLVIT team if you have market access issues relating to the operation of the Single Market.

EU funding

Slovakia has been allocated around EUR 14 billion in total for 2014 to 2020 through the structural and cohesion fund programme.

The main investment priorities are:

• infrastructure
• human development
• innovation
• energy efficiency

High growth Europe

Slovakia is part of the Emerging Europe region which offers numerous opportunities, particularly in 6 main sectors:

• energy
• infrastructure
• advanced engineering
• services
• security
• life sciences

Trade between UK and Slovakia

The UK is the 13th largest investor in Slovakia. It exported £441 million in goods to Slovakia in 2013. Bilateral trade was worth £2.21 billion.

UK’s top exports to Slovakia:

• fish fillets and fish meat
• platinum
• petroleum gases
• vehicles and car parts
• chemical materials and products

Opportunities for UK businesses in Slovakia

Access high value public procurement notices via Tenders Electronic Daily (TED). TED contains all procurement notices above a certain threshold from the EU and European Economic Area (EEA).

Railways

Slovakia is in receipt of EU funds to develop railway infrastructure.

Opportunities for UK companies include:

• track modernisation related to increasing speed and safety, electrification, and European Rail Traffic Management System (ERTMS)
• new passenger rolling stock
• upgrading railway stations
• building of 25 new tunnels totalling 40km
• reducing railway noise

Water

Slovakia can still draw around EUR 160.5 million from the Cohesion Fund (2007 to 2013 period) for construction of water and sewage networks and water treatment plants. All such projects must be completed by 31 December 2015.

Large volumes of the waste in Slovakia end at landfills. There are 118 landfill sites in Slovakia and 19 incinerators. Only 2.8% of the total waste and 6.8% of municipal waste is used for energy generation.

Opportunities for UK companies include:

• technology to increase use of waste for energy and recycling
• biomass waste energy projects

Automotive

Slovakia produces more cars per capita than any other country in the world. There are 3 Original Equipment Manufacturers (OEMs) based in Slovakia:

• Volkswagen in Bratislava
• PSA Peugeot Citroen in Trnava
• KIA Motors in Zilina

Supply chain opportunities for UK companies include:

• castings
• forgings
• metal sheets
• plastic mouldings
• design engineering services
• testing services

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Retail

The retail market is dominated by foreign retail chains.

Demand for clothing and fashion accessories in Slovakia has been increasing in recent years. Slovak consumers are becoming more brand conscious. An increase in real disposable incomes is expected to result in an increase in the sale of higher priced goods.

Opportunities for UK companies include:

• fashion
• luxury products
• Internet retailing

Healthcare

Slovakia spends a relatively high proportion of GDP on healthcare, estimated at 8.6% in 2013. The healthcare system is still very much in the public sector, although the majority of pharmacies and health spas are now privately owned.

Opportunities for UK companies include:

• pharmaceuticals
• medical equipment and supplies
• equipment for medical laboratories
• eHealth

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Start-up considerations

To enter the Slovak market you can:

• appoint a local representative, distributor/agent
• set up branch office

The EU starts-ups guide provides information on setting up a company or subsidiary branch in Slovakia.

Legal considerations

Slovakia’s legal system is largely harmonised with EU requirements.

UK companies entering into agreements in Slovakia should take professional legal advice.

Standards and technical regulations

Products and packaging should meet EU standards.

Slovakia’s Standards, Metrology and Testing Authority has responsibility for standards and technical regulations.

All labels and packaging must be in Slovak.

Intellectual property

Trademarks, designs, patents and copyright are the principal forms of Intellectual Property (IP) protection available to companies and individuals.

IP law, especially for patent protection, is not totally harmonised within the EU.

The Industrial Property Office of the Slovak Republic has responsibility for intellectual property protection.

Tax and customs considerations

Value Added Tax (VAT)

The standard rate of VAT is 20%. A 10% rate applies to certain pharmaceuticals, healthcare products and books.

Check with HM Revenue and Customs (HMRC) regarding VAT refund of business expenses incurred in Slovakia.

Corporate taxation

The corporate tax rate is 22%.

Personal income tax

Income tax is 19% on incomes not exceeding EUR 35,002. A 25% rate is levied on incomes above this.

Customs

The internal market of the EU is a single market which allows the free movement of goods and services. Therefore, no import duties apply.

Entry requirements

You do not require a visa to travel or work in Slovakia. Passports must have a minimum of 6 month’s validity.

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