Starting a Business in Slovakia
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Why Start a Business in Slovakia?
Slovakia is generally recognised as an open market economy and has recently become known as a central European leader in economic development and rated by World Bank as one of the 20 most investor friendly countries in the world. It offers almost the whole EU within 2000 km radius as well as acts like the Gateway to Balkans and another 440 million inhabitants. It is politically stable EU Member State with 19% flat tax rate. Over 90% of more than 200 existing foreign investors in Slovakia have further expansion plans (in Slovakia).
What are the currency and exchange rate?
The currency of Slovakia is the Euro. For an up-to-the-minute exchange rate, please use the currency converter located on the site.
Geography and Climate
Slovakia is situated in the heart of Europe. It is mountainous country with relatively hot summers and cold winters. Slovakia shares borders with Poland, Ukraine, Hungary, Austria and Czech Republic. Bratislava, the capital city, is strategically situated downstream from Vienna on the river Danube close to Austrian and Hungarian borders.
Where should I base myself?
Slovakia's capital city of Bratislava has been the focus for investment coming into the country, and is without doubt the focus of interest among property buyers wishing to invest in Slovakia. Many large international companies have moved into the city.
Time Zone: GMT + 1hr
Official Language: Slovak
Parliamentary System: Republic
Election system: proportional representation
Membership in international organizations: EU, OECD, NATO, WTO, UNO
The comprehensive and deep structural reforms by the Slovak Government over the last four years have focused on creating a business friendly environment for investors.
New act on investment aid has entered into force on January 1, 2008. This new act allows for provision of regional investment and employment aid for investment or expansion projects of industrial production, technology centres, strategic service centres, and complex tourism centres.
At the same time, the European Commission is reforming European Union state aid rules.
What does Slovakia export?
According to the Statistical Office of the Slovak Republic, the total export from Slovakia grew by 15.2 % and reached SKK 1 421 billion while the imports grew to SKK 1 442.1 billion or 10.2 %.
The Slovak Republic had the highest active balance with United Kingdom, France, Austria, Italy, the Netherlands, Poland, Spain, USA, Germany and Romania.
In terms of goods, it is mostly export of private cars and other motor vehicles, television equipment, bodies (coachwork) for motor vehicles and parts and accessories for motor vehicles.
Export to the EU comprised 86.7 % of the total Slovak export.
What does Slovakia import?
In terms of goods, Slovakia is importing mainly parts and accessories for transmitting equipment for radiotelephoning, radiotelegraphing, radio and TV broadcasting, parts and accessories for motor vehicles, electrical equipment for wired telephony and telegraphy, television equipment and also private cars.
In relation to the most significant trade partners, import is coming from Germany, the Czech Republic, Hungary, China, the Republic of Korea, Poland, France and Austria. What sort of opportunities are there in Slovakia?
The driving force behind the sharp increase of foreign direct investment is primarily investor friendly policies adopted by the current Government.
Geographically, Slovakia is at very centre of Europe, with combined market potential of over 350 million people. Several principal transport routes (road, rail, river) oil and gas pipelines cross the territory of Slovakia.
The Slovak government has made considerable progress in macroeconomic stabilisation and structural reform and the economy continues to grow. Heavy industry and agriculture have declined in importance since the end of communism but the services sector has increased significantly. A rise in real wages has contributed to a revival of domestic demand and consumption is increasing.
Low cost base of Slovak businesses and its membership in the EU (from 1.5.2004) means that you will be able to reduce your costs and increase your profits.
The automotive sector is currently one of the fastest growing sectors in Slovakia, primarily due to the significant amount of brown and greenfield investment already operative or currently planned. Car production could achieve one million units around 2013, this will make Slovakia the top per-capita car producer in the world. Other sectors active with respect to foreign investment are engineering, electronics, business process outsourcing and ICT. Investors from these sectors have already discovered Slovakia as a suitable location for their business operations. Still unutilized potential is in a pharmaceutical sector, biotechnology and in tourism.
There are particular opportunities in the following sectors:
- Automotive Industry - Stampings and Pressings, Fasteners/Fixings, Plastic Mouldings, Design Engineering Services, Testing Services
- Education & Skills - vocational education, rural development training, lifelong learning, ICT in Education, English language
- Clothing and fashion - British fashion is generally well regarded and opportunities exist for well-known fashion brands that offer good quality clothes at reasonable prices
- Water - key projects planned in drinking water supply, sewerage and wastewater treatment
- Environment - waste management, air pollution, soil decontamination projects and there is also demand for environmental services (audits, etc.
- Food and drink - confectionery, sauces, cereals, spirits, tea and ethnic foods
Labour and workforce
Employment of foreigners
The employment of foreigners is possible in Slovakia; usually they are required to obtain work permits issued by a local labour authority. For Czech individuals there is simplified procedure.
Since May 1st 2004 EU members do not need a work permit. Slovak legal entities or branch offices without restriction may employ Slovak individuals.
All employees must be registered with the labour and tax authorities.
Rules for expatriates
Employment income received by non-residents, for work performed on Slovakian territory, who are employed by a foreign entity and paid from abroad, is exempt from Slovak personal income tax provided that it is not derived from independent activities (actors, sports people, etc.) or performed in a permanent establishment. Slovak tax legislation includes the 'economic employer' structure under which, under certain circumstances, individuals legally employed by non-Slovak entities may be regarded as employees of a Slovak entity.
To utilise the knowledge of the Slovak people, investment incentives focus on investment projects from the high-tech sector and strategic services. The impact of state aid in these projects could reach 50% of the eligible investment costs. Companies can also benefit from the positive effects MINERVA has on the microeconomic environment and the talent base in Slovakia.
The labour productivity expressed in terms of GDP per hour worked shows very strong labour productivity growth in Slovakia. The growth is much higher not only in comparison to the original 15 EU countries but more importantly it is higher than in the neighbouring countries like Hungary, Poland and Czech Republic, which have similar conditions.
The workforce of more than 2.1 million has a strong tradition in engineering and mechanical production. Foreign companies frequently praise the motivation and abilities of younger workers, who also have good language and computer skills. According to the World Bank's Student Learning Assessment Database, Slovaks outscore all other central and eastern European students in math and place third in science. The educational system is a springboard for a high quality workforce entering the labour market.
Currency in Slovakia
Since 1st of January 2009, the official currency in Slovakia is Euro
Slovakia is an export-oriented economy that offers a workforce with a high degree of language skills. English is considered a natural second language and the proximity to Austria and Germany has resulted in German being the second most-spoken foreign language. The result has been an influx of multilingual Contact Centres and Shared Services Centres. 97% of the Slovak population can speak a foreign language, putting Slovakia in the top position in Central Europe for percentage of population that speaks foreign languages.
Organisations that can assist with Starting a Business
Simplified Global Payroll Managing payroll in multiple countries is complicated with different systems, deadlines, and languages in each country, lack of reporting, and constantly changing laws and regulations. Trying to manage global payroll via fax and email with excel spreadsheets leads to data security issues, fines, and penalties for non-compliance. Blue Marble has solved global payroll challenges with cloud-based technology, customized aggregated monthly reporting, and a hybrid service model in 150+ countries around the world.
PEO Worldwide is an international PEO offering employer of record, payroll, employee benefits management, HR and compliance services throughout the world.
GTP cross cultural trainings and intercultural workshops help global companies in improving their communication, efficiency and profitability when doing business across cultures.