Country profile

Doing business
in Slovakia
2024

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S L O VA K I A

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Country summary
Legal structures

Contents

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Company formation

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Incorporation procedures

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Ongoing obligations

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Tax implications

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Labour environment

18Compliance requirements

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CountrysummaryCountry summary
Slovakia, officially known as the Slovak Republic, is locatedin the centre of Europe and is oneof the continent’s most attractive
locations for doing business. A
stable legal environment, access to
European Union (EU) markets and EU
funds, improved transport corridors,
improved technology and common
currency have made it an attractive
location for foreign investors. Key
sectors of the economy include
information and communication technology (ICT), financial
and insurance services, automotive industry, electricity andgas supply, public administration and mining. It ranked 29th
for the complexity of its business environment, accordingM
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to TMF Group’s 2023 ‘Global Business Complexity Index’.
Slovakia is a member of international organisations, suchas the EU, the Organization for Economic and Cooperative
Development (OECD), and the World Trade Organization(WTO).

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1.1

Legal structures

Limited liability company, or branch office are the mostcommon forms of business entities used by foreign
investors.

•

In an LLC, a minimum capital of €5,000 is required andthere should be at least one member and at most 50
members.

Legal entities including Joint Stock Company, Simple Joint
Stock Company, General Partnership, Limited Partnershipand Cooperatives are also used in Slovakia.
1.2

Incorporation procedures

Every company incorporated in Slovakia must be registeredwith the Slovak Commercial Register.

1.3

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Ongoing obligations

All listed companies in Slovakia must have their financial
statements audited by an independent auditor.
Financial statements are required to be prepared inaccordance with Slovak Accounting Regulations (Act on
Accounting, Commercial Code and decrees issued by the
Ministry of Finance). Consolidated financial statements
shall be prepared in accordance with International Financial
Reporting Standards (IFRS).

•

Financial statements have to be filed with the registerof financial statements, within six months of the endof the financial year at the latest, by the date on which
the entity files the income tax return. The financial
statements have to be approved within one year of thereporting period. Annual reports should be filed withthe register of financial statements within one year of

5the reporting period. Preparation of an annual reportis mandatory only for entities that are required to havetheir financial statements audited.

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1.4

The audit of financial statements must be performed,
and the annual report must be verified by an auditor
within one year of the end of the accounting period forwhich the financial statements or annual report havebeen prepared.
Tax implications*

VAT: 20%. A reduced rate of 10% applies to medical andpharmaceutical products, basic food products, someprinted media and accommodation services.
Corporate income tax: 21% (lower rate of 15% for thresholdof €49,790).
*

Refers to general taxes, actual rate may vary.

1.5

Labour environment

1.6

Compliance requirements

Slovakia has signed a multilateral competent authority
agreement for the automatic exchange of Country-byCountry (CbC) reports, in line with BEPS Action 13, andsigned the law for the ratification of the Multilateral
Convention to Implement Tax Treaty Related Measures toPrevent BEPS (MLI) on 30 July 2018.
Foreign Account Tax Compliance Act (FATCA) and Common
Reporting Standards (CRS) were adopted by Slovakia in
September 2015 and January 2016 respectively.
Slovakia has adopted most of the principles of IFRS in its
accounting law. However, there are still some differences
between IFRS and Slovak accounting standards.

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When employing an EU citizen or third country national,
the employer must comply with the reporting obligation
towards the competent Office of Labour, Social Matters andFamily. The duty must be fulfilled within seven working days
from entering a job and the same applies for the terminationof employment.

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The minimum monthly wage as of January 2023 is €700.
Employment in Slovakia is governed by the Labour Code.

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Slovakia is known to be a country with a low risk of money
laundering; it ranked 90th among 110 countries.

Social security contributions for employer and employee are35.2% and 13.4% respectively.
All third country (non-EU) nationals coming to work in
Slovakia, even for short periods, are required to obtain awork permit (or a confirmation of possibility to take thevacant post) and a temporary residence permit.

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An amendment to Slovakia’s Act on Prevention of
Legalisation of Income from the Criminal Activity andTerrorist Financing (the AML Act) came into effect on
15 March 2018, followed by adoption of the 5th EU AML
directive from 1 November 2020.

6Country factsheet

GDP
US$115.46 billion(World Bank, 2022)

Country capital
Slovakia, Bratislava

Language
SlovakKey government departments• Ministry of Economy• Ministry of Finance• Ministry of Labour, Social Affairs
and Family• Ministry of Justice• Ministry of Health• Ministry of Foreign Affairs

Currency
Euro (sign: €; code: EUR)PEL

GNI per capita
US$22,060(World Bank, Atlas Method, 2022)

Key cities
Bratislava, Košice, Žilina, Prešov, Nitra

Population
5.43 million(World Bank, 2022)

Key sectors
Information and communication
technology (ICT), financial andinsurance services, automotive,
electronics, BPO, manufacturing, miningSMAS L O VA K I A

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8

Legal structures – Company formation

The Slovak Commercial Code recognises the following
common forms of business entities, all of which are required
to be registered in the Slovak Commercial Register:
Limited Liability Company (LLC, spoločnosť s ručením
obmedzeným, s.r.o.):••

An LLC must have at least one and at most 50
members, who may be individuals or legal entities.
However, one sole member company cannot be thesole member of another company. An individual can bea sole participant in no more than three limited liability
companies.

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Capital is divided into ownership interests. The liabilityof the members is limited to the unpaid value of theirownership interests.

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A reserve fund must be established, following thecompany’s first year in profit, at a level of at least 5%of net profit but not more than 10% of the registeredcapital.

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A JSC may be formed by a single legal entity or by two or
more resident or non-resident individuals or legal entities, asshareholders. It can be public or private.

Thereafter, the fund must be supplemented
annually by a sum stipulated in the memorandumof association; this sum, however, may not belower than 5% of net profit.
The reserve fund is to be supplemented until itreaches the level stipulated in the memorandumof association, which must be at least 10% of theregistered capital.

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A minimum capital of €25,000 is required at the timeof incorporation, which must be fully subscribed andat least 30% of monetary contributions and all nonmonetary contributions must be paid.

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Capital is divided into shares, which can be registeredor bearer shares. Shares of a public A.S. are offered forsubscription through a public offering and can be listed
on a stock exchange.

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A reserve fund of at least 10% of its registered capitalmust be established at the company’s incorporation.
Thereafter, the fund must be increased annually by asum stipulated in the company’s articles of association.
This sum, however, may not be lower than 10% of net
profit.

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A minimum capital of €5,000 is required at the timeof incorporation. If there is one participant, the initial
capital must be fully paid. If there are two or moreparticipants, at least 50% of the registered capital and
30% of each participant’s initial capital contribution
must be paid. The minimum capital contribution ofeach participant is €750.

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Joint Stock Company (JSC, akciová spoločnosť, a.s.):

Simple Joint Stock Company (jednoduchá spoločnosť na
akcie, j.s.a.):
A simple joint stock company has been introduced as a
new business vehicle and a hybrid type of corporate form,
combining various features of a limited liability company
and a joint stock company.

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A J.S.A. may be established by one or more individuals
or legal entities (resident or non-resident).

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A minimum capital of €1 is required at the time ofincorporation. The entire amount of registered capitalneeds to be subscribed and all contributions of theshareholders into the registered capital must be fully
paid up.

•Capital is divided into registered shares. Shares may
be transferable; however, it is possible to restrict or
exclude their transferability.

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Shares of a J.S.A. will not be accepted by the Stock
Exchange to be traded on the securities market.

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A reserve fund of at least 10% of the registeredcapital will need to be established at the company’s
incorporation.
••

Thereafter, the fund will need to be increased
annually by a sum stipulated in the company’s
articles of association, which will need to be atleast 10% of net profit.
The reserve fund will be supplemented, until itreaches the level stipulated in the company’s
articles of association, which will need to be atleast 20% of the registered capital.

Branch Office of a foreign company (organizačná zložka
podniku zahraničnej osoby):

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General Partnership (verejná obchodná spoločnosť,v.o.s.):S

Limited Partnership (komanditná spoločnosť, k.s.):

They are generally founded by two or more legal entities orindividuals comprising at least one limited and one generalpartner. General partners are jointly and severally liable forthe obligations of the partnership. The liability of the limited
partners is limited to the extent of their capital contribution,
which must be at least €250. Only general partners areentitled to manage the partnership and act as its statutory
representatives.
Cooperative (družstvo):

Cooperatives may be formed by at least five members(individuals) or at least two legal entities, whose liability islimited to the extent of their capital contribution. A minimum
capital of €1,250 is required at the time of incorporation.
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A cooperative is required to create an indivisible fundat least in the amount of 10% of the registered capital,

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These types of entities are treated as foreign exchange
non-residents under the Foreign Exchange Act (ie they are
not treated as separate legal entities). These entities are notsubject to any minimum capital or audit requirements.
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These are generally formed by two or more individuals
or legal entities who are jointly and severally liable for thepartnership’s obligations. There is no minimum capitalrequirement, and an audit is required under specified
circumstances.

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upon its incorporation. The fund must be replenishedannually by at least 10% of the cooperative’s annual
profit, until the amount of the indivisible fund is equal toone half of the registered capital of the co-operative.

While Slovak law does not limit the activities ofenterprises or branch offices of foreign entities, itdoes require that these offices hold a trade licenceor other authorisation and provide a full list of theirplanned activities in their application for entry into theCommercial Register. Only then may they engage in theactivities registered in the Commercial Register.

As part of the EU, Slovak law also recognises the following
legal entities:•

European Company (Societas Europaea – SE): These
operate on a Europe-wide basis under a Europe-wide
law that allows the creation of a registered presence in
Slovakia.

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European Economic Interest Group (EEIG): These also
operate on a Europe-wide basis and can have an official
address in Slovakia.

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European Cooperative Society (Societas Cooperativa
Europea – SCE): These operate on a Europe-wide basis
and can establish a registered office in Slovakia.

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Incorporation procedures

Slovakia ranked 29th for the complexity of its businessenvironment, according to TMF Group’s 2023 ‘Global
Business Complexity Index’.

Incorporation procedures for establishing a Limited Liability Company (s.r.o)
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ProcedureTime tocomplete

Check the uniqueness of the proposed company name
Agency: Commercial Register held by the District Court

Less than one
day (online
procedure)

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Notarise articles of association and related documents
Agency: Notary Public or Registrar’s Office

1 day

Associated costs

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The cost of the certificate is €3

The fee for the verification of a signature at
a Notary Public is €1.99 (excluding VAT), ie,€9.95 (excluding VAT) for the verification of fivesignatures.

Apply at the one-stop shop for a trade licence, register forincome tax and health insurance company
Agency: One-stop shop

3 days4

Obtain the consent of the tax authority with incorporationof the company proving that the founder has no tax arrears(applicable only for Slovak tax subjects with tax arrears)
Agency: Tax Authority Office

5 daysNo charge

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Open a bank accountAgency: Bank

1 day

16.5€ (varies from bank to bank)6

Apply for business registration
Agency: District Court

2 days

165.75€ for electronic application, 331.5€ forhardcopy application

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Register with pension, sickness, and disability insurance
and unemployment insurance at the local social insurancecompany (Socialna poistovna)
Agency: Local social insurance company

One day,
simultaneouswith previous
procedure

No charge

3S€5 for the standard trade licence and €15 forcraft trade license

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3.1

Personnel

LLCs are managed by a statutory body of one or more
executives. A supervisory board may be established but is
not a legal requirement.
A JSC is managed by a Board of Directors with at least one
member. Members of the board are elected in the general
meeting of shareholders or by the supervisory board, if thesame is stipulated in the articles of association.

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Members of the board of directors are elected for a
maximum of five years.

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JSCs are also required to have a supervisory board
with at least three members, who are elected for a
maximum of five years. If the JSC has more than 50
employees, at least one-third of the members of thesupervisory board must be elected by the employees.

A JSA is managed by a board of directors, whose members
are elected by the general meeting or, if stipulated by thecompany’s articles of association, by the supervisory board.

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Members of the board of directors can be elected for
an indefinite period.

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A supervisory board can also be established but is notmandatory.

Partnerships are managed by general partners, who act as
its statutory representatives.

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Cooperatives with more than 50 members are managed
by a board of directors. The members are required to electa supervisory committee, with at least three members, toperform regulatory and ombudsman functions.

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If the cooperative has fewer than 50 members, themembers’ meeting may perform the functions of theboard of directors and supervisory committee.

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A branch of a foreign entity is required to appoint a director(manager) to head the branch and register them in theCommercial Register.

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A director can either be a Slovak national or a foreignerwith a valid temporary Slovak residence permit. The
residence permit is not required for citizens of the EU
and OECD countries.

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Ongoing obligations

4.1
Frequency of board/shareholder meetings for a
corporation and limited liability companies
The General Meeting of Shareholders is the supreme body ofa JSC, which meets at least once annually. Each shareholder
is asked to attend general meetings, vote, and ask for
information and explanations. The key issues discussed
in the meeting include amendments to the articles ofassociation, an increase or reduction of the registeredcapital, appointment and removal of members of the boardof directors and/or the supervisory board, approval of
financial statements and profit distribution, and decisions
concerning the liquidation of the company. Shareholders
who hold at least 5% (or less if specified in the company’s
articles of association) of the registered capital for morethan three months can request the board of directors toarrange for an extraordinary general meeting for a specified
agenda.
For an LLC and JSA, a general meeting of the members
is held at least once a year, primarily to approve financial
statements of the entity.

Entities required to prepare financial statements inaccordance with IFRS, which include:•

Business entities (a.s., s.r.o., v.o.s., k.s.) which meetat least two of the following criteria in at least twoconsecutive financial years:

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Total gross assets exceeding €170 million•

Net turnover exceeding €170 million•

Average number of employees exceeding 2,000.

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Banks, insurance companies, or other entities providing
financial services.

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Business entities required to prepare IFRS financial
statements under special Government requirements or
EU legislation.

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Companies that are required to prepare consolidated
financial statements. A company is required to prepare
consolidated financial statements when the aggregatedamounts of the parent and subsidiaries meet at least
two of the following criteria in the previous and current
financial year:

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A Members’ Meeting, which is the supreme body of acooperative, must be held at least annually, and eachmember of the cooperative has one vote at the members’
meeting, unless stipulated otherwise in the articles ofassociation. The meeting is primarily conducted to electa board of directors who deal with the day-to-day affairsof the cooperative; and a supervisory committee that is
responsible for the regulatory functions.

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Other entities that are required to be audited according
to special legislation.

4.2•

The audit of financial statements must be performed,
and the annual report must be verified by an auditor
within one year of the end of the accounting period forwhich the financial statements or annual report havebeen prepared.

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Audit requirements

The following types of entities are required to have theirfinancial statements audited:••Business entities that are obliged to create issued
capital (eg limited liability companies, all Slovak jointstock companies and cooperatives) which meet at least
two of the following criteria:•

Total gross assets exceeding €4 million•

Net turnover exceeding €8 million•

Average number of employees exceeding 50.

All listed companies.

Certain organisations that are designated by taxpayers
as beneficiaries of percentage donations of income tax, if
the annual amount of the tax donations received exceeds€35,000.

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Total gross assets exceeding €20 million•

Net turnover exceeding €40 million•

Average number of employees exceeding 250.

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4.3

Filing requirements

All entities must prepare their accounting books andfinancial statements in Slovak language and in EUR (except
where companies prepare their financial statements inaccordance with IFRS and have a different functional
currency). Financial statements are required to be preparedin accordance with Slovak Accounting Regulations (Act on
Accounting, Commercial Code and decrees issued by the
Ministry of Finance). Consolidated financial statements shallbe prepared in accordance with IFRS. All entities are required
to submit a copy of their financial statements, together
with their corporate income tax return, to the relevant
tax authority. Entities that prepare financial statementsin accordance with IFRS are also required to submit asummary of selected information from their financial
statements.
Financial statements have to be filed with the register offinancial statements within six months of the end of thefinancial year, however, no later than the deadline for filingthe income tax return. The financial statements have tobe approved within one year of the end of the financial
year. Annual reports should be filed with the register offinancial statements within one year of the reporting period.
Preparation of an annual report is mandatory only forentities that are required to have their financial statements
audited.

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Annual reports must contain financial statements, anauditor’s report, summary of operations/activities, significant
and subsequent events, information about research anddevelopment costs, forecast for the entity, and otherinformation as specified by other applicable acts.

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For entities that have shares, or other securities tradedon regulated markets, annual reports must also contain
governance and management disclosures, information
about structure of shares and securities and theirrestrictions, agreements between shareholders or otherinformation related to shareholders and the company’s
bodies. Consolidated financial statements must be filed withthe register of financial statements within one year of thereporting period.
Entities that are required to prepare financial statementsin accordance with IFRS (except branch of bank, asset
management company, insurance or reinsurance company)
must make full financial statements and annual reports
publicly available on their website, for a minimum of one
year.

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Tax implications

5.1

Value added tax (VAT)

VAT is imposed on the delivery of taxable goods and VAT ischarged on the supply of goods and services in the Slovak
Republic, on the acquisition of goods from another EU
Member State (intra-community acquisition of goods), on
the acquisition of selected “reverse charge” services fromother EU Member States or third countries, and on goods
imported from non-EU countries.
The standard VAT rate is 20%. A reduced rate of 10% applies
mainly to pharmaceutical products, certain medical aids,
printed materials (books, certain types of magazines,
newspapers, etc.), selected food products (eg, fish and meatproducts, milk, butter, bread, potatoes, tomatoes, apples,etc.) and accommodation services. Certain supplies, suchas financial and insurance services, are exempt from VAT.
5.2

Withholding tax

Corporate income tax

The corporate income tax rate is 21%.
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The tax rate for entities with income less than €49,790
is 15%.

Investment incentives may be available for the production,
expansion, or modernisation of shared services centres or
research and development (R&D) centres. These incentives
are subject to special rules in the State Aid Act and can beprovided in the form of either cash or tax relief. Furthermore,
the taxpayer may deduct 200% of R&D expenses incurred in
the relevant tax period, plus the year-over-year increase insuch expenses.

No withholding tax is levied on technical services fees.
No withholding tax is levied on profits remitted by a branch
to the head office.

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Starting on January 1, 2022, taxpayers can apply a new
additional investment deduction, allowing them to deducta percentage of expenses from depreciation, depending on
their planned reinvestment percentage from the averagevalue of investments, as outlined in the provided table:

Re-invested
average valueof investments

Investment deduction based on the value of theplanned amount of reinvestment of the average value ofinvestments

EUR 1 million to
EUR 20 million

More than
EUR 20 million
to EUR 50 million

More than
EUR 50 million

700% to1,399.99%

15%

25%

50%

1,400%or more

20%

30%

55%

Interest paid to a non-resident is subject to a 19%
withholding tax, unless reduced under a tax treaty or the EUinterest and royalties directive. A 35% rate applies where thepayment is made to a resident of a non-treaty state.
Royalties paid to a non-resident are subject to a 19%
withholding tax, unless reduced under a tax treaty or the EUinterest and royalties directive. A 35% rate applies where thepayment is made to a resident of a non-treaty state.

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An exit tax is imposed when a taxpayer moves its assets
and/or business activities (either fully or partially) and/or
tax residence out of Slovakia. The exit tax rate is 21% andapplies on the economic value of the gains generated in
Slovakia.

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Dividends distributed out of profits generated as from 2017and paid to an entity or individual resident in a country thathas not concluded a tax treaty with Slovakia are subject toa 35% withholding tax, which may be reduced under a tax
treaty. Dividends distributed out by a Slovak-resident entity
out of profits generated as from 2017 to an entity resident
in a country that has concluded a tax treaty with Slovakia
are exempt from withholding tax. Dividends distributed bya Slovak-resident entity out of profits generated as from2017 to individuals resident in Slovakia, or a country thathas concluded a treaty with Slovakia, are subject to a 7%
withholding tax.

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5.3

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5.5

List of countries with Free Trade Agreements

Slovakia is a member of the EU, and implements the EU’s FTAs:

FTAs

Entered into
effectFTAsEntered into
effectEU – Overseas Countries and Territories FTA

January 1971

EU – Caribbean Forum FTA

December 2008

EU – Switzerland and Liechtenstein FTA

January 1973

EU – Papua New Guinea and Fiji FTA

December 2009

EU – Iceland FTA

April 1973

EU – South Korea FTA

EU – Norway FTA

July 1973

EU – Eastern and Southern African States
Interim EPA

EU – Syria FTA

July 1977

EU – Faroe Islands FTA

January 1997

EU – Palestinian Authority FTA

July 1997

EU – Tunisia FTA

March 1998

EU – South Africa FTA

January 2000

EU – Morocco FTA
EU – Israel FTA
EU – Mexico FTA

EU – Colombia and Peru FTA
EU – Central America FTA
EU – Serbia FTA
EU – Ukraine FTAMAMarch 2000
June 2000
July 2000

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EU – Cameroon FTA

EU – Republic of Moldova FTA
EU – Georgia FTA

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May 2012

March 2013

August 2013

September 2013
April 2014

August 2014

September 2014
September 2014

EU – Cote d’Ivoire FTA

September 2016

EU – Southern African Development Community
FTA

October 2016

EU – Ghana FTA

December 2016

March 2003

EU – Colombia and Peru FTA (Accession of
Ecuador)January 2017

June 2004

EU – Canada FTA

September 2017

September 2005

EU – Japan FTA

February 2019

EU – Albania FTA

December 2006

EU – Singapore

November 2019

EU – Montenegro FTA

January 2008

EU – Vietnam

August 2020

EU – Bosnia and Herzegovina FTA

July 2008

EU – United Kingdom

May 2021

EU – Macedonia FTA

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EU – Jordan FTA
EU – Chile FTA

EU – Lebanon FTA
EU – Egypt FTA

EU – Algeria FTA

June 2001
May 2002

February 2003

Furthermore, the EU has concluded FTA with New Zealand in June 2022 and is negotiating FTAs with the Eastern African
Community, West Africa and the Philippines. It is also in the early stages of negotiations with India, Indonesia, Malaysia
and Thailand.

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5.5

Customs policy

Slovakia does not impose any customs duty on goods orservices imported from EU countries. Imports from non-EU
countries are subject to the EU common customs duty, VAT,
and excise duty (levied on energy products such as mineraloil, electricity, coal, and natural gas, beverages such as beer,wine, and spirits and tobacco products). The EU customs
tariff depends on the classification of goods and their origin.
Generally, payments for customs duties are required to bemade within 10 days from the date of import and cannot bedeferred for more than 30 days.
5.6

5.7

Customs incentives

No customs duties are levied on the trade of goods between
EU Member States. Slovakia implements the bilateraland multilateral FTAs concluded by the EU with othercountries, under which goods from member countries may
be imported at reduced rates or free of duty. Furthermore,
EU customs regulations provide customs exemptions andpreferences for various purposes, such as aid for developing
countries.

Import restrictions

The EU imposes controls on the import of certain types ofgoods through import quotas, anti-dumping customs duties
and embargoes, which are implemented by Slovakia as well.
Restricted imports include endangered species of animals
and plants, dangerous chemicals, counterfeit or pirated
goods, agricultural products, iron and steel products, andaluminium products.

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Labour environment
6.1

Social security system

The Slovak social security system includes state pensions and insurance for sickness, permanent disability, unemployment,
injury and employer insolvency, as well as contributions to a reserve fund. Both the employer and the employee are required
to make social security contributions. The employee’s contribution is withheld by the employer on a monthly basis.
•

For 2023 the employer and employee contribution rates are as follows:

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Type Of Contribution

Employer Contribution(% Of Employee Salary)

Employee Contribution(% Of Salary)

Maximum Monthly Assessment Base

Pension contribution

14%

%4

€8,477

Health insurance

10%

4%

Disability fund3%

3%

Sickness insurance

1.4%

1.4%

Unemployment insurance

1%

1%

Accident insurance

0.8%

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4.75%

-

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0.25%

-

€8,477

35.2%

13.4%

-

Reserve fundS

Guarantee insurance

Total

6.2

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Employment contracts

Under the Slovak Labour Code, employment contracts
must be in writing, and should include details of the job
description, place of work, date on which employment
commences, salary and other working conditions (eg pay
date, working time, length of vacation and length of notice
period). The employment contract should be signed by theemployee and employer.

An employment contract can be for a fixed or an indefinite
term. A fixed-term contract can be concluded cumulatively
for a maximum of two years and can be extended orconcluded again within these two years only twice. The

Unlimited€8,477€8,477€8,477

Unlimited€8,477

duration of the contract must be agreed upon in writing,otherwise the contract is deemed to be of an indefinite
term. Employers can also enter into collective bargaining
agreements with employees.
Employment contracts may include a probationary
period of at most three months, except in the case of an
executive employee who reports directly to the statutory
body or a member of the statutory body and in the caseof an executive employee who reports directly to such an
executive employee, where the maximum length of theprobationary period can be six months.

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An employment contract can be terminated in writingby mutual agreement, by notice, immediately, during theprobationary period, or at the expiry of a fixed-term contract:
An employment contract can be terminated at any time bymutual agreement.
In the case of termination by notice, a minimum notice
period of one month is required, which increases to twomonths if the employee was employed for at least one year
but less than five years, and three months if the employee
was employed for at least five years.
An employee can terminate employment immediately in thecase of a threat to his/her health; non-payment of wages,
compensatory wages, travel expenses, compensation for
temporary/sick leave; while an employer can terminate
employment immediately if the employee is convictedof deliberate criminal acts or serious breach of working
discipline.
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An employee may be dismissed by an employer only
for the reasons defined in the Labour Code, such as thewinding-up or relocation (in a case where the employee
does not agree with the relocation) of the employer ora part thereof, the redundancy of the employee, inability
to perform work due to health reasons, unsatisfactory
performance, or disciplinary breaches. The employee isentitled to severance pay corresponding to the numberof years worked for the employer if the employment
was terminated by notice of the employer or byagreement between the employer and the employee forhealth or organisational reasons. Severance payments
vary between one month’s and four months’ pay whenthe employment is terminated by notice; and between
one month’s and five months’ pay if it is terminated byagreement.

6.3

Foreign citizens from the European Economic Area (EEA)
and Switzerland can work in Slovakia without any work/
residence permits. However, the Slovak employer isrequired to inform the labour authorities of the employmentof any such individual within seven working days of thecommencement of the employment activities. The same
applies for the termination of the employment.
All other foreign nationals coming to work in Slovakia, evenfor short periods, are required to obtain a work permit (ora confirmation of possibility to take the vacant post) anda temporary residence permit. The work permit is only
granted to a foreign national if the requirements of the job
are not fulfilled by a local Slovak unemployed person or toan employee transferred on the base of an intercompany
transfer to Slovakia. The employer is required to inform thelabour authorities of the employment of any such individual
within seven working days from the commencement of theemployment activities. The same applies for the terminationof the employment.
6.4

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Residency permits issued are of three types:•

Temporary residence permits are issued with amaximum validity of up to five years, dependingon the type of permit. A Blue Card is a type of
temporary residence permit that a third country
national can apply when performing a highlyqualified role in Slovakia.

•

Permanent residence permits are valid for aperiod of up to five years and are extended for an
unlimited period after the first permit expires.

•

Tolerated residence is a specific type of residence
which may be granted to a foreign national for a
maximum of 180 days.

Fixed-term employment is terminated upon the expiry of theagreed period.

In the case of mass layoffs (when a prescribed numberof employees are dismissed over a period of 30 days), an
employer must negotiate with the employees at least amonth before giving out such a verdict, so that they get afair chance to reduce the impact of the termination and takeproper steps to get out of the adverse consequences.

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Work permits

Citizens of countries within the EEA and of Switzerland are
obliged to register with the Slovak Foreign Police, if they stayin Slovakia for more than three months. Nationals of a third
country (ie non-EEA and non-Swiss nationals) are obliged
to apply for a work permit and temporary residence prior totheir arrival.

Both the employee and the employer are eligible toterminate the employment during the probationary
period without providing any reason, although a noticeof at least three days prior to termination is required.

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Foreign personnel

Visa requirements currently do not apply for:•EU and European Free Trade Association citizens.

•

Citizens of Albania, Andorra, Antigua and Barbuda,
Argentina, Aruba, Australia, Bahamas, Barbados, Bosnia
and Herzegovina, Brazil, Brunei, Canada, Cape Verde,
Colombia, Costa Rica, Curacao, Dominican Republic,
Georgia, Grenada, Guatemala, Honduras, Hong Kong,
Chile, Israel, Japan, Republic of Korea, Kiribati, Macao
OAO, Macedonia, Malaysia, Marshall Islands, Mauritius,
Mexico, Republic of Moldova, Monaco, Montenegro,
Nicaragua, Palau, Panama, Paraguay, Peru, El Salvador,
San Marino, Samoa, Seychelles, Singapore, The United
Arab Emirates, The United Kingdom of Great Britain

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and Northern Ireland, Saint Lucia, Saint Vincent andGrenada, Serbia, Saint Kitts and Nevis, Solomon Islands,
Taiwan, Timor, Tonga, Trinidad and Tobago, Tuvalu,
Ukraine, Uruguay, USA, The Netherlands Antilles,
Vanuatu and Venezuela for visits of up to 90 days.
The following types of visas are issued by the Slovak
authorities:
•

•

6.5

Schengen visa: A Schengen visa is an authorisation
issued by an EU Member State with a view to a) Transit
through or an intended stay in the territory of the EU
Member States of duration of no more than threemonths in any six-month period from the date of firstentry in the territory of the EU Member States; b) Transit
through the international transit areas of airports of the
EU Member States. It may be issued for one, two or
multiple entries. The period of validity shall not exceed
five years.
National visa: A National visa is issued to a foreigner
along with a residence permit, or in connection with
Slovakia’s commitments under international treaties, or
if it is for the benefit of Slovakia. It is valid only for the
territory of Slovakia, and is granted for a stay which islonger than three months but no more than one year.

and 18 even when working for several employers, normal
working hours are set at a maximum of 37.5 hours per week.
Regular working hours are between 8am/9am and5pm/6pm. Any work performed between 10pm and 6am
is referred to as night work. An employee’s average weekly
working time, including overtime, cannot exceed 48 hours.
An employee can work a maximum of 400 hours of overtime
in a year. Out of this, the employer may order the employee
to work overtime up to a maximum of 150 hours (plus 100
extra hours in the healthcare sector) in a year.
Standard Time Zone is UTC/GMT +1hour. Daylight Savings
Time (UTC/GMT +2 hours) applies from the last Sunday ofMarch to the last Sunday of October.
6.7

The system of wage benefits has changed since 1 January
2021. It is now a given sum rather than a percentage ofa person’s income. The wage benefit in addition to theachieved wage for each hour of work is:•

Public holidays and leave

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Employees engaged with the same employer for a periodof at least 60 days in a year are eligible for paid holidays on
a pro-rata basis. The minimum annual entitlement to paid
leave is four weeks (five weeks for employees who are older
than 33 years or are taking care of a child).
From 2022, employees who permanently take care of achild are entitled to an aliquot of 365 days, according to thenumber of days counting from the date they permanently
take care of a child and date of its written announcement totheir employer.

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Besides these, employees are also given days off with orwithout pay in the case of exceptional circumstances, suchas medical examination, childbirth, and marriage.
Local office working hours and time zone

Slovakia has a five-day working week (with rest on Saturday
and Sunday, or Sunday and Monday) with a maximum of 40
hours of work.

Employees working on the basis of a two-shift system maywork up to 38.75 hours per week, and employees working
on a three-shift system, or who are involved in continuous
operation, may work up to 37.5 hours per week. For
employees working with chemical carcinogen substances,normal working hours must not exceed 33.5 hours per week.
For employees aged below 16, normal working hours are
up to 30 hours per week. For employees aged between 16

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Salaries are generally paid on a monthly basis. The minimum
monthly wage as of 1 January 2023 is €700. The minimum
hourly wage is €4.02.

The Slovak employment system grants 15 days of public
holidays.

6.6

Payroll cycles

6.8

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Saturday: at least €1.79 per hour; if an employee
works regularly on Saturdays, it is at least €1.61 per
hour.

•

Sunday: at least €3.58 per hour; if an employee
works regularly on Saturdays, it is at least €3.22 per
hour.

•

Night: at least €1.43 per hour of night work –applies to an employee conducting non-risky work
or at least €1.79 per hour of night work – applies
to employee conducting risky work; if an employee
works night hours regularly, the bonus can belowered to €1.25, but this only applies to non-risky
jobs.

•

The premium paid for work performed on public
holidays is 100% of the employee’s average
earnings.

•

Employees are entitled to regular wages and awage surcharge of 25% of average earnings forovertime work and 35% of the average earnings incase of hazardous activities.
HR legislation

Employment in Slovakia is governed by the Labour Code.
The key aspects of the Labour Code include stipulations
on employment agreements, probation periods, labour
protection policies such as minimum wages, hours ofwork, public holidays and paid vacations, procedures fortermination of contracts and work permits, amongst others.
Other legislations include the Act on Employment services,
Act on Illegal Employment and Occupational Safety and
Health Protection Act.

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Compliance requirements

7.1

Base Erosion and Profit Shifting (BEPS)

As an EU Member State, Slovakia must adapt its national
law to the EU anti-tax avoidance directive (ATAD) I andII, which contain minimum standard provisions on BEPS
Actions 2, 3 and 4. Slovakia has signed a multilateralcompetent authority agreement for the automatic
exchange of Country-by-Country (CbC) reports, inline with BEPS Action 13. Ultimate parent entities oflarge multinational groups resident in Slovakia with aconsolidated annual turnover above €750 million are
required to annually report information to the relevant tax
authority. The first CbC report in relation to financial years
starting after 31 December 2016 was required to be filed
no later than 31 December 2017.
On 28 March 2018, the Slovak tax administration issued
guidance regarding the taxation of non-residents that
perform regular intermediation of accommodation andtransport services within the Slovak Republic throughdigital platforms. Based on the amended definition of
permanent establishment (PE), effective from 1 January
2018, non-resident operators of digital platforms who
repeatedly facilitate the conclusion of contracts forproviding transportation and accommodation services are
deemed to carry out the activities through a fixed placeof business in Slovakia. The guidance clarifies that they
are obliged to register a PE in Slovakia by the end of themonth following the month when these repeated activities
are carried out.

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Common Reporting Standard (CRS)

CRS was implemented into Slovak legislation with effect from
1 January 2016, and the first reporting deadline to the Slovak
tax authorities was 30 June 2017.
7.4

Foreign Account Tax Compliance Act (FATCA)

Slovakia has a FATCA Model 1 intergovernmental
agreement (IGA) with the US, in force since November
2015. The agreement requires Slovakian financial
institutions to report, to the Financial Directorate of the
Slovak Republic, information about financial accounts
held by US taxpayers, or by foreign entities in which US
taxpayers hold a substantial ownership interest. The
Financial Directorate shares this information with the US
Internal Revenue Service (IRS). FATCA was implemented
into Slovak legislation with effect from 1 January 2016,
with a first reporting deadline of 30 June 2016.

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International Financial Reporting Standards (IFRS)Slovakia has adopted most of the principles of IFRS in its
accounting law. However, there are still some differences
between IFRS and Slovak accounting standards. The following
entities are required to prepare their statutory financial
statements according to IFRS:•PBusiness entities (a.s., s.r.o., v.o.s., k.s.) which meetat least two of the following criteria in at least twoconsecutive financial years:•

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On 30 July 2018, Slovakia signed the law for theratification of the Multilateral Convention to Implement
Tax Treaty Related Measures to Prevent BEPS (MLI). The
country deposited its ratification instrument to bring the
MLI into force for its covered agreements (tax treaties) on
20 September 2018, and MLI is in force from 1 January
2019.
7.2

7.3

Total gross assets exceeding €20 million•

Net turnover exceeding €40 million•

Average number of employees exceeding 250.

Banks, insurance companies, or other entities providing
financial services.

Business entities required to prepare IFRS financial statements
under special Government requirements or EU legislation.
Companies that are required to prepare consolidated financial
statements. A company is required to prepare consolidated
financial statements when the aggregated amounts of theparent and subsidiaries meet at least two of the following
criteria in the previous and current financial year:•

Total gross assets exceeding €24 million•

Net turnover exceeding € 48million•

Average number of employees exceeding 250.

7.5

Anti-Money Laundering (AML)On 15 March 2018, an amendment to Slovakia’s Act on
Prevention of Legalisation of Income from the Criminal Activity
and Terrorist Financing (the AML Act) came into effect. The
amendment transposed the EU’s Fourth AML directive into
Slovak law, and introduced the following key changes:•

Obliged entity: The amendment specifies in more detailthe conditions under which a bank, financial agent,financial advisor, insurance company, judicial executor,
attorney-at-law or notary public, auditor, accountant,
tax advisor, provider of asset management services or23business services, trustee or provider of postal services
etc. is considered as an obliged entity for purposes of
the AML Act. In addition, the new legislation reduces
the threshold of payments made or received in cash,
execution of which classifies the relevant person as theobliged person, from €15,000 to €10,000.
••

Ultimate Beneficial Owner (UBO) records-keeping:
Legal entities (excluding public sector entities) andpurposeful property associations without legal
personality are obliged to identify their UBO, to keep andregularly update data about the UBO – unless they arecontained in the verification document filed with theregister of public sector partners.
UBO registration: Registration of data related to the
UBO in the relevant register is one of the conditions
for the establishment of selected legal entities (egcompanies, non-investment funds, not-for-profit
organisations or foundations). Such UBO data will not
be publicly available.
•

In order to apply customer due diligence, theobliged entity is entitled to obtain UBO data fromthe Slovak Statistical Office.

•The obligation to register UBO data whenestablishing and registering the above legal entities
came into force on 1 November 2018. Legal
entities already registered in the respective register(eg in the commercial register) by 31 October 2018
are obliged to file the application for UBO dataregistration by 31 December 2019.

•

•

•

The 5th EU AML directive came into force in the
beginning of 2020. It was transposed into Slovak
legislation with a delay, and the new rules wereapplicable from 1 November 2020. Among the changes
introduced are:•Information on UBOs to be publicly available in theextent of name, surname, date of birth, nationality,
address, and reason for which the person isconsidered UBO.

•

Virtual currency service providers shall beconsidered as Obliged entities, and virtual currencytransactions shall become regulated trades.

•

Decreased financial limits for exemptions in
the use of anonymous prepaid card payments
including virtual money exchange platforms.

7.6

Own activity programme and risk assessment: Obliged
entities must align their own activity programmes inline with the amended legislation by 15 May 2018.
In addition, the obliged person must conduct a risk
assessment taking into account factors related to thetype of the service and risk factors indicated in the AML
Act.
Administrative offences: The amendment regulates
the conditions for the imposition of penalties foradministrative offences, increases limits of thesepenalties (up to €1 million for entrepreneurs and up
to €5 million for banks and financial institutions for abreach of selected obligations), and prolongs the time
limits within which the investigation unit is allowed to
impose penalties from one year from detection of thebreach to three years.

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Know-Your-Customer (KYC)

The amendment to the AML Act introduced the followingchanges related to customer due diligence:

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Politically exposed person: Implies a natural person
who is, or has been, entrusted with prominent public
functions, irrespective of the place of his/her permanent
residency. Under previous regulation, this category
consisted only of such persons with permanent
residency outside Slovakia.

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As per the Council of Europe’s MONEYVAL’s fifth roundevaluation report published on 29 October 2020,
Slovakia was fully or largely compliant with 24 of the
40 FATF recommendations constituting the AML/CFT
standard, and partially compliant in implementation of 16
recommendations.

•However, registration of the UBO in the local
Commercial register will not replace the obligation
to identify and register the UBO under the act on
the register of public sector partners.

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•

•

Basic due diligence: The scope of the basic customer
due diligence is extended by:•

Mandatory identification of the UBO.

•

Adoption of measures for verification of such an
identification and for understanding the ownershipand control structure of the client.

•

Identification whether the client or its UBO arepolitically exposed persons or internationallysanctioned persons.

The amendment also reduces the threshold of the amountof occasional transactions, under execution of which the
obliged entity must apply customer due diligence, from
€15,000 to €10,000 (or €2,000 for providers of gambling
services).
•

Simplified due diligence: In areas of lower risk oflegalisation and terrorist financing, the obliged entities
must apply at least simplified customer due diligence.
Before adoption of the amendment, no care was
required in this case.

•Enhanced due diligence: Obliged entities are required
to apply enhanced customer due diligence in a case of ahigher risk, reflected in the risk assessment, and always
with respect to:•

Cross-border correspondent relationships of abank and financial institution with a third-country
respondent institution. Dealing with a politically
exposed person, or with a person established in
the third countries identified by the Commission as
high-risk third countries.

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TMF Group is a trusted and reliable partner, in strong financial health and focused onproviding flawless service to our clients.
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