HomeReportsBureau of Economic and Business Affairs2019 Investment Climate Statements...Slovak Republic

# 					2019 Investment Climate Statements: Slovak Republic			

 In this section										/

													Executive Summary											

                -  Executive Summary 
                -  1. Openness To, and Restrictions Upon, Foreign Investment   
                -  2. Bilateral Investment Agreements and Taxation Treaties   
                -  3. Legal Regime   
                -  4. Industrial Policies   
                -  5. Protection of Property Rights   
                -  6. Financial Sector   
                -  7. State-Owned Enterprises   
                -  8. Responsible Business Conduct   
                -  9. Corruption   
                -  10. Political and Security Environment   
                -  11. Labor Policies and Practices   
                -  12. OPIC and Other Investment Insurance Programs   
                -  13. Foreign Direct Investment and Foreign Portfolio Investment Statistics   
                -  14. Contact for More Information   

## Executive Summary

The Slovak Republic is a small, open, export-oriented economy, with a population of 5.4 million.  Slovakia joined the European Union (EU) in 2004 and the Eurozone in 2009. Slovakia is an attractive destination for foreign direct investment (FDI), with a favorable geographic location in the heart of Europe, and an investment-friendly regulatory environment.  Many established companies continue to expand and make new investments in their production facilities.

In 2018, GDP growth of Slovakia reached 4.3 percent, fueled by export growth and growing domestic consumption.  As a result, Slovakia expects a balanced budget in 2019 and has the lowest unemployment rate in the country’s history.  In a response to the growing tightness in the labor market, the country has moderately eased the conditions for employment of non-EU workers.  While average wages in Slovakia continue to be significantly below the OECD average, high social insurance payments increase the overall cost of labor, particularly for low-skilled, low-wage workers.  Employers’ combined social and health contributions are equivalent to 35 percent of wages. The corporate income tax rate is 21 percent.

Slovakia continues to face challenges of an inefficient judiciary, a lack of investment in innovation, an inadequate education system, and high perception of corruption.  There have been few high value-added investments to date, despite Slovak efforts to court R&D. Private and public investment in R&D remains very low compared to the OECD average, and inefficiencies in drawing available EU funds persist.

The automotive industry continues to attract significant FDI, and Slovakia remains the largest per capita car producer in the world, with four major car producers and hundreds of suppliers.  Manufacturing industries, including automotive, machinery and transport equipment, metallurgy and metal processing, electronics, chemical and pharmaceutical remain attractive and have the potential for further growth.

Positive aspects of the Slovak investment climate include:

- Membership in the EU and the Eurozone
- Open, export-oriented economy close to western European markets
- Qualified and relatively inexpensive workforce
- Investment incentives, including for foreign investors
- Firm government commitment to EU deficit and debt targets
- Sound banking sector, deep economic and financial integration within Europe

Negative aspects of the Slovak investment climate include:

- High sensitivity to regional economic developments
- Shortages in qualified labor, due in part to education system inadequacies
- Weak public administration, allegations of corruption, weak judiciary
- Significant regional disparities, suboptimal national transport network
- Low rate of public and private R&D
- Heavy reliance on EU structural funds, chronic deficiencies in allocation of funds

*Table 1: Key Metrics and Rankings*

							1. Openness To, and Restrictions Upon, Foreign Investment					

Slovakia is one of the most open economies in the EU.  The government’s overall attitude toward foreign direct investment (FDI) is positive, and the government does not limit or discriminate against foreign investors.  FDI plays an important role in the country’s economy, with major foreign investments in manufacturing and industry, banking, information and communication technologies (ICT), and Business Service Centers, where U.S. companies have a significant presence.

Slovakia’s assets, including skilled labor, EU and Eurozone membership, and location at the crossroads of Europe, have attracted a significant U.S. commercial presence, including Hewlett-Packard, Cisco, IBM, Dell, AT&T, Oracle, Accenture, Whirlpool, Adient, Amazon, GlobalLogic, and U.S. Steel.

The government supports foreign investors and offers investment incentives based on specific criteria, usually delivered in the form of tax allowances, or grants to support employment, regional development, and training.  The Act on Regional Investment Aid (57/2018) specifies eligibility criteria. Section four of this report covers investment incentives in more detail.

According to the National Bank of Slovakia, in 2017, inward FDI flows to Slovakia reached EUR 2 billion, and inward FDI stock was EUR 46.5 billion.  EU member states are the largest foreign investors in Slovakia, including the Netherlands, Austria, the Czech Republic, Luxemburg, and Germany. South Korea remains an important investor among non-EU countries, given its importance in global automotive supply chains.

Improving the business climate is an inter-agency effort involving a number of state institutions and other actors.  The Ministry of Economy coordinates efforts to improve the business environment, innovation intensity, and support for least-developed regions.  Within the Ministry of Economy, the Slovak Investment and Trade Development Agency (SARIO) is responsible for identifying and advising potential investors on the Slovak political, business, and investment climate.  The National Investment Plan 2018-2030, drafted by the Deputy Prime Minister’s Office for Investments and Digitalization, focuses on investment programs in the areas of green economy, including transport, ICT, energy, green infrastructure, waste management, climate change mitigation, R&D and innovation, healthcare, and education.

**Limits on Foreign Control and Right to Private Ownership and Establishment**

Foreign and domestic private entities have the right to establish and own business enterprises and engage in all forms of remunerative activity in Slovakia (Commercial Code, 98/1991   Coll.).  Businesses can contract directly with foreign entities.  Private enterprises are free to establish, acquire, and dispose of business interests, but must pay all Slovak obligations of liquidated companies before transferring any remaining funds out of Slovakia.  Non-residents from the EU and OECD member countries can acquire real estate for commercial purposes.

Slovakia has no formal performance requirements for establishing, maintaining, or expanding foreign investments.  Large-scale privatizations are possible via direct sale or public auction.

The Slovak government treats foreign entities established in Slovakia in the same manner as domestic entities, and foreign entities face no impediments in participating in R&D programs financed and/or subsidized by the Slovak government.  R&D spending is 100 percent tax deductible, set to increase to 150 percent in 2019, and 200 percent in 2020. According to the OECD, total R&D investment in 2016 represented just 0.8 percent of GDP (compared to the OECD average of 2.3 percent).  A large percentage of R&D spending is financed though EU funds, and private R&D intensity remains low at 0.4 percent of GDP. The European Commission continues to criticize the persistent lack of transparency in allocating EU funds.

The Slovak government holds stakes in a number of energy companies.  It has historically been less open to private investment in energy assets that it considers to be in the national security interest, and has even expressed interest in increasing state ownership of some key energy assets.  There are no domestic ownership requirements for telecommunications and broadcast licenses. The Act on Civil Air Transport (143/1998 Coll.) sets out rules for foreign operators seeking to operate in Slovakia.

There are no formal requirements to approve FDI, though the Government ultimately approves investment incentives.  If investment incentives apply, the Economy Ministry manages the associated legislative process. The Act on Regional Investment Aid (57/2018) specifies eligibility requirements.

Please consult the following websites for more information:

Office of Deputy Prime Minister:  https://www.vicepremier.gov.sk/index.html  

R&D Tax-Deductible:  https://superodpocet.sk/  

**Other Investment Policy Reviews**

The OECD produced a 2019 Economic Forecast Summary for Slovakia: http://www.oecd.org/economy/surveys/Slovak-Republic-2019-OECD-economic-survey-overview.pdf 

The European Commission published its regular Country Report – Slovakia 2019, addressing various aspects of the Slovak economy:  https://ec.europa.eu/info/sites/info/files/file_import/2019-european-semester-country-report-slovakia_en_0.pdf 

The World Trade Organization’s data on Slovakia is available here: https://www.wto.org/english/thewto_e/countries_e/slovak_republic_e.htm  

**Business Facilitation**

According to the World Bank’s Doing Business 2019 report, Slovakia ranks 127th out of 190 countries surveyed on the ease of starting a business (down from 83rd in the 2018 edition).  It takes around 26.5 days to start a business in Slovakia (versus 12.5 days in 2018), and involves eight procedures.  Slovak officials commented that the drop in ranking was due to a lack of consideration of all relevant country specific indicators and did not indicate a deterioration in the business climate.

The Central Government Portal “slovensko.sk” provides useful information on e-Government services in the area of starting and running a business, citizenship, justice, registering vehicles, social security, etc.  Checklists of procedures necessary for registrations, applications for permits, etc., are currently available on websites of individual institutions, and the Economy Ministry is working on streamlining the information into one common platform.

Please consult the following websites for more information:

- Central Government Portal:   https://www.slovensko.sk/en/title/  
- Commercial Register:   http://www.orsr.sk/Default.asp?lan=en  
- Slovak Business Agency:   http://www.sbagency.sk/en/national-business-center#.WrzvnNtMS9I  
- Slovak Investment and Trade Development Agency:   https://www.sario.sk/en  
- World Bank Doing Business 2019:   http://www.doingbusiness.org/content/dam/doingBusiness/media/Profiles/Regional/DB2019/EU.pdf    http://www.doingbusiness.org/en/reports/subnational-reports/eu-croatia-czechrepublic-portugal-slovakia  

**Outward Investment**

Several state agencies share responsibilities for supporting investment (inward and outward) and trade.  SARIO is officially responsible for export facilitation and attracting investment. The Slovak Export-Import Bank (EXIM BANKA) supports exports and outward investments with financial instruments to reduce risks related to insurance, credit, guarantee, and financial activities; it assists both large companies and small- and medium-sized enterprises (SMEs), and is the only institution in Slovakia authorized to provide export and outward investment-related government assistance.  The Ministry for Foreign and European Affairs runs a Business Center that provides services in the area of export and investment opportunities. Slovakia’s diplomatic missions, the Ministry of Finance’s Slovak Guarantee and Development Bank, and the Deputy Prime Minister’s Office for Investments and Digitalization also play a role in facilitating external economic relations.

The majority of Slovak exports go to fellow EU countries.  Slovak companies have made limited outward foreign direct investments.

							2. Bilateral Investment Agreements and Taxation Treaties					

Slovakia has signed several bilateral investment treaties in accordance with the European Outline Convention on Trans-frontier Cooperation between Territorial Communities or Authorities.  Some of these are legacies of the former Czechoslovakia, while others have come into force following independence in 1993. The 1992 U.S.-Slovakia Bilateral Investment Treaty specifies the basic framework for investment protection and dispute resolution.  Slovakia signed a Bilateral Taxation Treaty with the United States in 1993.

Like other newer members acceding to the EU, Slovakia had to negotiate an amendment to its bilateral investment treaty with the United States to address inconsistencies with EU legislation.  The amended treaty entered into force on May 14, 2004.

The United States and Slovakia agreed to the Foreign Account Tax Compliance Act (FATCA) in July 2015, and Slovakia subsequently approved the Act on Automatic Exchange of Information on Financial Accounts (359/2015) in order to fully comply with FATCA.  Slovak financial institutions are now required to report tax information of American account holders to the Slovak Government, which then forwards that information to the U.S. Internal Revenue Service (IRS).

The Act on Special Levy on Regulated Sectors (235/2012 Coll., and later amendments) imposes a special tax on regulated industries, including the energy and network industries, insurance companies, electronic communications companies, healthcare, air transport, and others.  The levy applies to profits generated from regulated activities above EUR 3 million. A special 0.2 percent levy also applies to the banking sector based on the Special Levy Act on Selected Financial Institutions (384/2011 Coll., and later amendments). Some Government officials perceive the levies as non-systemic, and a discussion on their potential abolishment is underway.

An amendment to the Act on Income Tax (344/2017 Coll.) valid as of January 1, 2018 and further amended in January 2019, introduced an obligation for sharing economy platforms to register a permanent platform in Slovakia if they systematically offer their services in the area of transport or housing.  Income is taxed in accordance with the valid income tax rules of 21 percent for corporate income tax in Slovakia. If the service provider does not register a platform, the firm will be obligated to pay either a 19- or 35-percent withholding tax on the fees it pays to a foreign entity, based on the residence of the recipient of such fee, and based on whether bilateral taxation treaties exist.

Please consult the following websites for more information:

- U.S.- Slovakia Bilateral Investment Treaty:   http://2001-2009.state.gov/documents/organization/43587.pdf 
- U.S.- Slovakia Bilateral Taxation Treaty:   https://www.irs.gov/businesses/international-businesses/slovak-republic-tax-treaty-documents  
- Finance Ministry: https://www.finance.gov.sk/sk/financie/statne-vykaznictvo/medzinarodna-ochrana-investicii/     https://www.finance.gov.sk/sk/dane-cla-uctovnictvo/priame-dane/dane-z-prijmu/zmluvy-zamedzeni-dvojiteho-zdanenia/zmluvy-zamedzeni-dvojiteho-zdanenia/  
- UNCTAD:  https://investmentpolicyhub.unctad.org/IIA/CountryBits/191#iiaInnerMenu  

							3. Legal Regime					

**Transparency of the Regulatory System**

Slovakia still struggles with a lack of transparency in the regulatory processes in several industries.  The business community has registered concerns that a number of regulatory bodies are not fully impartial and that their decisions can be unpredictable.  A frequently changing and complex legislative environment is often cited as a business obstacle for both local and global companies, and the long-term predictability of regulations affecting the business and legal environment is uncertain.

The Legislative and Information Portal of the Ministry of Justice, Slov-Lex, is a publicly accessible centralized online portal for laws and regulations, including information about inter-agency and public review processes.  Draft bills proposed by ministries through a standard legislative procedure are available for public comment through the portal; however, the public is often granted little time to comment on draft legislature, and there is no obligation to react to comments prior to final submission to the cabinet.  Additionally, MPs or parliamentary groups can propose draft bills outside the standard participatory legislative procedure, which has no rules guaranteeing opportunities for public comment, thus rendering the legislative process less predictable and less transparent. Recent examples of MP proposals becoming laws without due stakeholder consultations include: an obligation for employers in companies with more than 49 employees to pay up to EUR 275 per year for holiday vouchers for domestic vacations, and a special levy on retail stores (2.5 percent of net turnover) selectively targeting large chains selling foodstuffs (which has been blocked by the European Commission since its introduction in January 2019).  Parliament also passed a Constitutional law introducing a retirement age ceiling – the original law linked retirement age to life expectancy – of 64 years for men and around 62 years (with the exact age based on the number of children) for women. Businesses and economic think tanks have criticized these measures for hindering the predictability of legislative and regulatory frameworks.

The Economy Ministry’s Better Regulation Strategy – Regulatory Impact Assessment 2020 (RIA) aims to further improve the business environment, reduce bureaucratic burdens, and improve the quality of laws and regulations by providing a more transparent and open legislative process.  Slight improvements have been noted by the Economy Ministry in terms of decreasing the volume of legislation with negative impacts on the business climate, but the goal is to expand interagency cooperation and coordination. One of the ways to improve the certainty of the legislative framework is the Prime Minister’s initiative for laws and regulations affecting the business climate to come into effect on the first day of either January or July of a given year.

Regulations are not reviewed on the basis of scientific data assessments.  At their discretion, analytical institutes at some ministries (mostly under the value-for-money umbrella) produce data-driven assessments of state policies or big investment projects.  However, projects for assessment are selected by the institutes or by the ministries and they are not publicly available for comment. Assessments are often published once completed.

The Commercial Code (98/1991   Coll.) and the Act on Protection of Economic Competition (136/2001 Coll.)govern competition policy in Slovakia.  A 2018 amendment of the Commercial Code introduced stronger provisions to prevent speculative mergers.  As an EU member state, Slovakia has transposed numerous pieces of relevant EU legislation. The Anti-Monopoly Office, a part of the EU’s European Competition Network (ECN), is an independent state administrative body responsible for ensuring competition, including in state aid.

The Office for Public Procurement supervises and administers public procurement.  Public procurement legislation is frequently amended, and challenges remain to fair competition and eradicating corruption.  The October 2018 amendment to the Act on Public Procurement (343/2015 Coll.) has significantly increased the threshold for low-value tenders, thus eliminating some previous obligations to procure through public competition (public procurement for below-limit contracts is governed by a different regime than the one applicable to above-limit contracts).  The business community has expressed concerns that this measure could reduce transparency. On the other hand, under new leadership, the Public Procurement Office has made efforts to increase transparency in communication with stakeholders, as well as in its own supervisory activities. The European Commission noted some progress in modernizing, simplifying, and increasing efficiency in public procurement procedures in the 2019 Slovakia Country Report.

Slovakia’s fiscal transparency is generally good.  Budget proposals, enacted budgets, and closing statements are substantially complete and publicly available.  The Ministry of Finance publishes monthly reviews of budget execution, which provide a clear overview of public revenues and expenditures broken down by source and type.  Public debt management information is an integral part of the Public Administration budget, including volume, total cost, debt service, structure, financing, forecast, risk assessments, etc.  Annex 6 of the Public Administration budget is dedicated to describing the Debt Management Strategy.

Please consult the following websites for more information:

- Legislative and Information Portal Slov-Lex:   https://www.slov-lex.sk/domov    (Note: all legal acts and regulations mentioned throughout this report can be found on this portal.)
- World Bank:  http://rulemaking.worldbank.org/en/data/explorecountries/slovak-republic  
- Anti-Monopoly Office of the Slovak Republic:  http://www.antimon.gov.sk/antimonopoly-office-slovak-republic/  
- Office for Public Procurement:   https://www.uvo.gov.sk/  
- Ministry of Finance:  https://www.finance.gov.sk/sk/financie/verejne-financie/rozpocet-verejnej-spravy/  
- The European Commission published its regular Country Report – Slovakia 2019:   https://ec.europa.eu/info/sites/info/files/file_import/2019-european-semester-country-report-slovakia_en_0.pdf 

**International Regulatory Considerations**

Slovakia is an EU Member State, thus, EU legislation and standards fully apply in Slovakia.  The national regulatory system is enforced in areas not governed by EU regulatory mechanisms.  Slovakia is a WTO member, and the government notifies technical regulations to the WTO Committee on Technical Barriers to Trade.  The Trade Facilitation Agreement (TFA) is an EU competence; the EU approved in 2015 a Protocol of Amendment to insert the WTO TFA into Annex 1A of the WTO Agreement.

Please consult the following websites for more information:

- WTO:  https://www.wto.org/english/thewto_e/countries_e/slovak_republic_e.htm  

**Legal System and Judicial Independence**

Slovakia is a civil law country.  The Slovak judicial system is comprised of the Constitutional Court and general courts, including the Specialized Criminal Court and the Supreme Court.  General courts decide civil, commercial, and criminal matters, and review the legality of decisions by administrative bodies. The Specialized Criminal Court focuses on cases involving corruption, organized crime, serious crimes like premeditated murder, crimes committed by senior public officials, and crimes related to extremism, such as hate crimes.  Enforcement actions are appealable, and are adjudicated in the national court system. The right to appeal against regulations is limited to some state institutions and selected public officials.

The Slovak Constitution and the European Convention of Human Rights guarantee property rights.  Slovakia has a written Commercial Code including contract law in the civil and commercial sectors.  The basic framework for investment protection and dispute resolution between Slovakia and the U.S. is outlined in the 1992 U.S.-Slovakia Bilateral Investment Treaty.

Court judgments by EU member states are recognized and enforced in compliance with existing EU Regulations.  Third country judgments are governed by bilateral treaties or by the Act on International Private Law. Contracts are enforced through litigation or arbitration – a largely applied form of alternative dispute resolution.

Laws guarantee judicial independence, however, in practice, public perception of judicial independence is among the lowest in the EU.  Some judicial nominations and personnel selections appear to be strongly influenced by political considerations. Despite recent improvements, the justice system remains relatively slow and inefficient, and judges remain divided on the need for reform.  Some judges have been suspected of manipulating the case assignment system, and critics suggest verdicts lack predictability and are often poorly justified. As a result, investors generally prefer international arbitration to resolution in the national court system.

**Laws and Regulations on Foreign Direct Investment**

The Economy Ministry’s Slovak Investment and Trade Development Agency (SARIO) is a specialized government agency in charge of attracting foreign investments to Slovakia, and serves as a multifaceted resource for foreign investors.  The Slovak Business Agency (SBA) runs a National Business Center (NBC) in Bratislava and several other cities; it provides a one-stop shop with information and services for starting and establishing businesses. Startups can use a simplified procedure to register their company in order to facilitate entry of potential investors.  The Interior Ministry operates Client Centers around the country where many formal procedures for both natural persons (to distinguish from legal entities) and companies can be done under one roof.

The Act Against Bureaucracy, valid as of September 2018, aims to reduce the bureaucratic burden for companies and private individuals as a part of continuing e-Government efforts.  The act is based on the “once is enough” philosophy, obliging state agencies to share information and use digital communication rather than requiring multiple filings of the same information with different government entities.

In February 2019, the government approved a third anti-bureaucracy package drafted by the Ministry of Economy.  This resolution resulted from a stakeholder discussion and contained 36 concrete measures, including sector-specific, as well as generally applicable tools.  These measures aim at further simplifying business registration, streamlining processes through e-Government, and improving the overall business climate.

Slovakia ranked 42nd out of 190 countries in the World Bank’s Doing Business 2019 ranking, and 41st out of 140 in the 2018 World Economic Forum’s Global Competitiveness Index.

Please consult the following websites for more information:

- Ministry of Economy:   https://www.mhsr.sk/podnikatelske-prostredie  
- Slovak Business Agency:   http://www.sbagency.sk/en/national-business-center#.WrzvnNtMS9I  
- Slovak Investment and Trade Development Agency:   http://www.sario.sk  
- Central Public Administration Portal:   https://www.slovensko.sk/en/title/  
- Interior Ministry:  https://www.minv.sk/?klientske-centrum-bratislava  

**Competition and Anti-Trust Laws**

The Anti-Monopoly Office of the Slovak Republic is an independent body charged with the protection of economic competition.  The Office intervenes in cases of cartels, abuse of a dominant position, vertical agreements, and controls compliance of mergers with antitrust law.  The key antitrust legislation regarding fair competition is the Competition Law (136/2001 Coll.).

Slovakia complies with EU competition policy.

Please consult the following website for more information:

- The Anti-Monopoly Office:  http://www.antimon.gov.sk/2066-en/cases-in-slovak/  

**Expropriation and Compensation**

The Slovak Constitution guarantees the right to property.  There is an array of legal acts stipulating property rights.  The right to the Act on Expropriation of Land and Buildings (282/2015 Coll.) mandates that expropriation must only occur to the extent necessary, be in the public interest, provide appropriate compensation, and shall only occur when the goal of expropriation cannot be achieved through agreement or other means.

In the past, significant expropriation efforts included the government’s plan – currently on hold – to revert to a single-payer healthcare system and to expropriate two private health insurance companies.  Expropriation most often occurs in the construction of road or industrial infrastructure.

**Dispute Settlement**

*ICSID Convention and New York Convention*

Slovakia is a contracting state to the International Centre for Settling International Disputes (ICSID) and the World Bank’s Commercial Arbitration Tribunal (established under the 1966 Washington Convention).  Slovakia is a member of the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitrage Awards, which obligates Slovakia to accept binding international arbitration. The Finance Ministry leads on bilateral investment treaty matters, and manages and represents Slovakia in international arbitration.  Investment contracts with foreign investors in Slovakia are covered by respective ministries depending on the sector, in most cases by the Ministry of Economy.

*Investor-State Dispute Settlement*

The basic framework for investment protection and dispute resolution between Slovakia and the United States is governed by the 1992 U.S. – Slovakia Bilateral Investment Treaty.

To date, nine known cases of international arbitration have concluded.  There are currently two ongoing international arbitration cases.

The legal system generally enforces property and contractual rights, but decisions may take years, thus limiting the courts’ relevance in dispute resolution.  According to the World Bank Doing Business 2019 report, Slovakia ranked 47th out of 190 countries in the “enforcing contracts” indicator, with a 775-day average for enforcing contracts (up from 538 days in 2016).  The report notes that Slovakia made enforcing contracts easier by implementing electronic processing services. Slovak courts recognize and enforce foreign judgments, subject to the same delays.  Although the commercial code generally appears to be applied consistently, the business community continues to cite a lack of legislation protecting creditor rights, corruption, political influence, lengthy procedures, and weak enforcement of court rulings as persisting problems.  U.S. and other investors privately described instances of multi-million dollar losses that were settled out of court because of doubts about the court system’s ability to offer a credible legal remedy.

*International Commercial Arbitration and Foreign Courts*

There are two acts applicable to alternative dispute resolution in Slovakia – the Act on Mediation (420/2004 Coll.) and the Act on Arbitration (244/2002 Coll.).  In addition, the Slovak Chamber of Commerce and Industry (SOPK) has a court of arbitration for alternative dispute resolution, and has a number of bilateral cooperation agreements with Chambers of Commerce or similar institutions abroad.

Local courts in Slovakia recognize and enforce foreign arbitral awards, subject to delays that limit the courts’ relevance in dispute resolution.

Please consult the following websites for more information:

- U.S.- Slovakia Bilateral Investment Treaty:   http://2001-2009.state.gov/documents/organization/43587.pdf 
- Finance Ministry – International Arbitrations:   https://www.finance.gov.sk/sk/financie/statne-vykaznictvo/medzinarodna-ochrana-investicii/arbitrazne-spory/  
- Slovak Chamber of Commerce:  http://web.sopk.sk/view.php?cisloclanku=900001  

**Bankruptcy Regulations**

The Law on Bankruptcy and Restructuring (377/2016 Coll.) governs bankruptcy issues.  The law allows companies to undergo court-protected restructuring and both individuals and companies to discharge their debts through bankruptcy.  The International Monetary Fund credited the Act for speeding up processing, strengthening creditor rights, reducing discretion by bankruptcy judges, and randomizing the allocation of cases to judges to reduce potential corruption.  The Act contains provisions to prevent preferential treatment for creditors over company shareholders, measures limiting space for arbitrariness in bankruptcy administrators’ conduct, and stricter liability rules for those responsible for initiating bankruptcy proceedings, as well as new provisions on related parties valid as of January 2019.  The Commercial Code also contains provisions on bankruptcy and restructuring, and its 2018 amendment introduced stronger provisions to prevent speculative mergers, including in cases of ongoing bankruptcy.

Slovakia ranked 42nd out of 190 in the World Bank’s Doing Business 2019 ranking of the ease of resolving insolvency, with an average of four years for resolving insolvency.

Please consult the following websites for more information:

- Slovak Banking Credit Bureau:   http://www.sbcb.sk/  
- Non-Banking Credit Bureau:   http://www.nbcb.sk/  
- Justice Ministry:   https://www.justice.gov.sk/Stranky/Sudy/Zoznam-dlznikov.aspx?OrgZlozka=MSSR_AN4100  
- Insolvency Register:   https://ru.justice.sk/ru-verejnost-web/pages/home.xhtml  
- Dlznik.sk:   https://dlznik.zoznam.sk/  
- Central Register of Debtors:  http://www.registerdlznikov.sk/verejny-registr-dluzniku.htm  

							4. Industrial Policies					

**Investment Incentives**

Eligibility for investment incentives is defined in the Act on Regional Investment Aid (57/2018 Coll.).  Investors are encouraged to implement projects in less-developed regions, and to invest in high value-added activities.  The Economy Ministry manages and coordinates investment aid with other relevant agencies.

Investment incentives are available to foreign and domestic investors for projects in sectors including industrial production, technology centers, and shared service centers.  The incentives are provided as tax relief, cash grants (which can be viewed as joint financing of FDI projects), contributions for newly created jobs, and transfer of state/municipal property at a discounted price.  Eligible costs include acquisition of land, acquisition and construction of buildings, acquisition of technology equipment and machinery, as well as intangible assets (i.e. licenses, patents, etc.), and wages of new employees for a period of two years.

Apart from investment aid, the Economy Ministry also runs projects eligible for support from EU funds, with a particular focus on research and innovation; the Economy Ministry also offers innovation vouchers and special loans through its Investment Fund, as well as support for industrial clusters.  Other ministries run EU-supported projects in their respective areas of expertise (i.e. agriculture, environment, infrastructure, R&D, etc.).

State aid granted by the Slovak government must comply with valid EU regulations.  The Anti-Monopoly Office of the Slovak Republic is the coordinating body for state aid granted by individual ministries, as per the Act on State Aid (358/2015 Coll.), and there is a dedicated state aid web portal (link below).

Please consult the following websites for more information:

- Investment Aid:   https://www.sario.sk/en/invest/investment-incentives  
- State Aid:   http://www.statnapomoc.sk/  
- Deputy Prime Minister for Investment and Digitalization:  https://www.vicepremier.gov.sk/index.html  

**Foreign Trade Zones/Free Ports/Trade Facilitation**

Slovakia eliminated all foreign trade zones and free ports in 2006.

**Performance and Data Localization Requirements**

There are no special requirements for foreign IT providers to turn over their source code or to provide access to encrypted documents.  However, according to the Act on Electronic Communications (351/2011 Coll.), entities providing public networks or public services that use coding, compression, encryption, or other form of concealing signal transfer must, at their own expense, provide information obtained through wire-tapping and network traffic recording or monitoring to relevant authorities.  Slovakia implemented the EU General Data Protection Regulation (GDPR) regulating data protection and privacy. There are no mechanisms in place enforcing rules on local data storage. Slovakia follows the EU regulation on the free flow of data 2017/0228 (COD) that abolishes data localization requirements within the EU while ensuring access rights to competent authorities for regulatory control.  The relevant authority for data localization is the Deputy Prime Minister’s Office for Investments and Digitalization.

In April 2018, the Cybersecurity Act (69/2018) came into force.  The bill, prepared by the National Security Authority (NBU), transposes the EU Directive on Security of Network and Information Systems (NIS Directive).  The Act addresses system security, incident response, and reporting requirements with minimal regulation of the private sector. It proposes housing a Computer Security Incident Response Team (CSIRT) at every ministry relying heavily on ICT.  Along with the NBU, the main public stakeholders for cybersecurity are located in the Deputy Prime Minister’s Office for Investments and Digitalization.

Slovakia does not mandate local employment, follow “forced localization,” or impose conditions on permissions to invest.  Conditions for employing foreigners from non-EU countries were somewhat eased in 2018 (more details in Chapter 11 on Labor Policies).

Foreign entities have equal access to investment incentives on a case-by-case basis, as per the Act on Regional Investment Aid (57/2018 Coll.).  For more details on eligible projects, please see the section on Investment Incentives. The decision on investment aid may be cancelled based on provisions stipulated in the Act, and these requirements apply to domestic and foreign recipients of investment aid equally.  Along with investment incentives, other tools to support investment, including EU structural funds or other schemes, are motivational tools and every investor can freely decide whether to apply for them or not; as such, any procedures linked to these tools should not be perceived as investment performance requirements per se.

The Alien Police Department (APD) issues temporary and long-term residence permits.  The legislative framework on residence and adjacent permits is specified in the Act on Residency of Foreign Nationals (404/2011 Coll. and successive amendments, last amended in 2018 as 108/2018 Coll.).  Although foreign nationals have criticized the process of obtaining residency permits as difficult and time-consuming, Slovak authorities have made significant concessions to expedite this process for American citizens.  This has included accepting expired FBI background checks, accepting applications at the Slovak Embassy in Washington, D.C. prior to departure for Slovakia, and adopting suggested new wording on their APD and embassy sites to clear up common misconceptions.  The U.S. Embassy’s Consular Section has reported a significant drop in the number of Americans looking for help with this issue since the implementation of these changes. However, even with these welcome changes, there are still problems with authorities not being consistent in their recommendations or enforcement of regulations.  The regulations themselves, however, do not differ significantly from those of other EU countries.

Please consult the following websites for more information:

- Alien Police Department at Interior Ministry:   https://www.minv.sk/?residence-of-an-foreigner
- Migration Information Center:   https://www.mic.iom.sk/en/doing-business/general-information.html  
- Foreign Affairs Ministry:  https://www.mzv.sk/web/en/consular_info/residence_of_foreigners_in_territory_of_slovakia   .
- Central Office of Labor, Social Affairs and Family:   http://www.upsvar.sk/sluzby-zamestnanosti/zamestnavanie-cudzincov.html?page_id=272197  
- Deputy Prime Minister’s Office for Investments and Digitalization of Society:  https://www.vicepremier.gov.sk/sekcie/investicie/o-sekcii-riadenia-investicii/index.html  

							5. Protection of Property Rights					

**Real Property**

The mortgage market in Slovakia is growing rapidly, and a reliable system of record keeping exists.  In 2018, the National Bank of Slovakia introduced measures to cool down the mortgage market by introducing strict assessments and limiting the size of the mortgage.  Secured interests in property and contractual rights are recognized and enforced.

Even though the Cadastral office records that less than 10 percent of the land in Slovakia lacks a clear title, there are rare instances when the property owner is unknown.  This is a result of unclear record keeping dating back to the 20th century and the communist era.  In such cases, real estate titles can take significant amounts of time to determine.  Legal decisions may take years, thus limiting the utility of the court system for dispute resolution.

There are currently 8.4 million parcels, 4.4 million recorded owners of land, and 100 million co-owning relations.  On average, one parcel has 11.93 co-owners, and one owner has an average of 22.74 parcels. To address this issue, the Agriculture Ministry started land ownership reform in early 2019 to consolidate parcels and simplify ownership records in the cadaster database.  A dedicated web portal makes it possible to verify information about land and property ownership.

The complex and obsolete Construction Act is currently under review, with the aim to better respond to the current environment.

In November 2018, the Slovak Constitutional Court ruled against a Law on Agricultural Land Ownership (140/2014 Coll.) which limited the sale of land to foreigners by requiring at least three years of previous agricultural business activity and 10 years of residency in Slovakia.  Since 2018, the maximum lease period decreased from 25 to 15 years.

Squatting is illegal in Slovakia, and ownership of unoccupied property will not revert to squatters or other parties unless they are entitled to own the land.

Slovakia fell two places to ninth out of 190 countries in the World Bank’s 2019 Doing Business “registering property” indicator, averaging 16.5 days to register a property.

Please consult the following websites for more information:

- Cadastral portal on land and property ownership:   http://www.katasterportal.sk/kapor/  

**Intellectual Property Rights**

Slovak law protects patents, copyrights, trademarks and service marks, trade secrets, and semiconductor chip design.  The protection of intellectual property rights (IPR) falls under the jurisdiction of two agencies. The Industrial Property Office is responsible for most areas, including patents, while the Culture Ministry is responsible for copyrights, including software.

Slovakia adheres to major intellectual property agreements including the Bern Convention for Protection of Literary and Artistic Works, the Paris Convention for Protection of Industrial Property, the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), and numerous other international agreements on design classification, registration of goods, appellations of origin, patents, etc.  The Industrial Property Office of the Slovak Republic is the central government body overseeing industrial property protection. The Financial Administration (under the Finance Ministry) deals with customs and adjacent IPR, including the fight against counterfeit goods.

No major IP related laws were passed in 2018.  Slovakia is not listed in the United States Trade Representative (USTR) Notorious Markets List.  Slovakia was taken off the USTR Special 301 Watch List in 2006 in large part due to significant progress that the government had made in addressing concerns related to the protection of pharmaceutical patents in Slovakia.

There were 1,363 suspected breaches of IPR in 2017 (for goods imported from third countries, especially textiles and shoes), with the value of seized counterfeit goods down 42 percent from 2016, to around EUR 1.5 million.

For additional information about treaty obligations and points of contact at local IP offices, please see WIPO’s country profiles athttp://www.wipo.int/directory/en/  .

Please consult the following websites for more information:

- Ministry of Culture, Copyright Act:  http://www.culture.gov.sk/extdoc/5831/Zakon_185_2015_Autorsky percent20zakon  
- Intellectual Property:  https://www.dusevnevlastnictvo.gov.sk/web/guest  
- Industrial Property Office:   http://www.upv.sk/?introduction  
- Financial Administration:   https://www.financnasprava.sk/en/homepage  
- Financial Administration Annual Report for 2017:   https://www.financnasprava.sk/_img/pfsedit/Dokumenty_PFS/Financna_sprava/Vyrocne_spravy/2018.03.26_VS_2017.pdf 
- American Chamber of Commerce in the Slovak Republic:
- http://www.amcham.sk/home  

							6. Financial Sector					

**Capital Markets and Portfolio Investment**

The stock market in Slovakia is among the smallest in Europe, and largely dominated by bonds that represent more than 99 percent of all volume.

The Bratislava Stock Exchange (BSSE), a joint-stock company, has been a member of the Federation of European Securities Exchanges (FESE) since 2004.  In 2018, the total volume of transactions at the BSSE was slightly below USD 560 million. Market capitalization of shares was roughly USD 5.5 billion and market capitalization of bonds was USD 51.5 billion.

The European Single Market and existing European policies facilitate the free flow of financial resources.  Slovakia respects International Monetary Fund (IMF) Article VIII by refraining from restricting payments and transfers for current international transactions.  Credit is allocated on market terms in Slovakia and is available to foreign investors on the local market.

The Central Bank of Slovakia (NBS) maintains a Central Register of Regulated Information – a database of information on issuers of securities.

The Central Depository of Securities is responsible for maintaining shareholders’ registers and records of dematerialized and certificated securities, as well as for settling financial instrument transactions.  Slovakia does not have a national regime for securitization and follows the EU rules and regulations on securitization of properties for lending purposes.

Please consult the following websites for more information:

- Bratislava Stock Exchange:  http://www.bsse.sk/bcpben/MainPage/tabid/104/language/en-US/Default.aspx  
- Central Depository of Securities:   https://www.cdcp.sk/en/  
- Central Bank of Slovakia:   https://www.nbs.sk/en/about-the-bank  
- Central Register of Regulated Information:  https://ceri.nbs.sk/  

**Money and Banking System**

Slovakia became part of the Euro system, which forms the central banking system of the euro area within the European System of Central Banks, upon its integration into the Eurozone on January 1, 2009.  The Central Bank of Slovakia (NBS) is the independent central bank of the Slovak Republic.

Most banks operating in Slovakia are subsidiaries of foreign-owned institutions.  Slovak branches operate rather conservatively, and showed good resilience during EU-wide stress tests.  The combined total assets of the monetary financial institutions active in the Slovak market were over EUR 80 billion at the end of 2018.

According to the 2018 Financial Stability Report issued by NBS, profitability of the Slovak banking sector has long been among the highest in the EU’s banking union, mainly due to lending activity.  Corporate credit has stabilized after a period of expansion. Non-performing loans reported by domestic banks were approximately 4.7 percent of all total loans in September 2018, and Slovak banks report the highest provisioning coverage for non-performing loans.

The banking sector’s aggregate total capital ratio fell to 18.2 percent in the first half of 2018 (close to the lower quartile of the EU range), partly because of banks transition to the new IFRS 9 accounting standard.  Banks are increasingly aiming to optimize the level and structure of their capital and gradually reduce voluntary capital buffers above the level of regulatory requirements.

Foreign nationals can open bank accounts by presenting their passport and/or residence permit, depending on the bank.

Please consult the following websites for more information:

Central Bank of Slovakia: https://www.nbs.sk/en/financial-market-supervision-practical-info/publications-data  

**Foreign Exchange and Remittances**

*Foreign Exchange Policies*

Slovakia joined the Eurozone on January 1, 2009.  Slovakia meets all international standards for conversion and transfer policy.  The exchange rate is free floating.

The Foreign Exchange Act (312/2004) governs foreign exchange operations and allows for easy conversion or transfer of funds associated with an investment.  The Act liberalized operations with financial derivatives and abolished the limit on the export and import of banknotes and coins (domestic and foreign currency).  It also authorizes Slovak residents to open accounts abroad and eliminates the obligation to transfer financial assets acquired abroad to Slovakia.

Non-residents may hold foreign exchange accounts.  No permission is needed to issue foreign securities in Slovakia, and Slovak citizens are free to trade, buy, and sell foreign securities.

*Remittance Policies*

There are very few controls on capital transactions, except for rules governing commercial banking and credit institutions, which must abide by existing banking and anti-money laundering laws.  The basic framework for investment transfers between Slovakia and the United States is set within the 1992 U.S. – Slovakia Bilateral Investment Treaty.

The United States and Slovakia agreed to the Foreign Account Tax Compliance Act (FATCA) in July 2015, and Slovakia subsequently approved the Act on Automatic Exchange of Information on Financial Accounts (359/2015) in order to fully comply with FATCA.  Slovak financial institutions are now obligated to report tax information of American account holders to the Slovak Government, which then forwards that information to the U.S. Internal Revenue Service (IRS).

Slovakia is not a Financial Action Task Force (FATF) member; but receives FATF recommendations, and is a member of MONEYVAL, which is an FATF associate member.

Slovakia does not impose any limitations on remittances.  Dividends are taxed at a 7 percent rate. Transfer pricing for controlled transactions must be based on market prices.  For a fee, the Financial Administration provides tax-consulting services, which can result in issuance of a deed of compliance on transfer pricing valid for up to five years, in line with the Advance Pricing Agreement.  An obligation to pay a 21 percent tax applies to companies that are moving their assets or activities abroad.

Please consult the following websites for more information:

- U.S.-Slovakia Bilateral Investment Treaty:  https://2009-2017.state.gov/documents/organization/43587.pdf 
- U.S.- Slovakia Bilateral Taxation Treaty:   https://www.irs.gov/businesses/international-businesses/slovak-republic-tax-treaty-documents  
- MONEYVAL:   https://www.coe.int/en/web/moneyval/jurisdictions/slovak_republic  

**Sovereign Wealth Funds**

Slovakia does not maintain a Sovereign Wealth Fund (SWF).  Slovak Investment Holding (SIH) is a fund of funds managed by SZRB Asset Management, a subsidiary of the Slovak Guarantee and Development Bank.  SIH is financed by drawing three percent of allocations from five EU 2014 – 2020 operational programs, totaling roughly EUR 1 billion. Resources are allocated as revolving financial instruments (guarantees, risk sharing loans, equity and mezzanine instruments) mainly through financial intermediaries (i.e. commercial lenders who leverage the funds).  Resources are focused on strategic investment priorities in the following sectors: transport infrastructure, energy efficiency, waste management, energy production, small and medium-sized enterprises, and social economy.

Please consult the following websites for more information:

- Slovak Investment Holding:   https://www.sih.sk/en/  

							7. State-Owned Enterprises					

State-owned enterprises (SOEs) and private companies generally compete on a level playing field.  SOEs are mostly active in certain strategic sectors, including health and social insurance, airports, railways, and electricity transmission networks.  There are almost 70 SOEs in Slovakia, 80 percent of which are wholly state-owned. There are approximately 250,000 employees working in SOEs; Slovak Rails, a rail infrastructure company, and Slovak Post are two of the three biggest employers in Slovakia, each with approximately 14,000 employees.

Transparency International Slovakia (TIS) reports that five of the ten biggest employers in Slovakia are SOEs and 80 public companies (including municipally and regionally owned companies) have a combined budget of EUR 9.5 billion, which represents half of the total state budget.  The thirty biggest SOEs have a combined value of EUR 25 billion.

In the energy sector, combined state and private ownership is common.  The state fully owns the national gas supplier Slovak Gas Industry (SPP), and it also holds 51 percent stakes (without managerial control) in all three electricity distribution companies, and a 49 percent stake in the gas transmission system operator.  Based on a Memorandum of Understanding (MOU) signed with the Italian utility giant Enel, the Economy Ministry holds an option to increase its stake in Slovenske Elektrarne, which controls around 70 percent of the domestic electricity generation market, from the current 34 percent to a 51 percent majority.

Most SOEs are structured as joint-stock companies governed by boards that include government representatives and government appointees.  Significant SOEs are required to publish their audited financial statements in accordance with the Accounting Act. They submit their audited financial statements to the Finance Ministry’s dedicated portal.  Transparency International has deemed the SOEs to be generally non-transparent. SOEs are not significantly advantaged compared to privately owned companies.

Most ministries publish a list of companies they formally own on their web portals.  The list includes SOE equities and profits broken down by enterprise, and is publicly available.

Slovak SOE ownership is exercised in accordance with the Act on State-Owned Enterprises (111/1990) and is consistent with the OECD Guidelines on Corporate Governance for SOEs.

Please consult the following website for more information:

- Register of Financial Statements:   http://www.registeruz.sk/cruz-public/home  
- Analysis on SOEs by Transparency International Slovakia:  http://www.transparency.sk/wp-content/uploads/2015/12/statne_firmy_web_a5_eng.pdf 
- SOEs in Slovakia:  https://www.finance.gov.sk/files/archiv/31/priloha3.pdf 

**Privatization Program**

Foreign investors are free to participate in privatization programs for SOEs, however, no privatization efforts are currently under way.  Privatization frequently occurs through direct sale, although Slovakia has a track record of doing major privatization projects through public tender, especially in the energy sector.

According to Act on Transfer of State Assets to Other Entities (92/1991 Coll.) privatization of an SOE in case of a direct sale is decided by the government based on a proposal from the relevant ministry and in case of a public tender, the relevant ministry decides the privatization project.  In both instances, the ministry plays a central part in the process. Privatization of natural monopolies such as electricity distribution companies or a gas distribution company are always based on a government decision. Once a decision is made on the privatization of a project, the ministry is obliged to publish an advertisement in domestic media.

							8. Responsible Business Conduct					

The Ministry of Labor, Social Affairs and Family references the World Business Council for Sustainable Development in its definition of Corporate Social Responsibility (CSR) as “the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at-large.”  The ministry refers to Howard R. Bowen’s 1953 text on Social Responsibilities of the Businessman for its definition of social responsibility. While the ministry has a generic section regarding social responsibility on its website, the ministry has not updated it nor has it been actively promoting or assessing Responsible Business Conduct (RBC) in recent years. By adhering to the EU directive on social responsibility, state institutions can demand that public procurement requirements consider ecological, social, and ethical criteria.  Slovakia currently has no unified or comprehensive national plan towards RBC at the government level.

Slovakia has a voluntary target of having at least 50 percent of public procurements include a “green” component by 2020.  The current share of green procurements is around 3 percent.

As an OECD member, Slovakia adheres to the OECD Guidelines for Multinational Enterprises, which represent the global gold standard on the due diligence approach to RBC.  Slovak Investment and Trade Development Agency (SARIO) was designated in 2000 as the National Contact Point (NCP) for the OECD Guidelines for Multinational Enterprises. Please see below for the NCP’s contact information:

Mr.  Marcel SládokSlovak Investment and Trade Development Agency (SARIO)Trnavska cesta 100, 821 01 Bratislava, SlovakiaTel: +421 2 4854 2309Email: sladok@mhsr.sk

Slovakia has ratified the Extractive Industry Transparency Initiative (EITI).

An increasing number of NGOs, businesses, and multinational companies promote RBC and are aware of its associated expectations and standards.  The Pontis Foundation – an NGO promoting corporate philanthropy, transparency, and ethics – has an almost 20-year tradition of recognizing the country’s best RBC programs with its prestigious Via Bona Awards.

In May 2018, a law on social enterprise (112/2018 Coll.) came into force.  It defines a “social enterprise” as an entity aimed at profoundly improving the conditions for integrating disadvantaged and vulnerable groups and incentivizes the creation of such entities.

Slovakia is a party to the Aarhus Protocol.  Consumer protection is guaranteed and enforced through the Civil Rights Act, Consumer Protection Act, and the Act on E-Commerce.

The Acts on Environmental Impact Assessment (24/2006), Air (137/2010), and Waste (313/2016) govern the environmental protections affecting businesses.  The mandatory Environmental Impact Assessment (EIA) process applies to a number of industries, including mining, energy, steel, chemical, pharmaceutical, wood, food, and agriculture, as well as infrastructure projects.  The Act on Air defines legal obligations for businesses causing emissions, including emissions limits, monitoring, and reporting in line with valid national and EU legislation. The Act on Waste establishes the obligations for companies producing packaging, as well as rules on waste recycling and recovery, and other waste management issues.  The Environment Ministry and its agencies, as well as dedicated public administration structures in municipalities, share responsibility for implementing and enforcing legal obligations on environmental protection.

Some concerns about RBCs persist as Roma face ongoing discrimination in private sector employment and services.  Domestic courts have in a few cases ruled in favor of those individuals who provided legal counsel by an NGO.

Please consult the following website for more information:

- Ministry of Labor, Social Affairs and Family:  https://www.employment.gov.sk/sk/ministerstvo/spolocenska-zodpovednost/  

							9. Corruption					

Slovakia is a party to international treaties on corruption.  Among them are the OECD Convention on Combating Bribery of Foreign Public Officials, the UN Anti-Organized Crime Convention, the UN Anti-Corruption Convention, and the Criminal Law Convention on Corruption and Civil Law Convention on Corruption.  Slovakia is a member of the Group of States against Corruption (GRECO).

The giving or accepting of a bribe constitutes a criminal act according to Slovak law.  Slovak criminal law incorporates criminal liability for legal persons, including corporations.  Nevertheless, corruption continues to be among the most serious issues for the business community.  According to the Special Eurobarometer survey of October 2017, 81 percent of respondents believed that corruption is part of Slovakia’s business culture.  There is no data available on whether U.S. firms identify corruption as an obstacle to foreign direct investment. In a March 2018 survey by five foreign chambers of commerce (Slovak-German Chamber of Commerce, Slovak-Austrian Chamber of Commerce, Dutch Chamber of Commerce, Swedish Chamber of Commerce, and Advantage Austria), respondents marked the fight against criminality and corruption as the worst among evaluated investment criteria.  The investors further noted that concerns about corruption and rule of law could potentially damage the image of Slovakia and raise questions about future stability.

Despite recent changes in asset declaration regulations, opposition politicians and NGO analysts claim that conflicts of interest and asset declaration regulations lack the necessary level of detail to be implemented and enforced in practice.  There is also a very high threshold for reporting gifts accepted by judges and prosecutors. Government authorities do not require private companies to establish internal codes of conduct that would prohibit bribery of public officials, although some companies have adopted such measures voluntarily.  While law enforcement has effectively investigated some cases of petty bribery and mid-level corruption, anti-corruption non-governmental organizations say high-level corruption is rarely investigated or prosecuted effectively; only two ministerial-level officials have been convicted of corruption-related crimes since Slovak independence in 1993.  Following the murder of an investigative journalist and his fiancée in February 2018 and the resulting changes in the government and police leadership, one individual involved in high-level tax fraud was convicted and one is being prosecuted.

In December 2018, the government approved an “Anti-corruption policy for 2019-2023,” intended to improve the effectiveness of anti-corruption measures.  A national anti-corruption plan should follow in July 2019. NGOs investigating corruption do not enjoy any special protection.

Some members of civil society and most opposition politicians claim political influence over the police and prosecution services impedes corruption investigations, allowing individuals with strong political connections to the ruling coalition to avoid prosecution for corrupt practices. Some police investigators claim that the police corps’ politically nominated leadership discourages investigation of politically sensitive cases, manipulates police statistical data on criminality, and forces honest police officers to leave the force.  An anti-shell company law provides for increased transparency in governmental contracting. It requires private companies to reveal their ownership structure before entering into business contracts with state entities.

Disclosure of contracts in the Central Registry of Contracts by public administrators and state-owned enterprises is compulsory, securing additional transparency.  However, media reports alleging corruption in public tenders and EU subsidy programs remain frequent.  According to the Special Eurobarometer survey, business representatives perceive manipulating public procurement, bribery, nepotism, and tax fraud as the most widespread corrupt practices.

Private businesses, especially those with foreign ownership, often have internal codes of ethics, in many cases also extending to contractors.

*Resources to Report Corruption*

Contact details of government agencies responsible for combating corruption:

Dusan KovacikHead of the Special Prosecutor’s OfficeOffice of the Special Prosecution under the General Prosecutor’s OfficeSturova 2812 85  BratislavaTelephone:+421 33 690 3171Dusan.Kovacik@genpro.gov.sk

Martin FritzDirector of the National Anti-Corruption UnitMinistry of Interior, National Police HeadquartersNational Criminal AgencyPribinova 2812 72 BratislavaTelephone: +420 9610 56371Martin.Fritz@minv.sk

Contact details of “watchdog” organizations:

Gabriel SiposExecutive DirectorTransparency International SlovakiaBajkalska 2582718 BratislavaTelephone: +421 2 5341 7207sipos@transparency.sk

Zuzana PetkovaExecutive DirectorStop Corruption FoundationStare Grunty 18841 04 Bratislavapetkova@zastavmekorupciu.sk

Peter KunderExecutive DirectorFair Play AllianceSmrecianska 21811 05 BratislavaTelephone: +421 2 207 39 919kunder@fair-play.sk

							10. Political and Security Environment					

Politically motivated violence and civil disturbance are rare in Slovakia.  There have been no recent reports of politically motivated damage to property, projects, and installations or violence directed toward foreign-owned companies.  Following the murder of an investigative journalist in February 2018, large, peaceful, countrywide protests sought political changes and greater government transparency; protests continued sporadically into 2019.  In March 2019, in an election that was classified as fair and transparent, Slovakia elected a new president who ran on a campaign of good governance and accountability, largely in line with protestors’ demands.  The next parliamentary elections are due not later than March 2020.

							11. Labor Policies and Practices					

Roughly 71 percent of the active population works in services (including construction), 27 percent in industry, and the rest in agriculture.  The unemployment rate dropped to 6.6 percent by the end of 2018, according to preliminary data. Foreign companies frequently praise workers’ motivation and productivity, and especially commend younger workers for their proficiency with foreign languages.  However, businesses complain about the growing gap between their labor market needs and popular areas of study, with shortages in technical education at both the high school and higher education levels, but also a lack of support for critical thinking and managerial skills.  This lack of appropriate skills is shown in the low level of public and private R&D conducted in the country.

Minimum wage law indexes the minimum wage to overall wage growth in the economy.  The minimum wage in 2018 was EUR 480 per month; it increased to EUR 520 in 2019, which corresponds to EUR 2.99 per hour.  Nominal wages grew at 6.3 percent in 2018 and are expected to grow at nearly 7 percent in 2019. The average wage in 2018 exceeded EUR 1,000 per month.  The average hourly labor cost is EUR 11, significantly lower than the EU average of EUR 27. According to Eurostat, the gender pay gap stood at nearly 20 percent in 2017, with the gender employment gap at roughly 14 percent in 2018.  A lack of childcare facilities for children below three years of age discourages mothers from returning to work and aggravates the gender pay gap. According to the European Commission Country Report on Slovakia, only 0.6 percent of children under 3 years participate in formal childcare.  Flexible and part-time work arrangements remain rare.

The Slovak Labor Code (311/2001 Coll. and later amendments) governs relations on the labor market, including for foreigners.  Businesses cite labor regulations and frequent changes to the Labor Code, non-systematic measures, and lack of stakeholder discussion as one of obstacles to doing business in Slovakia.

The Labor Code contains provisions against discrimination in the work-place (also stipulated in the Anti-discrimination Act, 365/2004 Coll.) based on gender, race, nationality, sexual orientation, health impairment, age, language, religion, political affiliation, and other forms of discrimination.  Slovakia has a standard workweek of 40 hours, and the Labor Code caps overtime at 400 hours annually, and sets minimum remuneration for overtime and work during public holidays or on weekends. The cost to lay-off employees stipulated by the Labor Code is generally less expensive than in Western Europe, and depends mostly on the employee’s time in service.

Few foreign nationals from non-EU countries currently work in Slovakia.  According to Slovak Labor Office statistics, the number of foreign workers with work permits from non-EU countries was just over 17,000 in December 2018, with the nationals of Ukraine and Serbia accounting for 75 percent of the total.  The total number of foreign workers, including EU nationals and those non-EU nationals who do not require work permits, was nearly 70,000. A 2018 amendment to the Act on Employment Services (5/2004 Coll.) eased conditions for employment of non-EU nationals, but specific rules and restrictions still apply.

Social insurance contributions are compulsory and include healthcare, unemployment, and pension insurance. Both employers and employees must pay social contributions – employers’ combined social and health contributions amount to 35 percent of wages.  The relatively heavy reliance on social insurance increases the cost of labor, especially on low-skilled, low-wage workers. According to the OECD, the average single worker in Slovakia faced a tax wedge (the difference between salary and total cost of employment) of 42 percent in 2017, compared to the OECD average of 36 percent.

Union membership has declined in recent years.  The “tripartite arrangement” is used as a discussion platform including state representatives, labor unions, and the employers’ associations.  Slovakia is a member of the International Labor Organization and has ratified all eight core conventions. Strikes are infrequent in Slovakia. In recent years, there were labor actions by both teachers and nurses, with both groups complaining about insufficient budgets and low salaries.  In 2017, workers at Volkswagen, the largest private employer in Slovakia, conducted a short strike that was resolved with an increase in pay.

Please consult the following websites for more information:

- European Commission Country Report – Slovakia 2018: https://ec.europa.eu/info/sites/info/files/file_import/2019-european-semester-country-report-slovakia_en_0.pdf 

- OECD Economic Survey – Slovak Republic:  http://www.oecd.org/economy/surveys/Slovak-Republic-2019-OECD-economic-survey-overview.pdf 
- Central Office of Labor, Social Affairs and Family:  https://www.upsvr.gov.sk/sluzby-zamestnanosti/zamestnavanie-cudzincov.html?page_id=272197  

							12. OPIC and Other Investment Insurance Programs					

The Overseas Private Investment Corporation (OPIC) offers U.S. investors in Slovakia insurance against political risk, expropriation of assets, damages due to political violence, and currency inconvertibility through its 1990 agreement between Slovakia and the United States.  OPIC can provide specialized insurance coverage for certain contracting, exporting, licensing, and leasing transactions that U.S. investors undertake in Slovakia. Slovakia is a member of the World Bank Group’s Multilateral Investment Guarantee Agency (MIGA) that also provides political risk insurance.

							13. Foreign Direct Investment and Foreign Portfolio Investment Statistics					

*Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy*