Basic and reduced VAT rates

The basic VAT rate in Slovakia is 23%. 19% is the first reduced rate that is also applicable. 5% is the second reduced rate applicable for limited goods and services.

Following the consolidation measures of the Slovak government, starting from January 1, 2025, the VAT rates in Slovakia have changed significantly. Aside from the change of the basic VAT rate from 20% to 23%, a new reduced VAT rate of 19% has been introduced, which applies to all food items (except for selected items subject to a 5% VAT rate), restaurant services involving the serving of non-alcoholic beverages and supply of electric energy.

The second reduced rate of 5% is applicable to a longer list of items. In general, it may be applicable to pharmaceuticals, some medical products, books, specific food items, accommodation, entrance fees to sport events and fitness centers, restaurant services involving the serving of food, and the transactions related to state-supported residential rent. In any case, the actual product or service should be reviewed individually.

From January 1, 2025, the reduced VAT rate is no longer applicable on transport of persons by cable cars, ski lifts, access to indoor and outdoor sports facilities (except fitness centers) or admission to artificial swimming pools.

Export within and outside the European Union

The supply of goods to other EU member states are free from VAT, if delivered to a VAT payer registered in another EU member state and transported to such member state. The export of goods outside of EU is free from VAT but is subject to the confirmation of custom authorities on export from EU.

Taxable amount

The taxable amount equals everything that is deemed to be received or shall be received for the delivery of goods or services. In case of the import of goods from third countries, the taxable amount is based on the value of customs.

Voluntary and obligatory registration

Voluntary VAT registration in Slovakia is possible, but only for a taxable person, i.e. person (natural or legal person) pursuing economic activity. The turnover threshold for obligatory VAT registration is EUR 50,000 within calendar year. The taxable person becomes VAT payer on January 1 of the next calendar year, or by the reaching the turnover threshold EUR 62,500.  

The deadline for filing the obligatory VAT registration falls on the 5^th working day after the turnover threshold has been reached. In some special situations there is a shorter period applicable (immediately).

Starting from January 1, 2025, domestic taxable persons who perform exclusively exempted activities such as financial, insurance services, delivery and rental of real estate are also obliged to register for VAT purposes after the turnover threshold has been reached. However, in such cases, the monthly VAT reports shall be submitted only for taxable supplies (not exempted ones).

Group registration for taxable entities

In Slovakia, group registration for VAT is possible. Several taxable persons who have their seat, place of business or fixed establishment within the territory of the Slovak Republic and are financially, economically and organizationally connected, may participate in VAT group registration and as such be deemed as a single taxable person for VAT purposes.

Other specifications of the VAT registration

In Slovakia, a taxable person may become a VAT payer by law without previous registration. It may concern cases of real estate sale, business acquisition or part of a business by purchase or otherwise.

Besides the obligatory registration, Slovak taxable persons must register for the purposes of service delivery to other EU member states, or for the purposes of acquiring goods or services from other EU member states. Registration shall be done in advance.

For those taxable persons that perform e-commerce, it would be worth mentioning that as from July 1, 2021, the rules implementing the Council Directive (EU) 2017/2455 and Council Directive (EU) 2019/1995 entered into force. Further details are available here.

Definition of foreign taxable persons

Foreign taxable persons are entities without seat, place of business or fixed establishment located in Slovakia. Otherwise, they are considered as domestic taxable persons, i.e., the same rules are applicable on foreign persons having a fixed establishment in Slovakia as on domestic taxable persons.

Obligatory registration for foreign taxable persons

Foreign subjects in Slovakia are obliged to register for VAT on the 5^th working day after the fulfilment of the legislative conditions.

In the field of e-commerce, as from July 1, 2021, the rules implementing the Council Directive (EU) 2017/2455 and Council Directive (EU) 2019/1995 entered into force.

Minimum amount and applicable period

The value of requested VAT must be at least EUR 50 for the respective calendar year.

The VAT refund may be requested also for shorter periods than a whole calendar year, however such period shall not be shorter than 3 calendar months and the value of VAT must be at least EUR 400.

Deadline and place of filing for VAT refund

The deadline for filing a VAT refund request is September 30 of the subsequent calendar year. The request for VAT refund shall be filed at the local tax authority in the other EU member state. The deadline for VAT return is 10 working days after laps of period for delivery of the decision made on the VAT refund, which may be between 4 to 8 months since filing VAT refund request.

Refund for foreign taxable persons

Upon the fulfilment of specific conditions. VAT refund for a foreign taxable person is possible.

VAT refund conditions

VAT refund to third countries is possible only upon the fulfilment of specific conditions, including reciprocity.

Minimum amount and applicable period for VAT refund

The value of requested VAT must be at least EUR 50 for the respective calendar year.

The VAT refund may be requested for the whole calendar year or for half calendar year. However, in case of the later, the value of the requested VAT has to exceed EUR 1,000.

Deadline and place of filing for VAT refund

The deadline for filing a VAT refund request falls on June 30 of the subsequent calendar year. The request for VAT refund shall be filed at the Tax office in Bratislava, Slovakia. The deadline for VAT return is 6 months after filing the refund request.

Depending on the nature of breach of the law, penalty for non-compliance can be imposed in form of fine, based on situation and severity, up to EUR 32,000, or in the form of interest, up to 3xECB rate or 10 % p.a. Delay interest for late payment is 4xECB rate or 15 % p.a.

General social security and health insurance

1. There is no maximum assessment base for health insurance; for social insurance, it is currently set at 11-times the average wage in Slovakia. The minimum assessment base for the employee and the employer is not defined; however, for the sole entrepreneurs, it is EUR 715 starting January 1, 2025.
2. The contribution is voluntary.
3. Starting from January 1, 2011 it was introduced that dividends are also subject to the health insurance contributions if they are paid on the account of individuals obligatorily insured for health insurance purposes in Slovakia. This applies to dividends paid out of profits generated from January 1, 2011 to January 31, 2016. Also dividends paid out of profits generated before January 1, 2004 are subject to health insurance contributions. Starting from January 1, 2025 the maximum annual assessment base is EUR 85,800. Dividends paid out from profits generated from January 1, 2017 are not subject to health insurance at all.
4. The rate of health insurance contributions increased as of January 1, 2024 for the contributions paid by employer from 10.00% to 11.00% and for the contributions paid by sole entrepreneur from 14.00% to 15.00%.

Persons residing in the EU are subject to the provisions of EC Regulation 883/2004, which provide for the applicable social security regulation in the case of cross-border activities. If non-EU residents work in Slovakia or Slovak nationals work in a third country, a bilateral social security agreement may provide for the applicable social security legislation.

General comments on labour law

Starting January 1, 2025, financial transactions in Slovakia are subject to a special tax. This tax applies to transactions carried out on a transaction account, which is an account specifically used for business activities. Taxpayers must open such an account by March 31, 2025, if they do not already have one. The tax applies to entrepreneurs, legal entities, and certain other organizations using payment services, including those based in Slovakia or abroad.

The tax applies to financial transactions involving withdrawals from the transaction account, the use of payment cards, or cash withdrawals. Specific rates are applied based on the type of transaction:

• Debit transactions incur a tax of 0.4% of the transaction amount, with a maximum of EUR 40 per transaction.
• Cash withdrawals (either from ATMs or bank branches) are taxed at a rate of 0.8% with no maximum limit.
• Payment card usage is taxed at a fixed rate of EUR 2 per year, regardless of the number of transactions.

The law provides a broad set of exceptions, which include intra-bank transfers, payments for taxes, social insurance contributions, payments on special accounts for bankruptcy trustees or bailiffs, and several others. These exemptions are aimed at reducing the tax burden on certain types of transactions and account operations.

The taxpayer is the individual or entity who conducts the transaction, while the income payer (typically a payment service provider like a bank) is responsible for calculating, collecting, and remitting the tax to the Slovak tax authority. The income payer must report the collected tax monthly (or annually for payment card usage), and submit the notification electronically. The tax is considered assessed upon submission of the notification, and the income payer must ensure timely payment of the tax by the end of the month following the tax period.

The tax base for the financial transaction tax is determined by the amount of funds withdrawn or paid through the transaction account, and for invoiced costs related to activities in Slovakia, the base is the cost amount invoiced to the taxpayer.

The taxpayers are required to pay the financial transaction tax themselves instead of the income payer under specific circumstances, for instance if the taxpayer carries out financial transactions on an account other than a transaction account, if the taxpayer uses a foreign bank account or if the taxpayer is invoiced for costs by other entity that made payments on its behalf related to its activities carried out in Slovakia.

The first tax period will begin in April 2025, with taxes for the period from April to June 2025 due by July 31, 2025. If a taxpayer closes their transaction account during this period, they are responsible for calculating and remitting the tax for the time the account was active, and they must report it to the tax authority by the end of the month following the account closure. This new tax framework imposes a broad scope of reporting and payment obligations on both taxpayers and income payers, and also introduces an additional administrative burden for businesses, particularly those with foreign accounts.

An e-commerce in Slovakia can be operated by either natural or legal person, Slovak or foreign. Slovak entities and foreign branches need to obtain a trade license from the Slovak Trade License Office covering the intended scope of activity carried out through the e-shop, and companies have to be properly established and registered in the Commercial Registry.

Foreign entities residing in the EU, which are entitled to operate an e-shop in their country of residence/establishment, may run an e-shop in the Slovak Republic without a duty to obtain a trade license or register its branch into the Commercial Registry. Nevertheless, having a delivery address in the Slovak Republic may prove to be advantageous in certain situations.

An obligation of foreign entities to obtain a trade license and to register in the Commercial Registry requires further analysis depending on the particular circumstances of each case.

To secure proper fulfilment of all statutory obligations, the operator of the e-shop should be aware of which legal system governs relationships with its customers (e.g. rights and obligations of the parties to the contract, claims of the customer in case of defects or limitation periods).

In case the e-shop is operated by a Slovak-based entity which offers goods or services to Slovak customers, Slovak law would probably be the first choice. If the headquarters of the operator of the e-shop offering goods and services in the Slovak Republic resides abroad, the answer to this question may not be as clear.

Law governing the contract can be established on the basis of an EU regulation No. 593/2008 which determines the law decisive for consumer contracts. First, differences are made between contracts entered into by two entrepreneurs within their business activity and consumer contracts, i.e. contracts between an entrepreneur and a consumer. A consumer is a natural person concluding a contract outside their trade, business or profession.

As a general rule, consumer contracts are governed by the law of the country of residence of the consumer. The EU law, however, allows parties to choose the governing legal system. Nevertheless, such a choice cannot deprive the consumer of protection provided by the legal system applicable under the general rule. The EU law further contains some exceptions from the general rule, applicable for example to contracts on provision of services, if the place of performance lies outside the country of the consumer’s residence, insurance and transport contracts.

If a contract concluded through an e-shop is not a consumer contract, the choice of the governing law is possible without the limitations, which are related to consumer´s protection. In case of lack of such a choice, the EU regulation contains rules for determination of the applicable legal system for a legal relationship with a foreign element.

So for e-commerce in Slovakia, which intend to sell goods or services to Slovak customers, the following conclusion can be made: the contract concluded with consumers through an e-shop will be governed by the Slovak law. Non-consumer contracts will be governed by the law of the seller’s/provider’s residence if no other choice is made.

To be able to realize the customer supplies, the e-shop will first acquire the relevant goods. The decision on the supplier of the goods to be sold by the e-shop will most likely be business-driven. Nevertheless, the VAT liabilities relevant to the purchase transaction must be assessed in line with the VAT legislation to avoid any negative consequences.

The diversity of purchase (of goods) transactions is almost unlimited. Below are comments on the most common ones.

Acquisition of goods in the Slovak Republic

Provided that the e-shop seated in the Slovak Republic will acquire goods locally (i.e. from a taxable person registered for VAT in the Slovak Republic), the e-shop as the purchasing party will be entitled to claim input VAT through its VAT return.

The relevant VAT may be claimed based on a tax document containing all the prerequisites defined by the VAT legislation.

However, for certain commodities the Slovak VAT legislation defines a VAT treatment that varies from the one described above. For specific commodities upon some conditions so-called local reverse charge mechanism applies. Under the local reverse charge mechanism, the supplier transfers the VAT liability to the customer (i.e. Slovak VAT registered e-shop). This means that the supplier applies no VAT on the delivery of the goods to the customer. The customer (i.e. Slovak VAT registered e-shop) is consequently obliged to declare the output VAT relevant to the acquisition of goods in its VAT return. Simultaneously, the input VAT relevant to the purchase of the goods may under standard conditions be claimed through the VAT return.

Some of the concerned commodities are as follows:

• mobile phones
• integrated circuit devices such as microprocessors and central processing units

Acquisition of goods from the EU

When acquiring goods from other EU member states, reverse charge mechanism applies to the purchasing party – VAT registered e-shop in the Slovak Republic.

Under the reverse charge mechanism, the supplier of the goods treats the delivery of the goods to a customer seated in another EU country as exempt from VAT. The purchasing party (i.e. the Slovak VAT registered e-shop) is subsequently obliged to declare the output VAT relevant to the acquisition of goods from other EU member state through its Slovak VAT return. Simultaneously the input VAT relevant to the purchase of the goods may under standard conditions be claimed through the Slovak VAT return.

Acquisition of goods from 3rd countries – import of goods

In the case of the import of goods to the Slovak Republic, the tax administration is in hands of customs authorities. This means that VAT upon importation of goods is assessed by customs authorities. The purchasing party pays the VAT arising from the imported goods to customs authorities based on customs documents.

Deduction of VAT paid upon importation relevant to the purchase of the goods may under standard conditions be claimed through the Slovak VAT return.

The sale of goods may create various VAT situations to consider. When concluding on the VAT treatment to be applied, many indicators will need to be evaluated, e.g. where are the goods located at the moment of sale, whether the e-shop is registered for VAT in the Slovak Republic, are the goods sold to a Slovak customer or to a foreign one and many others.

The text below comments on the VAT treatment of some of the situations that may arise on the sale of goods.

Slovak seated and VAT registered e-shop sells goods to Slovak customer (non-taxable person); the goods are located on the territory of the Slovak Republic at the time of sale:

Under this scenario the e-shop will be liable to apply output VAT on the sale of the goods.

The Slovak seated and VAT registered e-shop sells goods to an EU customer (non-taxable person); the goods are located on the territory of the Slovak Republic at the time of sale:

Delivery of goods to the final customer (non-taxable person) to other EU member state, where the goods are transported from the Slovak Republic by the supplier or by third person engaged for this purpose (e.g. courier service, post office) by the seller falls under distant sale regime (provided that the sold goods are not used goods, goods that are delivered with installation and assembly, or new means of transport).

For the determination of the correct VAT treatment in this situation, the overall value of the relevant transactions to the EU final customers carried out by the e-shop is decisive. As relevant transactions are considered, in particular, distanced sale of goods and provision of telecommunication services, radio and television broadcasting services and electronically provided services to a non-taxable person.

The Slovak VAT will be applied and reported in the Slovak VAT return of the Slovak e-shop on the sale of goods if the place of taxable supply will be in the Slovak Republic. The place of the taxable supply will be in the Slovak Republic provided that the following condition is be met:

• the overall value of relevant transactions (without VAT) carried out by the e-shop to the EU final customers does not exceed the amount EUR 10,000 in both the given and the preceding calendar year

If the above condition is not fulfilled, the e-shop will become liable to register for VAT in the EU member state of consumption and apply the relevant VAT rate as defined by the VAT legislation of the given EU member state on the sale of goods to the customer. Subsequently, the e-shop will be liable to comply with VAT reporting and payment obligations as defined by the VAT legislation of the other EU member state.

Starting from 1st July 2021, the e-shop may register for One-Stop Shop (OSS) scheme, which enables online sellers, including online marketplaces/platforms, to register in one EU Member State. This is valid for the declaration and payment of VAT on all distance sales of goods and cross-border supplies of services to customers within the EU. Therefore, the e-shop does not have to VAT register in each EU member state of delivery of goods or provision of services and might tax the supplies by relevant VAT rate in a single OSS declaration.

Even if the e-shop does not fulfil the above conditions obligating it to VAT registration in the other EU member state, the e-shop will be entitled to VAT register voluntarily in the other EU member state. However, in this case, the e-shop will be obliged to comply with VAT reporting and payment obligations defined by the other EU member state.

EU seated and VAT registered e-shop sells goods to a Slovak final customer (non-taxable person):

This scenario mirrors the one described in the above example. Therefore, the place of taxable supply will be in the other EU member state, provided that the conditions given by the Slovak VAT legislation (and giving rise to obligatory Slovak VAT registration) are not fulfilled. Under this scenario the sale of goods to Slovak final customer (non-taxable person) will be subject to VAT of the other EU member state.

If, however, the value of the goods and electronically provided services sold to EU final customers (non-taxable persons) in the given and the preceding calendar year exceeds EUR 10,000, the EU e-shop would become liable to VAT register in the Slovak Republic. As a consequence, the EU e-shop will be liable to apply Slovak VAT on the sales to Slovak Republic final customers (non-taxable persons) and comply with its Slovak VAT reporting and payment obligations.

In case of registration for OSS in its EU member state, the Slovak VAT is applicable, however, the VAT registration in the Slovak Republic is not required. The Slovak VAT will be reported in the home member stated in OSS scheme.

The Slovak seated and VAT registered e-shop sells goods to a third country customer (non-taxable person); the goods are located on the territory of the Slovak Republic at the time of sale:

Under this scenario the sold goods exit from the territory of the EU and are released to export customs regime. Should this be the case, the sale of goods to the final customer (non-taxable person) would be exempt from VAT in the Slovak Republic. Any duty and VAT could be assessed to the customer based on the legislation of the country of destination.

Sale of goods by the Slovak seated and VAT registered e-shop to a Slovak final customer (non-taxable person); the goods are dispatched from the warehouse located in other EU member state:

This situation would be very likely connected with the VAT registration of the Slovak seated e-shop in other EU member state. The main reason behind this VAT registration is the entitlement to apply for input VAT of the other EU member state in case of local purchases or import of goods from third countries.

In this case, the place of supply is always in the country where the goods are located after dispatch or transport, regardless of the total value of the goods (and selected services) sold to end customers in the EU. For this reason, the supply will be subject to taxation in the country of the end customer and the seller (online shop) will be obliged to register for VAT in that country. If the online store is registered in the one-stop-shop regime, it does not have to register for VAT in the end customer’s country of establishment.

The most common legal form for doing business in Slovakia is the limited liability company (or LLC in short). The incorporation time usually takes up max. 2 weeks, counted from when the necessary documentation is signed.

There are no limitations for foreign investors when it comes to setting up companies doing business in Slovakia, they enjoy identical rights and obligations as Slovak persons.

The fees for establishing an LLC are:

• EUR 220 for court fees
• EUR 15 for regulated trades (the so-called free trades are free of charge).

At least one shareholder (natural or legal person) is required for setting up a limited liability company, in which case anti-chaining rules apply (i.e., LLC with only 1 shareholder cannot be a sole shareholder in other LLC), or two or more persons (the maximum number of shareholders is limited to 50).

The minimum registered capital is EUR 5,000. The minimum contribution of each shareholder must be EUR 750. If the Limited Liability Company is founded by a single entity, the registered capital must be paid up in full.

A limited liability company doing business in Slovakia acquires legal personality status upon its registration in the Commercial Register. A company shall have registered seat in the territory of Slovakia. It is not possible to register the company in the Commercial register without document proving the seat in the premises.

The LLC is also required to have at least 1 director. Only a natural person can be appointed as a director. If there are more directors, each of them is entitled to act individually on behalf of the company doing business in Slovakia unless stipulated otherwise in the Memorandum of Association/Foundation Deed.

The Commercial Register in Slovakia is administered by the Registry (District) Courts, and it is public. The website is accessible at www.orsr.sk.

An employer’s social fund contribution is exempt from tax if it is provided to an employee for a preventive medical examination in excess of the scope specified in special regulations. Benefits in the form of social assistance due to the death of a close relative, mitigation of the consequences of a natural disaster, or temporary incapacity for work of an employee, which lasts continuously for the greater part of the tax period (183 days), are also exempt from tax.

An employer-provided education benefit for the employer’s own employees is considered tax-exempt income for the employee in accordance with the provisions of Section 5(7)(a) of the Income Tax Act. Amounts paid by the employer for an employee’s education, training, and qualifications are exempt from tax, but only on condition that such education, etc., is related to the employer’s business.

An employer’s attractiveness also depends on the benefits it provides to its employees. If a company wants to attract new people, it must offer more than the competition. Meal vouchers, overtime pay, or so-called sick days are already a common part of company benefits and are considered standard. New forms of benefits are becoming a necessity, but the way they are used and managed can also make an impression.

A very popular benefit for employees is the provision of non-cash benefits from which employees do not pay tax or social security contributions. However, such a benefit will not be tax deductible for the employer, but the overall effect is beneficial for both parties. In accordance with Section 5(7)(o) of the Income Tax Act, non-cash benefits provided by an employer to an employee in a total amount of up to EUR 500 per tax period from all employers are exempt from tax, provided that the employer excludes the funds spent on this non-cash benefit from tax deductible expenses.

The non-cash benefit up to the limit of EUR 500 can be used for, for example:

• employee participation in a Christmas party / teambuilding;
• employee participation in a sporting or cultural event;
• provision of shopping vouchers/cards to the employee;
• provision of a parking space, etc.

On the other hand, the non-cash benefit up to the limit of EUR 500 can be used for, for example, benefits that can be exempted according to other provisions of the Income Tax Act, e.g. meals, accommodation for employees, further for various refunds of expenses incurred by the employee, benefits from the social fund that were not created by the employer through tax deductible expenses, etc.

For companies looking to unburden their HR department while still having an efficient benefits management system, we have developed our online HR portal, which contains 2 modules for automation and management of company benefits.

Benefits module of our online HR portal

• Simple management of company benefits
• Possibility to force an approval of the benefit draw by HR department
• Automated recalculations of recreational allowances
• Creating online applications for benefit activation directly in the employee´s account
• E-mail notifications and clear reports for HR department
• An overview of all assigned company benefits in the employee´s account

Events module of our online HR portal

• Modern management of company events
• HR department has full control over the created events
• Employees can report to specific times, waiting lists are available
• HR has lists of attendees and relevant reports

The acquisition of real estate in Slovakia requires two obligatory steps:

Execution of a written agreement for real estate transactions in Slovakia

The ownership of the real estate may be transferred by written purchase agreement concluded under the Slovak law. The demonstration of will to transfer the real estate of both the transferor and the transferee must be on the same document and the signature of the transferor shall be verified.

The purchase agreement can be drafted by either party and it does not need to be drafted by a public notary or certified attorney. The purchase agreement must include all the particulars required by the Civil Code and must also comply with the requirements of the Cadastral Act specifying more precisely its content.

The purchase agreement must be in Slovak language (or Czech language). Any other language version must be translated into Slovak by a certified translator, making it eligible to be registered in the Real Estate Registry.

Prior to the execution of the purchase agreement, the parties may conclude a preliminary agreement in which they undertake to enter a purchase agreement within the agreed time period. Based on the preliminary agreement, either party can sue for the performance of the purchase agreement if the other party breaches the obligation to enter in the purchase agreement.

Registration of the ownership title in the Real Estate Registry

The title to real estate is acquired by the registration in the Real Estate Registry upon the Resolution of the competent Real Estate Administration.

The registration process starts by the submission of the Application to the respective Real Estate Administrator and should be completed by the Resolution of the Real Estate Administration.

In line with the established practice for real estate transactions in Slovakia

1. Parties conclude a purchase agreement, the signature of the transferor shall be verified
2. Parties regulate how the payment of the purchase price should be “secured” (from the signing of the agreement to the registration of the new ownership), for example:
   • Purchase price can be deposited in the notarial custody for the benefit of the transferor,
   • Purchase price can be deposited on escrow account administrated by a bank for the benefit of the transferor, and the purchase price will be paid to the transferor once the respective Resolution of the Real Estate Administration is issued
3. Application is submitted to the respective Real Estate Administration. The Administration decides on the Application for the registration of the ownership title within 30 days, the fee is in the amount of EUR 66. The parties of the agreement can apply for registration in accelerated proceedings, in this case the fee is in the amount of EUR 266 and the registration is completed within 15 days.

Prohibition of fragmentation of a land

It is prohibited to create a new land as a result of the splitting up of existing land with an area of less than 3 000 m² in the case of agricultural land and less than 5 000 m² in the case of forest land.

The table below provides a brief overview of fees and taxation with respect to the real estate transfer in Slovakia

Specificity

1. Ownership of a land does not include ownership of a building located on it.

Slovak law does not recognize the principle according to which the ownership of a land includes the ownership of a building located on it. Consequently, the owner of a land may be different form the owners of the buildings on it.

2. Due diligence

The real property ownership is registered in the Real Estate Registry.  A Resolution of the respective Real Estate Administration approving an entry in the Real Estate Registry and the registration of the transfer in the Real Estate Registry may not be considered as a guarantee that the ownership title was validly transferred, as there are several circumstances under which the transfer was in compliance with law.

Legislation for real estate transactions in Slovakia

• The Act No. 40/1964 Coll., Civil Code, as amended
• The Act No. 162/1995 Coll. on the real estate cadastre and entering of ownership and other rights to real estates, as amended (Cadastral Act)
• The Act No. 140/2014 Coll. on acquiring the ownership of agricultural land, as amended
• The Act no.180/1995 Coll. on some measures for land ownership arrangements, as amended

A Limited Liability Company may be established by a sole shareholder or by more shareholders, in both cases it is irrespective of whether they are a legal or a natural person. In respect of one shareholder there are the following restrictions:

• a limited liability company owned by a sole shareholder must not be a sole shareholder in another limited liability company,
• a natural person must not be a sole shareholder in more than three limited liability companies.

The maximum number of shareholders is limited to 50.

The registered capital must be at least of EUR 5,000 with a minimum contribution of EUR 750 of each shareholder. Contributions can be monetary or non-monetary, while an official appraiser must value a non-monetary contribution.

At least 30% of each shareholder’s monetary contribution, and in cases of non-monetary contributions at least 50%, must be paid up before the application for the registration of the Limited Liability Company is filed at the Commercial Register. The contributions do not have to be paid to the bank account and for the purposes of registration, the person administering the contributions will issue an affidavit declaring that the respective contributions have been paid up. If the Limited Liability Company is founded by a single entity, the registered capital must be paid up in full.

A general meeting is composed of all shareholders and decides on all major issues as the appointment and dismissal of the executive directors, modification of the statutes and Memorandum of Association/Foundation Deed, increases and decreases of the registered capital.

The statutory body of the Limited Liability Company is formed by one or more executives (executive directors). Only a natural person can be appointed as an executive director. In the event that there are several executive directors, each of them is entitled to act individually on behalf of the company unless stipulated otherwise in the Memorandum of Association/Foundation Deed.

Establishment of a supervisory board is optional. If it is established, the supervisory board must be composed of at least three members appointed by the shareholders’ meeting.

The activity would be regarded as an unauthorized trading if the person systematically, independently, on own behalf, on own responsibility, for the purpose of earning profits, without holding a trade licence performs an activity subject to craft, regulated or unregulated trades or licenses.

The fine for unauthorized trading ranges from EUR 1,659 to EUR 3,319. Unauthorized trading can be also considered as an offence under the Slovak Criminal Code.

The Slovak tax system comprises the following taxes:

Income taxes (personal income tax, corporate income tax)

Personal income tax

The tax rates applicable for income derived in 2024 are:

• annual taxable income (except for income from business activity, capital and dividend income) up to EUR 47,537.98 is taxed at 19%
• annual taxable income (except for income from business activity, capital and dividend income) above EUR 47,537.98 is taxed at 25%
• income from business activity is taxed at reduced tax rate of 15%, if its annual taxable value does not exceed EUR 60,000 (note: in 2020 the threshold was EUR 100 thousand; between 2021 – 2023 the threshold was EUR 49,790); otherwise, 19% rate applies for taxable business income up to EUR 47,537.98 and 25% rate applies to the amount, which is above that threshold
• income from capital is taxed at flat rate of 19%
• income from dividends paid out of pre-2004 profits and profits derived from January 1, 2017 to December 31, 2023 is taxed at 7% (35% applies if dividends are from foreign sources of non-cooperating state).
• income from dividends derived from profits for periods starting after January 1, 2024, a tax rate of 10% applies (while the rate of 35% still applies for dividends from foreign sources of non-cooperating states).

Moreover, an additional tax of 5% is to be paid by the representatives of constitutional bodies (e.g. the President, Members of Parliament) on their employment income.

Certain types of income are not aggregated but are subject to a final withholding tax of 19%, 10% or 7% in the case of dividends paid out by domestic company.

Corporate income tax

Corporate income tax is levied at a rate of 21%. However, since January 1^st, 2021, taxpayers with taxable revenues not exceeding EUR 60,000 per tax period (note: in 2020 the threshold was EUR 100,000; between 2021 – 2023 the threshold was EUR 49,790) are entitled to apply reduced tax rate of 15%. This is the final tax burden on 2024 corporate profits in some cases because dividends paid out of 2024 profits are not taxed in the hands of shareholder if the shareholders are corporate and based in other than non-cooperating state.

Starting from the 2024 tax period, the minimum corporate tax (commonly known as tax licenses) has been reinstated in the tax legislation, following its abolition from 2017 to 2023. Legal entities are required to pay a minimum corporate tax of between EUR 340 and EUR 3,840 based on the amount of taxable income. Only a limited number of exceptions from the payment of the minimum tax are allowed, such as companies in bankruptcy, companies in their initial taxable period, non-profit organizations, etc.

Value added tax (VAT)

• 20% is the standard VAT rate in Slovakia
• 10% is the first reduced VAT rate
• 5% is the second reduced VAT rate

Export of goods and services is zero rated.

Intra-Community supplies of goods are zero rated under certain conditions.

Excise duties

Excise duties are levied on mineral oil, beer, wine, spirits, electricity, coal, natural gas and tobacco products.

Motor vehicle tax

Levied on motor vehicles and trailers in categories L, M, N, and O if registered in Slovak Republic and used for business purposes.

Special taxes

Special taxes cover special duty paid by regulated industries and special levy on non-life insurance premium. Further, in 2023 and 2024, companies operating in the oil, gas, coal and refinery sectors shall pay a special solidarity contribution.

Moreover, there are local taxes to be paid, e.g. real estate tax.

For more details about taxation in Slovakia, download our free 2024 Tax Guideline!

Investment incentives are serious arguments in favour company formation in Slovakia. As an EU member country, Slovakia must ensure compliance with EU rules. In general investment incentives (or state aid) are linked to the region where the investment takes place and the European Commission has determined which regions are entitled to receive aid and the amount of aid each of those regions may receive. The connection with a certain region is one of the fundamental characteristics of the incentives and their provision shall serve to support not only foreign, but also Slovak investments.

In general, there are four categories of projects that can be supported by the investment incentives for company formation in Slovakia:

• industrial production
• technological centres
• shared service centres
• tourism

Each category has specifically defined conditions which shall be met in order to apply for the investment incentives. The incentives are provided in general in the form of:

• a subsidy for the acquisition of material assets and immaterial assets
• an income tax relief
• a contribution for newly created jobs
• transfer of immovable property or exchange of immovable property at a price lower than a general asset value

The provision of the state aid is governed in particular by the European Union law that forms the basic legal framework also for the Slovak authorities.

The bankruptcy proceedings and restructuring proceedings start officially with the resolution of the court which is published in the Company Gazette (in Slovak: “Obchodný vestník”). The date of publication is also the starting date of the period during which creditors may submit their claims on receivables against the company

• in the bankruptcy proceedings such period is 45 days. If the creditor delivers the application later to the administrator, the application shall be taken into consideration, but the creditor cannot exercise the voting right and other rights granted otherwise by law. The right to proportionate satisfaction of the creditor shall not be affected thereby, however it can be satisfied only from the proceeds included in the distribution plan from the general assets,
• in the restructuring proceedings the period is 30 days. Any claim delivered after the expiration of the term shall be disregarded within the framework of the restructuring proceedings and the claim enforced thereby shall not be included in the Restructuring Plan.

In both procedures the submission of claims is free of charge. Each submitted claim shall be reconciled by the administrator with due care. If administrator finds out while analysing the claims, that any of them is disputable (as to the title of its existence or enforceability), the administrator shall be obliged to contest such claim to the extent in which it is disputable. However, the creditor holding a contested claim may file with the court an action asking the court to acknowledge the claim.

The property which is liable to the bankruptcy shall made up a bankruptcy estate, which shall be split between:

The creditors are satisfied by the funds which were converted by the sale of the assets from the respective group.

In general, the receivables are satisfied in the following order:

• costs of the insolvency procedure which include mainly costs of selling the assets, remuneration of the administrator,
• alimony,
• employees’ wages and other claims of employees that arose after the bankruptcy was declared,
• taxes, duties, health insurance payments, social insurance payments and other contributions to the state,
• other claims.

In the restructuring proceedings is applied that the property is divided as it is proposed in the Restructuring Plan, which shall be approved by the creditors and subsequently ratified by the court.

According to the law, the rate of satisfaction of any of the unsecured receivables shall not be lower than 50% of the amount of the claim, this does not apply if the concerned creditor agrees in writing with a lower level of satisfaction.

Sanctions on the side of the company (as the debtor)

Penalty for company´s (as the debtor) management

Company as the debtor is obliged to file a proposal for the bankruptcy order within 30 days since it knew or while maintaining due diligence should have known of its status. This obligation on behalf of the company (as debtor) has mainly the statutory body as well as the member of the statutory body of the company.

For the event of breach of the obligation to file a proposal for the bankruptcy in time, there is a fiction stipulated by the law, that between the company and the person obliged to file the proposal for the bankruptcy a contractual penalty in the amount of EUR 12,500 is negotiated. This sum serves for the satisfaction of bankruptcy costs and satisfaction of creditors (if the sum surpasses the bankruptcy costs). Any agreement between the company and the person obliged to file proposal for the bankruptcy, which excludes or restricts entitlement for the contractual penalty, shall be prohibited.

Entitlement for the contractual penalty shall not affect the entitlement to compensation for damage exceeding the contractual penalty.

Disqualification of the member of the statutory body to execute the function of the statutory

If the court decides that the person breached the obligation to file a proposal for the bankruptcy in time and therefore the person is obliged to pay the contractual penalty as described above, the person will be disqualified by the court to be a member of the statutory body of the company (as debtor) and also of other companies and the prohibition can be up to 3 years.

Further the person will be registered in the state Registry of Disqualification which is a public registry operated by the district court.

Criminal offenses on the side of the company (debtor)

There are several relevant criminal offenses according to Slovak Criminal Code concerning acting in insolvency status or in respect of the bankruptcy or restructuring proceedings, as:

• Fraudulent insolvency
• Culpable insolvency
• Fraudulent conveyance of a creditor
• Fraudulent preference of a creditor
• Distortion of data in financial and business records
• Deceitful practices in bankruptcy or restructuring proceedings
• Obstructing bankruptcy or restructuring proceedings.

Sanctions on the side of the creditor

Criminal offenses for an improper acting in the bankruptcy or restructuring proceedings are mainly:

• Deceitful practices in bankruptcy or restructuring proceedings
• Obstructing bankruptcy or restructuring proceedings.

Sanctions for any third person

All third persons are obliged to collaborate under the Act of bankruptcy and restructuring. The collaboration shall be provided promptly and free of charge. If any third person fails to provide collaboration as required by the law, the court may penalize such person by a fine up to EUR 3,300.

Legal regulation:

• Act No. 7/2005 Coll., Bankruptcy and Restructuring Act
• Act No. 513/1991 Coll., Commercial Code
• Act No. 300/2005 Coll., Criminal Code

Pursuant to the Act on Illegal employment, it is prohibited for an employer to employ persons without an established employment relationship. This is applicable for all types of individuals bellow:

• Slovak citizens,
• citizens of European Union (“EU”) or of contracting states of the Agreement on the European Economic Area and Switzerland (“EEA”),
• non-EU and non-EEA citizens.

A third-country national has the same right to use employment services as a citizen of Slovakia, with the following restrictions:

EU citizens

EU citizens are entitled to stay in Slovakia without any conditions or formalities for three months after the date of entry into the territory of Slovakia.

An EU citizen staying in Slovakia for more than three months is required to apply for registration of residence in Slovakia, while one of the reasons under which an EU citizen is authorized to stay in Slovakia is, for example, an employment in Slovakia.

NON-EU citizens

Citizens of other countries than the EU or EEA countries are entitled to work in Slovakia if they meet the specific conditions set by legislation (e. g. to have a work permit / temporary residence permit for the purpose of employment).

Throughout 2018 have been introduced several new regulations to make employment of non-EU citizens more flexible in areas of industry with lack of workforce, in particular in relation to shortening the time periods for granting of temporary residence permits and reducing of a related administrative burden.

Minimum specifications

The employment contract contains the employer’s and employee’s identification details. In order to conclude an employment contract, the employer and the future employee need to agree on the following minimum specifications that will be included in the contract:

Information about employment terms and conditions

With regard to other essentials, such as the method of determining the place of work in the case of multiple workplaces, the scheduling of working time, the amount of leave, the payment of wages and pay dates, the employer may decide whether to specify them in the employment contract or to provide them to the employee in the written form (or in electronic form, if this is possible under the law) or by reference to the relevant provisions of the Labour Code. In case the information is not directly contained in the employment contract, the employer is obliged to provide the employee with given information within the period of 7 days or 4 weeks, depending on the type of information to be provided.

Obligations

On taking up the employment, an employer is obliged to acquaint the employee with work rules, health and safety regulations and collective agreements, if any.

Pursuant to the Act on Illegal work and illegal employment, it is prohibited for an employer to employ persons without an established employment relationship.

Contract duration

The employment contracts in Slovakia can be concluded for:

The Labour Code contains certain limitations in respect to the employment contract concluded for definite period of time. Such contracts can be concluded for a maximum of two years and it is possible to extend them or conclude them again only twice within these two years. The limited duration (i.e. definite period of time) of the contract must be agreed in writing in the contract, otherwise the contract is deemed to be concluded for indefinite period.

Probationary Period

The parties can agree on an initial probationary period of:

Cases

The employment contract terminates also:

Notice period

Both employer and employee may terminate an employment contract by a written notice. As mentioned above, the employee may terminate the employment contract for any reason or without stating any reasons. On the other hand, the employer may terminate the employment contract only in the situations expressly stipulated in the Labour Code:

• The employer or its part:
  • is being wound up or
  • relocated and the employee does not agree with the change of the agreed place of work.
• The employee has become redundant because of a written decision of the employer or a competent authority to change the employer’s function, its technical equipment, or to reduce the number of employees in order to ensure labour efficiency, or other organisational changes, and the employer that is a temporary employment agency may also give notice to an employee if the employee has become redundant with regard to the termination of the temporary secondment prior to the expiry of the period for which the employment for a definite period of time was agreed,
• with regard to his or her medical fitness pursuant to medical opinion the employee has lost, for an extended period, his or her capacity to carry out their current work or must not carry out such work because of an existing occupational disease or the risk of occupational disease, or if the employee has reached in his or her workplace the maximum permissible exposure as determined by decision of a competent public health authority.
• The employee:
  • does not satisfy the prerequisites for the agreed work provided in legal regulations,
  • has ceased to satisfy the requirements referred to in Section 42 Subsection 2 of Labour Code,
  • does not satisfy, without any fault of the employer, the requirements for properly carrying out the agreed work as determined by the employer in its internal regulation, or
  • performs his or her work tasks in a dissatisfactory manner and during the last six months the employer has delivered to the employee a written notice requesting him or her to remedy such underperformance and the employee has failed to remedy it within a reasonable time,
• reasons exist in relation to the employee for which the employer could have terminated his or her employment with immediate effect, or could have terminated it for a less serious breach of work discipline; notice may be given to an employee on the grounds of a less serious breach of work discipline if the employee has been notified in writing during the last six months of the possibility of termination of employment.
• the employee has reached the age of 65 and the age for entitlement to a retirement pension; however, in December 2021 the Constitutional Court of the Slovak Republic decided to suspend the effectiveness of this Article of the Labour Code, which means that the provision of the law in question will not apply from January 1, 2022 and employers are therefore not able to use it. In the following months, the Constitutional Court will decide whether the given provision of the Labour Code is in accordance with the Constitution of the Slovak Republic and will therefore enter into force or is not in accordance with the Constitution of the Slovak Republic and will be deleted.
• The general length of the notice period for a Slovak labour contract is:
  • the statutory minimum notice period is 1 month (unless longer notice period is stipulated by the Labour Code),
  • 2 months, if the employee was employed for at least 1 year but less than 5 years,
  • 3 months, if the employee was employed for at least 5 years.
  • Longer statutory notice period depends on the length of employment and the reason of its termination.

Social contributions

The employer is obliged to pay monthly contributions to health insurance, social insurance and advances on the income tax. The amounts of contributions are presented in the table below.

Please note that as of January 1^st, 2024 the minimum monthly wage in Slovakia is EUR 750 in case of the 1^st degree of labour difficulty. The minimum wage depends on the degree of labour difficulty rating. Minimum hourly wage is EUR 4.310.

Income tax

An individual’s tax liability is derived from the taxable income. Slovak tax residents are liable to personal income tax on their worldwide income, subject to provisions under applicable double taxation treaties. The tax year is the calendar year and the income is taxed at a progressive tax rate of 19 % and 25 %.

The tax rates applicable for income derived in 2024 are:

• annual taxable income (except for income from business activity, capital and dividend income) up to EUR 47,537.98 is taxed at 19%,
• annual taxable income (except for income from business activity, capital and dividend income) above EUR 47,537.98 is taxed at 25%.

Regular working time

The maximum weekly working time is 40 hours, employees working on the basis of a two-shift system may work 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. It is also possible to agree on an uneven distribution of working time with the representatives of the employees.

Overtime

In general, upon agreement with the employer, employees may perform overtime work. Overtime work may reach up to 400 hours per calendar year. Of this time, the employer may order the overtime work in the extent of up to 150 hours per calendar year, the remainder of overtime work shall be agreed with the employee. For the work performed in excess of the standard working time, the employee is entitled to an allowance, specifics of which are regulated in the Labour Code.

Time off

Any employee who works for the same employer constantly for at least 60 days in a calendar year is entitled to annual paid leave on a proportionate basis. The basic annual leave entitlement is at least 4 weeks, rising up to 5 weeks for employees who are 33 years old or older (already in the year in that the employee reaches the age of 33, regardless of the birth date of the employee) and an employee who is permanently taking care of a child.

From 2022, employees who permanently take care of a child are entitled to an aliquot of 365 days, according to the number of days counting from the date they permanently take care of a child and date of its written announcement to their employer. For example, if the child was born in the 200^th day of the year and its parents announced it to the employer at the exact day of its birth, they are then entitled to: 200/365 days * 5 = 2.75, which is 3 days of extra time off after rounding.

Benefits include cash benefits and non-cash benefits provided by the employer to the employee.

The cash benefit refers to the financial bonus on top of the standard wage or salary.

The most common non-cash benefits in Slovakia are:

Meal allowance up to the statutory limit is exempt from tax. As of March 2021, the employer is obliged to allow his employees to choose between a meal voucher or a financial contribution for meal. As of January 2023, the employer can only provide meal voucher to employees in electronic form. Paper meal voucher may only be used if the use of a gastrocard (electronic form of meal voucher) at or near the employee’s workplace during the work shift would not be possible. The amount of the financial contribution for meal should be the same as the amount in which the employer contributes to the meal voucher to other employees (on the comparable job positions).

Effective from January 1, 2022 there is a new type of exemption from personal income taxation applicable. Specifically, benefits in kind, i.e. non-cash benefits (e.g. team-building activities, firm events, gifts to employees etc.) provided to an employee of up to EUR 500 from all employers in a calendar year can be exempt from taxation, provided that costs of such benefits in kind are treated as tax non-deductible costs for the purpose of employer’s corporate income tax.

As of January 2024, non-cash benefit in form of the employee shares or in the form of a business share in an LLC are exempt from income tax, if the comapny has not paid dividends so far; and these employee shares have not been/are not listed on a regulated market until the end of the tax year in which the benefit was acquired by the employee.

Special types of contracts

Besides an employment contract, the Labour Code recognizes three other contract types: (a) Work performance contract, (b) Work activities contract and (c) Temporary student job contract.

As of November 2022, the work conditions have to be transparent, which means in case of mentioned contracts that the employee must be informed about the days and time periods during which the employer may require him/her to perform work. Also, it will be no longer possible to require these persons to come to the workplace as soon as possible, if necessary, since the amendment introduced a period of at least 24 hours prior notice by which the employer will be obliged to inform the employee about assigned work task. Even in this case, the employee will need to be informed in writing of any change at the latest on the day it takes effect. If the employer fails to comply with these conditions, the employee will be entitled to refuse to perform such work. On the other hand, if the employer cancels the work without giving less than 24 hours’ prior notice, the employee will be entitled to a refund of at least 30% of the remuneration he would normally receive.

Work performance contract

The work performance contract may be concluded if the anticipated extent of work (work tasks) for which the agreement is concluded is not in excess of 350 hours in a calendar year. It can be concluded for maximum 12 months.

Work activities contract

Under the work activities contract the working period may not exceed 10 hours per week and the contract can be concluded for maximum 12 months.

As of January 2023, in the case of the performance of seasonal work under Annex 1b of the Labour Code, a new type of work activities contract may be concluded, which for these purposes is referred to as a work activities contract for the performance of seasonal work. The working period may not exceed 520 hours per calendar year and the weekly average working time for the duration of that contract, up to a maximum of four months, may not exceed 40 hours. The contract can be concluded for maximum 8 months.

Temporary student job contract

The temporary student job contract can be concluded only with a person with the status of student, who is under the age of 26 years. Work performance may not exceed 20 hours per week and the contract can be concluded for maximum 12 months.

Personnel leasing

Temporary assignment (personnel leasing) is also one form of employing individuals. This is a flexible form of employment where employees are temporary assigned to a so-called user employer, while the employee is in employment relationship with another employer or a temporary employment agency.

A temporary employee cannot be assigned to a particular user employer for more than 24 months.  Subject to that 24-month limit, a temporary assignment of a temporary employee to a particular user employer can be extended or renewed up to four times. A temporary employee is entitled to be paid at the same rate as the user employer’s core employees. If there is a difference between those pay rates, the user employer is obliged to pay any shortfall to the temporary employee. The user employer is not permitted to assign a temporary employee on to another user employer.

• The Labour Code
• Act on Illegal Employment
• Occupational Safety and Health Protection Act
• Act on International Cooperation when Posting Employees
• Act on Travel Allowances