1Business in Slovakia1. TaxThe tax system of the Slovak Republic is compliant with the systems of taxation in other EUMember States and includes corporate and personal income tax, standard value added tax(VAT), special taxes imposed on certain assets (such as real estates, vehicle-road tax) as wellas a system of excise taxes levied on specific goods such as alcohol or tobacco products.Corporate income tax is paid at a flat rate of 19%.Tax is paid on the taxable profit shown in a company’s financial accounts, which mustcomply with Slovakian accounting standards.There are no local business taxes in Slovakia.The standard VAT rate is 20%.Excise duties are payable on alcohol, tobacco, leaded and unleaded fuel, and industrial andcommercial fuel.2. PermitsAs a matter of Slovak law, the setting up of a company is divided into two stages, as follows:1. establishment;2. incorporation.1. The establishment of a Limited Liability Company is deemed to be the moment when thefounders sign the foundation documents. This does not give the legal personality to theestablished company and, therefore, it is not yet entitled to perform any business activity.The documents to be executed upon the establishment of a company include: a.) Memorandum of Association or Foundation Deed in the form of a notarial deed (ifthere is only one participant in the company); b.) Articles of Association . The Articles of Association must be notarisedChecks must be made to ensure the company name is not already in use.The next step after the company establishment is to make an application for trade licences,tax registration and health insurance; this can be done on a single, composite applicationand can take anything between five and 10 days. Personal identification and a passport arerequired as proof of identity. Opening a new bank account is also essential where capital is tobe paid up.Trade licence or certificate can be obtained at the Trade License office.Trade “certificates” are issued for “notifiable” trades, which fall into three differentcategories:1. Crafts - requiring an apprenticeship period (i.e. metalworking, motor vehicle repair,glass cutting, cosmetic production, brewing, masonry, carpentry, etc.)
22. Regulated Trades - generally requires a higher level of education than anapprenticeship period (i.e. travel agency, catering, accommodation services , medicalsupplies, electrical equipment, tourist guide, foreign language teacher, etc.)3. Unregulated Trades - no professional qualifications, other than the minimum agerequirement (18), mental competence, and good character required for all entrepreneurs.Additional documentation required for the Trade License Office is as follows:a. documents proving the executive director’s/responsible representative’s qualification(usual documents include: graduation certificate, confirmation of professional practice);For travel agency it is necessary to have a graduation certificate from theUniversity which provides education in tourism and confirmation of 3 years ofprofessional practice or a graduation certificate from the secondary vocationalschool in the field of tourism and 5 years of professional practice.b. a copy of the temporary residence permit/permanent residence permit for the executivedirector/responsible representative (if applicable) unless he is a citizen of an EU/OECDMember State; andc. an extract from the criminal records for the home jurisdiction of the executivedirector/responsible representative (if applicable).2. IncorporationAfter the foundation of the company as described above, with a trade certificate in the hand,the next step is a trip to the Commercial Registry, located in the district court in the regionalcourt seat where the company’s place of business will be located. Registration will take about5 days. Finally, registration for pension, sickness and unemployment insurance is alsomandatory.The business’ official existence, and the authorization to conduct business, begins as of thedate the business is incorporated in the Commercial Registry. The registration documents area matter of public record.Certain documents and information are required to incorporate a Limited Liability Companyin Slovakia, namely: The full name of each shareholder; The company name; The full name, date of birth and nationality of the person setting up the new company; The principal objectives of the new company and the type of business; Details of the paid-up capital and shareholding of each member.It is not necessary to have a business plan, but it is recommended.Elements of a business plan:1. Executive summary (objectives, mission, keys to success)2. Company description(ownership, history, location, facilities)3. Management team (organizational structure, management team, personnel plan)4. Market analysis (segmentation, target market, main competitors)5. Products (description of product or service, technology)6. Marketing plan (price policy, distribution, sales strategy)
37. Financial plan (break-even-analysis, projected profit and loss, projected cash flow,projected balance sheet, long-term plan)8. EnclosuresCosts for the permits: 331,50 – registration to Commercial Registry.Other application can be done online and it is free.3. FinanceInterest for business loans - between 4,6 % and 8 %Funding from governmentPeople who are unemployed last 3 months can get maximum 3700€ for starting ownbusiness. It is necessary to have a business plan and present it to the profesional board.Business plan has to prove that received money will be used effectively. Besides, it isnecessary to run business at least 2 years. If not, money must be paid back.4. Running costsCosts per employee ( 1 high trained person)- Income average 765 € brutto- Tax 19%Minimal wages – 327 €Insurance - both employers and employees are subject to social security taxes on anemployees gross monthly pay. The rates are 35.2% for employers and 13.4% foremployees. However, contributions are capped at a maximum of 825.41€ for employers and308.04 € for employees per monthCosts to rent an office per m2- around 10€Advertising costs – monthly: Billboard cca 200€Journal, newspaper - 23€/ 1 cm2TV – 30 s promo: 500 – 3 200€ (depending on time, television)5. Rights for employees (hire and fire)Employment is based on a written employment contract between the employer andemployee, which may be concluded for a fixed or indefinite period. Employment for a fixedperiod may be agreed for up to three years. Within these three years it may be extended orrenewed once. Contract is drawn up in two copies, one of which is for the employee.An employment contract must include (otherwise it will be invalid): type of work involved, place where work will be performed, start date of the work,
4 pay conditions, unless agreed in a collective agreement.In the case of work performed without an employment relationship, the employer andemployee must conclude a work agreement.It is also possible to agree other terms in an employment contract, such as materialbenefits or a trial period. A trial period may last up to three months and may not beextended.There are minimum social rules to follow, especially about non-discrimination, genderequality and health and safety.Employer has: to sign up to the Social Insurance Agencys Register of Employers within eight days of theday on which it starts to employ at least one employee, to sign up to the Insurance Register and the Register of Pension Scheme ContributorsOne of the main duties of an employer is to keep records of employees for the purposes ofsocial insurance and pension fund contributions.An employer may only employ foreigners: who have an employment permit and a temporary residence permit for the purposes ofemployment who are applying for asylum and who are allowed to seek work under the specific legislationEmployee can work up to 40 hours a week. Employees working a two-shift system maywork up to 38 ¾ works a week. Employees working a three-shift system or who are involvedin uninterrupted work may work up to 37 ½ hours a week.The minimum basic holiday allowance is four weeks.An employment contract may be terminated by agreement, by the serving of notice, byimmediate notice or by termination during a trial period.