Spotlight on Slovakia

Geography

Slovakia, a landlocked country in Central Europe is with an area of 49,037 km2 and a population of approximately 5.5 million people. It is bordered by five countries including Poland, Ukraine, Hungary, Austria, and the Czech Republic. Slovakia’s capital and the largest city remains Bratislava, located in the southwest of the country near the border with Austria. Slovakia’s official language is Slovak, and its currency is the Euro. Despite its small size, Slovakia is known for its natural beauty, including the High Tatra mountain range and numerous national parks. The people of Slovakia are known as Slovaks.

Economy

It belongs to both the United Nations and the European Union. Slovakia‘s economy is open, modest, and strongly reliant on exports. Despite its small size, Slovakia boasts a robust manufacturing industry, particularly in the electronics and auto industries.

Slovakia is the 59th-largest economy in the world based on nominal GDP and GDP based on purchasing power parity, which is around $203 billion and $127 billion in 2022, respectively. The country is a hub for the information technology and shared services industries. On the Human Development Index, Slovakia ranks 36^th and faces challenges related to high levels of unemployment, particularly among young people.

Easy of Doing Business

Slovakia has made significant progress in improving its business environment over the past few years, making it an attractive destination for foreign investors looking to establish a presence in Central Europe.  The country’s implementation of numerous reforms to streamline procedures and improve transparency makes it easier to do business in Slovakia than ever before.

Contributing to the ease of doing business in Slovakia includes the strategic location of the country in the heart of Europe, with easy access to major transportation routes connecting the region to the rest of the world. Well-developed highway networks, modern airports, and well-equipped seaports make it easy to move goods and people across borders.

Slovakia is ranked the 45^th economy with the most convenient regulations with respect to business by the latest statistic from the World Bank. Slovakia has a flat tax rate of 21% for both individuals and corporations, making it one of the most competitive tax environments in Europe.  Slovakia has implemented numerous reforms to improve the efficiency and transparency of its business environment e.g. the simplified process of registering new businesses, reduced number of steps required to obtain construction permits, and improved transparency of its legal system. Slovakia’s highly skilled and educated workforce also contributes to the country’s growing reputation as a business-friendly destination.

Terms of Recruitment

Understanding Slovakia’s hiring rules and regulations is crucial for firms intending to develop there, as adhering to local hiring laws and regulations requires comprehending the aforementioned terms of employment. The labour legislation of Slovakia is one of the first things to take into account when hiring workers there. The labour law specifies the fundamental privileges and duties that apply to both employers and workers, as well as the guidelines for minimum wage, overtime, and working hours. The termination of employment contracts and the rights of employees in the event of termination are governed by Slovakia’s labour code. When hiring any employees in Slovakia, it is essential to take the country’s labour code into account. WeHireGlobally can serve as your employment consultant and as a result, we can assist mitigate your employment risk

Slovakia has a strong labour union system and a set of anti-discrimination statutes. Hence, a formal employment contract in Slovak that specifies the terms and circumstances of employment, such as working hours, pay, and benefits, must be endorsed by both the employer and the employee.

Knowing the parameters of recruitment in Slovakia is vital for organizations and business owners wishing to grow in the country. There are several aspects to consider when choosing a company to work with. Use our international employer of record solution, which is cognizant of the Slovakian labour market and legal system, to help your business find and keep the best talent while complying with local laws and regulations.

Tax Obligation

The tax system in Slovakia, various types of taxes, the rates at which they are levied, and the obligations that come with paying them include:

Main Tax Types in Slovakia

• Corporate Income Tax – All legal entities operating in Slovakia, regardless of their place of incorporation or registration, are subject to corporate income tax. Tax levied on the taxable income of companies operating within the territory of the country. The current corporate income tax rate in Slovakia is 21%.
• Value Added Tax (VAT) – All businesses that supply goods or services in Slovakia are subject to VAT. Tax on the value added to goods and services at each stage of production and distribution. The standard VAT rate in Slovakia is 20%, with reduced rates of 10% and 0% applicable to certain goods and services.
• Personal Income Tax – Depending on the amount of income earned by individuals who are residents of Slovakia, personal income tax is levied. A progressive tax rate range from 19% to 25%.
• Social Insurance Contributions – Employers and employees are required to make social insurance contributions in Slovakia. These contributions are used to fund the country’s social security system, including healthcare, pensions, and other benefits.

• Real Estate Tax: Tax levied on the ownership or use of the real estate. In Slovakia, real-estate tax is levied on the market value of the property, and the tax rate varies depending on the type of property.

Taxpayers and their Rates

Tax	Payer	Rate
Corporate income tax	Employer	21%
Personal income tax,	Employer	19% to 25%.
Social security contributions	EmployerEmployee	21.41%13.4%
Value-added tax	Employer	20%, with reduced rates of 10% and 0%
Real estate tax	Employer	1.3%

• Personal Income Tax

Income up to €35,022 is taxed at a rate of 19%.

Income between €35,022 and €53,163 is taxed at a rate of 25%.

Income above €53,163 is taxed at a rate of 25%.

Personal income tax in Slovakia is levied on a progressive basis. 

For single taxpayers, the tax rate is 19% on income up to €35,022 and 25% over €35,022, while for married taxpayers, the tax rate is 19% on income up to €70,044 and 25% over €70,044.

• Social Security Contributions

Employers and employees in Slovakia are both required to contribute to social security in addition to paying income tax. Health insurance and social insurance are two types of social security contributions that are both determined as a percentage of an employee’s gross wage and are funded by both the company and the individual. Social insurance contributions are currently 9.40% for employees and 19.00% for employers, while health insurance contributions are currently 4.00% for employees and 10.00% for companies.

• To maintain compliance, it is essential for firms and businesses looking to expand to Slovakia to be aware of their varied tax duties. Use the support of our global employer of Record to help you understand the intricacies of the tax system and make sure all of your tax responsibilities are satisfied promptly and accurately.

Why Consider Slovakia?

Slovakia is a desirable place for business expansion because of its advantageous Central European position, access to the EU market, business-friendly climate, educated and skilled workforce, competitive cost of doing business, modern infrastructure, and robust economic growth. Slovakia has streamlined its business laws and provides grants, tax exemptions, and other incentives to foreign companies. The workforce in the nation is well-educated and highly skilled, with a focus on the manufacturing, automotive, and IT sectors. Business operations are made simple by Slovakia’s well-developed transportation and communication infrastructure. Slovakia provides a good business atmosphere for foreign firms looking to develop their operations because of its fiscal and political stability environment.

Unlock New Opportunities in Slovakia with WeHireGlobally

Slovakia is a preferred place for enterprises wishing to grow into Central Europe. Yet, starting a business in Slovakia can be challenging, especially if you are unfamiliar with the regulations and legislation of the nation. WeHireGlobally’s comprehensive human resources and employer-of-record services, which include compliance, payroll, and benefits management, can assist in streamlining the procedure. You may open up new prospects in Slovakia and broaden your global reach with WeHireGlobally as your partner.