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Slovakia, formally the Slovak Republic, is a landlocked Central European nation. It is bounded to the north by Poland, to the east by Ukraine, to the south by Hungary, to the southwest by Austria, and to the northwest by the Czech Republic. Slovakia's primarily hilly geography covers over 49,000 square kilometers (19,000 square miles) and has a population of over 5.4 million people. Bratislava is the capital and biggest city, while Koice is the second largest.
The Slavs arrived in what is now Slovakia in the fifth and sixth century. They were instrumental in the establishment of Samo's Empire in the seventh century. They founded the Principality of Nitra in the ninth century, which was eventually captured by the Principality of Moravia to become Great Moravia. After the disintegration of Great Moravia in the tenth century, the land was included by the Principality of Hungary, which would later become the Kingdom of Hungary in 1000. Following the Mongol invasion of Europe in 1241 and 1242, most of the area was devastated. The land was fully recovered owing to Béla IV of Hungary, who also settled Germans, who became a significant ethnic minority in the area, particularly in what is now central and eastern Slovakia.
Czechoslovakia was created after World War I and the disintegration of the Austro-Hungarian Empire. During the interwar era, it was the only nation in Central and Eastern Europe that remained a democracy. Nonetheless, local fascist groups progressively gained control in Slovak regions, and the first Slovak Republic functioned as a partly recognized client state of Nazi Germany throughout World War II. Czechoslovakia was re-established as an independent nation after the conclusion of World War II. Following a coup in 1948, Czechoslovakia fell under communist control and became a member of the Soviet-led Eastern Bloc. Attempts in Czechoslovakia to liberalize communism culminated in the Prague Spring, which was defeated by the Warsaw Pact invasion of Czechoslovakia in August 1968. The Velvet Revolution peacefully abolished Communist government in Czechoslovakia in 1989. Slovakia gained independence on January 1, 1993, after the peaceful disintegration of Czechoslovakia, sometimes known as the Velvet Divorce.
Slovakia is a developed nation with a high-income advanced economy that ranks extremely high on the Human Development Index. It also ranks well in terms of civil rights, journalistic freedom, internet freedom, democratic government, and peace. The country balances a market economy with a robust social security system, providing individuals with universal health care, free education, and one of the OECD's longest paid parental leaves. Slovakia is a member of the European Union, the Eurozone, the Schengen Area, NATO, CERN, the OECD, the World Trade Organization, the Council of Europe, the Visegrád Group, and the OSCE. In addition, Slovakia has eight UNESCO World Heritage Sites. Slovakia, the world's greatest per capita auto manufacturer, produced 1.1 million cars in 2019, accounting for 43 percent of total industrial production.
Employees who worked for less than 60 days are entitled to one-twelfth of their yearly entitlement every twenty-one days.
Employees who worked more than 60 days in a year are entitled to a prorated four weeks of vacation.
Slovakia recognizes fifteen public holidays.
The employer pays for the first ten days.
The first three days are paid at a rate of 25% of the daily income.
Days 4 through 10 are paid at a rate of 55% of the daily wage.
Maternity leave is entitled to 34 weeks for mothers.
Twin mothers are eligible to a total of 43 weeks of maternity leave.
Mothers who are single have the right to 37 weeks of maternity leave.
The Social Security Administration pays the leave at a rate of 75 percent of the daily wage up to a maximum of 66,6083.
Only if the mother is not getting maternity benefits is a father eligible to 28 weeks of paternity leave, which begins six weeks after the mother gives birth. Paternity leave is granted to single dads for a period of 31 weeks. The Social Security Administration pays for the leave.
Parental leave can be taken by a parent or guardian until the kid reaches the age of three, or until the kid reaches the age of six if the kid is suffering from a long-term illness.
The parental allowance is 270 EUR per month or 370 EUR per month if the parent has already received maternity benefits in an EU/EEA country. The Central Office of Labor, Social Affairs, and Family Policy pays it.
In Slovakia, employment contracts may be canceled if both parties agree. These may also apply to immediate terminations or to exceptional situations in which the employer is required to terminate the employment within two months of becoming aware of the grounds for immediate termination, and no later than one year from the day those grounds arose. Without specifying a reason for termination during the probationary period, a written notice must be given and delivered to the other party at least three days before to the designated termination date.
The notice period for a Slovak labor contract is generally one month (unless longer notice period is stipulated by the Labour Code). However, if the employee has been employed for at least one year but less than five years, they are entitled to a two-month notice period. If an employee has worked for the company for at least five years, the notice period is three months. When employees resign, they must adhere to the following notice period regulations. If the employee has worked for the company for less than a year, they must provide notice within a month. If the employee has worked for the company for two years or more, a two-month notice period is required.
Probation is limited to three months for operational positions and six months for management positions.
Severance pay is determined by the duration of employment and the nature of the termination. When an employee's employment is terminated without cause, the minimum severance pay is one to four times the employee's average monthly earnings, depending on the employee's years of service (2 to 20 years).
In Slovakia, the standard work week is 40 hours spread over five days. Employees may work between 37.5 and 40 hours per week under various shift work arrangements. A collective bargaining agreement or employment contract may specify a different weekly work schedule. Additional rules apply to employees who work in close proximity to hazardous chemicals or radiation, as well as to employees under the age of 16.
Overtime is permitted only in emergency situations. Work performed at night (between 10 p.m. and 6 a.m.) is compensated at a percentage of the employee's regular hourly rate, or more if the employee's work is particularly dangerous. Employees who will be scheduled to work at night on a regular basis must undergo a medical examination to ensure they are physically fit for night work and must undergo examinations on a regular basis, at least once a year, at the expense of the employer.
Employers are required to provide safe working conditions for night workers and to consult with unions or employee representatives on a regular basis regarding the organization of night work.
Overtime pay is 125 percent of the regular salary for hours worked over 40 per week. Saturday work is compensated at 150 percent of the regular salary. Sunday work is compensated at 200 percent of the regular salary. The pay rate for night work is 140 percent of the regular salary.
The Slovak Republic has increased its minimum salary to 623 EUR per month in 2021. However, many workers earn more than 900 EUR a month, and possibly even more depending on the company's health. Salary and perks are both considered part of work income under Slovak Republic compensation rules.
Slovakia has a national healthcare system. Permanent inhabitants and certain non-permanent residents are covered by the state system or one of two private health insurers that collaborate with the government system. Private supplemental insurance is available, although few individuals utilize it. There are also private providers and clinics. An employer must register an employee for health insurance within eight days of the employee's first day of work and remove the person from the register when employment ends.
Employee perks often include a corporate vehicle, a food allowance, a transportation allowance, an education allowance, a mobile phone, and flex time.
As a member in the Organization for Economic Co-operation and Development (OECD), the Slovak Republic's company taxation system usually adheres to OECD standards and principles.
The corporate income tax (CIT) is levied on earnings earned by all businesses, including overseas subsidiaries. Residents of Slovakia are taxed on their global income. If their income is taxed in another country, Slovak tax residents may use a technique to avoid double taxation. Depending on the applicable double tax treaty (DTT) and the kind of income, the exemption or credit technique may be utilized to eliminate double taxes.
Non-residents are solely taxed in Slovakia on their Slovak-source income. Slovak-source income is defined by local tax legislation and comprises, among other things, business revenue from permanent establishments (PEs) and passive income like as royalties, interest, and income from asset sale.
The normal CIT rate for 2020 is 21%, and it applies to business taxpayers with revenues of more than 100,000 euros for the relevant tax year (EUR). For the 2020 tax year, the CIT rate was lowered to 15% for business taxpayers, entrepreneurs, and self-employed people with income (revenues) of up to EUR 100,000 for the relevant tax period.
A withholding tax (WHT) of 7% may be levied on some taxable dividend payments made to individuals. Furthermore, some types of income, such as interest or royalties, may be subject to a 19% WHT rate. Payments to taxpayers from non-treaty jurisdictions (i.e., where no DTT or tax information exchange agreement [TIEA] exists and the taxpayer is not from a jurisdiction listed on the European Union's [EU's] List of Non-Cooperating Countries) or where the beneficial owners of the income cannot be identified, including payments of taxable dividends, are subject to a 35 percent WHT rate.
A tax resident of the Slovak Republic is taxed on global income, regardless of whether it is transferred to the Slovak Republic.
A Slovak tax non-resident is solely subject to Slovak income tax. Revenue from labor performed in the Slovak Republic, including director's fees, money from an independent company conducted via a permanent establishment (PE), and income from services provided in the Slovak Republic are all examples of Slovak-source income. Interest income, license fees, and revenue from the sale or rental of property in the Slovak Republic are other examples of Slovak-source income.
A 19 percent tax rate applies to the tax base of up to 176.8 times the subsistence level (i.e. EUR 36,256.38). The excess portion of the tax base is taxed at a rate of 25%.
Dividend income derived from earnings before 2004 and after 1 January 2017 is subject to a particular tax base and is subject to a 7% rate (if paid from abroad) and a 7% withholding tax (WHT) if paid by a Slovak business.
In addition to the tax determined above, income from dependent activity of constitutional authority is subject to a special tax rate of 5%. Income from capital gains is taxed at a 19% rate since it is included in a particular tax base.
With few exclusions, all taxable supplies are subject to a baseline VAT rate of 20%. Certain medical items, printed materials and media, certain foodstuffs and "basic commodities" (e.g., milk, butter, meat) categorized under specific codes of the Common Customs Tariff, and some lodging services are subject to a 10% VAT rate.
Employers of foreign citizens in Slovakia have many alternatives under the country's immigration system. Slovakia is a member of the European Union (EU) as well as the Schengen Zone. The requirements, processing dates, work eligibility, and perks for accompanying family members differ depending on the kind of permission.
Business travellers to Slovakia often utilize a local version of the Schengen C Visa, which foreign citizens must acquire before to travel unless their nationality qualifies them for visa exemption. In general, stays in the Schengen Area are limited to 90 days in each 180-day period.
The following are the primary work authorization categories.
The EU Intra-Company Transferee Permit is appropriate for intracompany transfers of managers, experts, and graduate trainees from outside the European Union.
The Single Permit for Local Hires is appropriate for recruiting experienced foreign employees locally when no local personnel is available.
The EU Blue Card, which allows for the local employment of highly trained, well-paid professionals. EU/EEA/Swiss citizens do not need work or residence permits, however they must notify their stay and register their residency if it exceeds three months.
In Slovakia, employment contracts must be in writing, and a copy must be delivered to the employee. The employment contract might be for an indefinite or defined period of time. At the very least, the employment contract should include:
A position description
The work environment
The start date of the project
Unless otherwise specified in a collective agreement, the employee's wage and pay period.
A fixed-term contract cannot last more than two years and must be specifically indicated in the written instrument. Fixed-term employment cannot last more than two years. It may be extended or renewed, but only twice in a two-year period, with limited exceptions.
The procedure of establishing a Slovak Republic subsidiary might vary depending on variables such as location, structure, and business objectives. Location, for example, might affect your expenses, availability, and the Slovak Republic subsidiary legislation you must adhere to. If you are unsure about which area or city is suitable for your headquarters, engaging with a consultant, lawyer, or other professional may help.
Your organization must also consider which form of subsidiary is ideal for your company's aims and requirements. Do you wish to carry out a variety of tasks like a resident company? Incorporating as a limited liability corporation (LLC) or a joint-stock business are both excellent choices. Do you need a smaller size entity to correspond with your smaller presence? A branch or representative office can be the best option.
Many businesses opt to organize as an LLC because of the advantageous tax regulations, ease of organization, and other benefits. The Slovak Republic subsidiary establishment procedure for an LLC involves the following steps:
1. Creating all necessary documentation
2. Obtaining permission from the tax authorities for Slovak citizens to check their taxpayers' history
3. Opening a bank account in the nation
4. Payment of entire share capital
5. Obtaining specific trade permits
6. Adding a Business to the Commercial Register
7. Registering as a taxpayer with your local tax authority
Each place and company will have its own set of Slovak Republic subsidiary laws that you must adhere to. A minimum of one shareholder and one director is required for an LLC. They do not have to be Slovak Republic citizens and do not have to reside in the nation. Keep in mind that you must deposit a minimum share capital of at least 5,000 EUR in your bank account in the nation, with a necessary paid-up contribution of 750 EUR from each member.
Although you must submit financial statements with the tax office each year, you only need to file an audit if you fulfill two of the three standards listed below:
1. Annual revenue of more than 2 million EUR
2. Assets worth more than a million euros
3. More than 30 people are employed.