Company Formation in Slovakia

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Slovak or foreign investors entering the Slovak market may choose between several corporate forms. The fundamental law in this area is the Slovak Commercial Code. Read more in our 2019 guide for company formation!
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  • 1. Slovakia 2019 Company Formation www.accace.com www.accace.sk
  • 2. 2 | 2019 Company Formation in Slovakia Contents Introduction 3 Legal forms of business, minimum capital, contribution 4 General Partnership 4 Limited Partnership 4 Limited Liability Company 4 Joint-Stock Company 5 Simple Joint-Stock Company 5 Co-operative 5 Enterprise or Organizational Branch of a foreign company 5 Other forms of business 6 Registration requirements 7 Registration procedure and documents 7 Requirements for foreign investors 8 Shareholders and statutory body 9 Fees and penalties 10 General overview of corporate taxes 11 Income taxes (personal income tax, corporate income tax) 11 Value added tax (VAT) 12 Excise duties 12 Motor vehicle tax 12 Special taxes 12 Investment incentives 13 ABOUT ACCACE 15
  • 3. 3 | 2019 Company Formation in Slovakia Introduction Slovak or foreign investors entering the Slovak market may choose between several corporate forms. The fundamental law in this area is the Slovak Commercial Code. The Commercial Code regulates the corporate forms and business (entrepreneurial) activities that are defined as systematic activities conducted independently by an entrepreneur (either an individual or legal entity), in their own name and under their own responsibility for the purpose of making a profit. There are no limitations for foreign investors when it comes to setting up companies. A foreign natural or legal person may establish any form of company either together with other foreign or Slovak persons or alone as a sole shareholder. In this respect, foreign natural and legal persons enjoy the same rights and bear the same responsibilities as Slovak persons and may not be discriminated against.
  • 4. 4 | 2019 Company Formation in Slovakia Legal forms of business, minimum capital, contribution Corporate forms introduced by the Slovak Commercial Code are: General Partnership Slovak: “verejná obchodná spoločnosť” or the abbreviation “v. o. s.” or “ver. obch. spol.” A General Partnership is a company in which at least two persons carry out business activities under a common business name and bear joint and several liabilities for the obligations of the partnership with their entire property. There is no requirement of a minimum registered capital. Limited Partnership Slovak: “komanditná spoločnosť” or the abbreviation “k. s.” or “kom. spol.” A company in which one or more partners are liable for the partnership’s liabilities up to the amount of their unpaid contributions (limited partners), and one or more partners are liable for the partnership’s liabilities with their entire property (general partners). The minimum contribution of the limited partner is in the amount of EUR 250. Limited Liability Company Slovak: “spoločnosť s ručením obmedzeným” or the abbreviation “spol. s.r.o.” or “s.r.o. This is the most common form of doing business in Slovakia. The company exists independently of its members and it may be established either by one person, a natural or legal person (with statutory restrictions described hereunder), or by two or more persons (up to 50). According to the Commercial Code, minimum registered capital of EUR 5,000 is required. The minimum contribution of each shareholder is in the amount of EUR 750. The Commercial Code also requires that at least 30% from each contribution of the shareholder, but altogether at least 50% of the minimum registered capital stipulated by the Commercial Code shall be paid before the application for the registration of the company is filed with the Commercial Register. A Limited Liability Company is liable for the breach of its obligations with all its assets, while shareholders guarantee for the breach of the obligations of the Limited Liability Company only up to their committed but unpaid contributions to the registered capital registered with the Commercial Register.
  • 5. 5 | 2019 Company Formation in Slovakia Joint-Stock Company Slovak: “akciová spoločnosť” or the abbreviation “a. s.” or “akc. spol.” The company may be established by a sole founder (provided that the founder is a legal entity) or by two or more founders. A Joint-Stock Company may be formed by a private agreement to subscribe for all shares, or by a public call for the subscription of shares. The minimum registered capital is EUR 25,000. Simple Joint-Stock Company Slovak: “jednoduchá spoločnosť na akcie” or the abbreviation “j.s.a.” The Simple Joint-Stock Company is a new corporate form, introduced in Slovakia in 2017. It represents a lean version of Joint-Stock Company with minimum registered capital EUR 1 and minimum nominal share value Cent 1. Simple Joint-Stock Company can provide greater flexibility comparing to Limited Liability Company or Joint- Stock Company in relation to unlimited number of shareholders (although the Simple Joint-Stock Company cannot be formed by public call for subscription of shares), minimum registered capital, or the possibility to issue several different types of shares with different rights of shareholders (e.g. more voting rights or greater profit share). Co-operative Slovak: “družstvo” The purpose of a Co-operative is to undertake business activities or to ensure the economic and social or other benefits of its members. The Co-operative bears liability for obligations of the Co-operative with its entire property, however the members do not bear liability for the obligations of the Co-operative. Minimum registered capital of EUR 1,250 is required. The Co-operative can be established by minimum of 5 natural persons or 2 legal persons. The Co-operative can provide certain level of anonymity to its owners (members) comparing to the other corporate forms, as the owners (members) are not registered within the Commercial Register, only listed internally within the Co-operative. Enterprise or Organizational Branch of a foreign company Slovak: “podnik” or “organizačná zložka podniku zahraničnej osoby” Persons may conduct business in Slovakia provided that they have their business or branch offices located in Slovakia, registered with the Slovak Commercial Register, from the day of its registration. However, there are exceptions from the obligation to establish business or branch offices located in Slovakia for persons established in EU or EEA member states stipulated within the free movement of services guaranteed by the EU in Treaty on the Functioning of the European Union.
  • 6. 6 | 2019 Company Formation in Slovakia Other forms of business Legal forms of business entities primarily regulated by EU regulations, which are legally binding for all EU Member States: ▪ European Company (or “SE”, Societas Europaea) ▪ European Cooperative Society ▪ European Economic Interest Group A Limited Liability Company (in Slovak: spoločnosť s ručením obmedzeným) is the most commonly used corporate form and is therefore dealt with in detail in the following parts.
  • 7. 7 | 2019 Company Formation in Slovakia Registration requirements Registration procedure and documents The procedure consists of the following phases: 1. Establishment of the company by signing of:  the Memorandum of Association/Foundation Deed  other required documents mainly as Signature Specimen of the persons who will form the statutory body; administrator´s declaration regarding the payment of the contributions  approval for the premises of the registered seat in the Slovak Republic  confirmation issued by the respective Slovak authority that the founders have no debts accrued on tax or stamp duties or in respect to payments of social security insurance. This duty, however, does not apply to foreign nationals/companies and an affidavit in this regard is sufficient in their case (i.e. no confirmations from the Slovak authorities are required) 2. Acquisition of the necessary trade licences 3. Registration in the Commercial Register of the competent District court. Please note, that as of November 01, 2018, ultimate beneficial owners (UBOs) of a company about to be registered have to be specified in an application for registration of the company with the Commercial Register as a new AML requirement.1 It is important to stress that a limited liability company acquires legal personality status upon its registration in the Commercial Register. The incorporation time is approximately 3 weeks after the receipt of duly executed establishment documentation. 1 For more information on legislation regarding ultimate beneficial owners, please refer to the following article: https://accace.com/new-obligation-to-register-ultimate-beneficial-owners-in-the-slovak-commercial-register-news-flash/
  • 8. 8 | 2019 Company Formation in Slovakia Requirements for foreign investors The citizens of the EU or EEA (except Slovak citizens) who will form the statutory body have to prove their integrity by obtaining and submitting the criminal record from the state of citizenship or residency (if residing for longer than 6 months in other country than country of their citizenship). The non-EU or non-EEA citizens, in order to become members of the statutory body, shall have a residence in Slovakia. Under Slovak law, the company shall have registered seat in the territory of Slovakia. The document proving the seat (confirmation with the seat in the premises) is the obligatory annex to the Registration application.
  • 9. 9 | 2019 Company Formation in Slovakia Shareholders and statutory body 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 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 and 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 shareholders’ 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.
  • 10. 10 | 2019 Company Formation in Slovakia Fees and penalties 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
  • 11. 11 | 2019 Company Formation in Slovakia General overview of corporate taxes 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 2019 are: ▪ annual taxable income (except for income from capital and dividend income) up to EUR 36,256.37 is taxed at 19% ▪ annual taxable income (except for income from capital and dividend income) above EUR 36,256.37 is taxed at 25% ▪ income from capital is taxed at flat rate of 19% ▪ income from dividends paid out of pre-2004 profits and profits derived from January 1st, 2017 is taxed at 7% (35% applies if dividends are from foreign sources of non-contracting state) 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% or of 7% in the case of dividends paid out by domestic company. Corporate income tax Corporate income tax is levied at a rate of 21%. This is the final tax burden on 2019 corporate profits in some cases because dividends paid out of 2019 profits are not taxed in the hands of shareholder if the shareholders are corporate and based in other than non-contracting state. Starting January 1st, 2018, a minimum corporate tax (so-called tax licenses), which was introduced in 2014, is abolished.
  • 12. 12 | 2019 Company Formation in Slovakia Value added tax (VAT) The standard VAT rate in Slovakia is 20% and the reduced VAT rate is 10%. 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, bank levy, special levy on non-life insurance premium and special levy for retail chains. Moreover, there are local taxes to be paid, e.g. real estate tax. For more details about taxation in Slovakia, please Download here our 2019 Tax Guideline!
  • 13. 13 | 2019 Company Formation in Slovakia Investment incentives Investment incentives are a serious argument in favour of 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: ▪ 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. Disclaimer Please note that our materials have been prepared for general guidance on the matter and it does not represent a customized professional advice. Furthermore, because the legislation is changing continuously, some of the information may have been modified after the material has been released and Accace does not take any responsibility and is not liable for any potential risks or damages caused by taking actions based on the information provided herein.
  • 14. 14 | 2019 Company Formation in Slovakia ABOUT ACCACE With more than 550 professionals and branches in 13 countries, Accace counts as one of the leading outsourcing and advisory services providers in Central and Eastern Europe. During the past years, while having more than 2,000 international companies as customers, Accace set in motion its strategic expansion outside CEE to become a provider with truly global reach. Accace offices are located in the Czech Republic, Hungary, Poland, Romania, Slovakia, Ukraine, Bosnia and Herzegovina, Croatia, Germany, Macedonia, Montenegro, Serbia and Slovenia. Locations in other European countries and globally are covered via Accace’s trusted network of partners. More about us: www.accace.com | www.accace.sk Subscribe to our newsletter! Karol Ďuriga Senior Associate, Accace Legal o.z. +421 2 325 53 000 Karol.Duriga@accace.com CONTACT US! Katarína Matejčíková Senior Associate, Accace Legal o.z. +421 2 325 53 000 Katarina.Matejcikova@accace.com
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