Foreign Investment opportunities in Slovakia

Entrepreneur, Doing Business

The liberty to do business is stated in Art. 35 of the Constitution of the Slovak Republic which guarantees to each person a free choice of employment and preparation for it as well as the right to do business and conduct another gainful activity. The terms of doing business are specifically dealt with in the Commercial Code the amendment of which is fully compatible with Art. 43 to 48 (ex Art. 52 to 58) of the Founding Agreement of the EC. The Art. 43 specifies that restriction of the liberty to do business for inhabitants of one member state of EU on the territory of another country is prohibited. Also prohibited are any restrictions applying to the foundation of daughter companies, branches and business representations of companies of one state on the territory of another state. The Commercial Register as well as the Act on Commercial Register include provisions which preclude any discrimination of entrepreneurs from the member states of EU from the moment the Slovak Republic joins the EU (e.g. § 21 subsection 5 of the Commercial Code and/or § 7 subsection 7 of the Act. On Commercial Register. There are more details on this area in individual chapters.)

Doing business is defined in the Slovak legal system as a systematic activity performed independently by an entrepreneur in his own name and on own responsibility with the goal of making a profit. The term systematic activity must be understood in the broadest sense of word including seasonal period activity or activity on various occasions e.g. markets, sport contests etc. Professionalism is a substantial characteristic of this activity which is, from the administrative point of view, connected with a certain entrepreneurial license in which conditions which must be kept by an entrepreneur as well as assumptions which he must meet under the sanction of withdrawal of the license in cases specified by a law are stated. Independence means independence of an entrepreneur from other persons as well as business partners in doing business as well as in bearing risk resulting from doing business and bearing responsibility for his activity. Under the term own name the legislator means the business name of the entrepreneur which is specified by the law for individual types of trade companies. The business name must not be mistakable with the business name of another entrepreneur and must not create a false impression about the entrepreneur or about the business activities. The entrepreneur is obliged to state the business name together with an addition specifying the present legal state, especially with an addition "in liquidation", "in bankruptcy" or "in settlement".

Entrepreneur according to the Commercial Code is:

1. person entered in the Commercial Register
2. person doing business on the basis of a trade license
3. person doing business on the basis of other than trade license according to special regulation
4. natural person engaged in agricultural production and registered according to special regulation.

Legal persons as well as natural persons may be entrepreneurs. The state is also a legal person and due to this the state can act as an entrepreneur in a range stipulated by law.

Doing Business of Foreign Persons

Foreign persons are allowed to do business on the territory of the Slovak Republic under the same conditions and to the same extent as Slovak persons unless it is stated otherwise in the Commercial Code. A foreign person can be a natural person with a place of residence or a legal person with an address outside the territory of the Slovak Republic. A Slovak legal person is a legal entity with an address on the territory of the Slovak Republic. Foreign persons with a right to do business abroad are considered entrepreneurs also in accordance with the Slovak legal system. The property of a foreign person related to doing business in the Slovak Republic and the property of a legal entity with a foreign property interest can be nationalized or the ownership right can be restricted only on the basis of a law and in the public interest which can not be satisfied in another way. Such a decision can be appealed in court. In case such a situation occurred the foreign person must be provided without any delay with a replacement in kind transferable into abroad in foreign currency. Also in these cases the Slovak legal system guarantees the observance of international treaties by which the Slovak Republic is bound. There exist four forms of doing business for foreign persons in the Slovak Republic.

The first form includes common conclusion of agreements with Slovak partners and is not conditioned by any other formal terms. Each subject who is an entrepreneur according to the law of the mother country can also be a subject of commercial law relations according to the Commercial Code. The legal regime of trade agreements will be regulated by applicable provisions of the Commercial Code unless, in case of a dispute, the contracting parties agree upon the law of another country.

The second form includes the establishment of a so-called organizational constituent (branch office) of the foreign person in Slovakia. Entry into the Commercial Register, the procedure which is stipulated in the Commercial Code, is a necessary condition for its legalization. Any foreign person is entitled to do business on the territory of the Slovak Republic from the day of the entry of this person's company, or its branch office, into the Commercial Register, covering the range of business activities entered in the register. Only a company or its branch office are entered, not a new legal entity which was already founded in accordance with another law. This branch office does not have a legal personality i.e. cannot alone and under its own name act as a juristic person in court. Only a legal person may have a legal personality and due to this only a foreign legal entity (with a comment that the lawsuit relates to a certain branch office) may act as plaintiff as well as defendant in a suit. The proposal for an entry is done by a foreign person.

From the moment when Slovakia joins the European Union these regulations will not apply to natural persons with a place of residence in one of the member countries of the EU or in a member country of OECD doing business on the territory of the Slovak Republic. It represents a provision of conditions for free enterprise and free provision of services in accordance with Art. 43 to 55 of the Founding Agreement of the EC. The foreign person is obliged to state in its business documents related to its company or a branch office as well as in official correspondence the name of the commercial register or any other register in which it is entered in a country by whose law it is governed. The third form of doing business includes the presence of a foreign person in a Slovak company where the foreign persons have identical rights and duties as Slovak persons. There are two situations which may occur in this case:

The foreign person may conclude a partnership agreement about the foundation of a business company or a cooperative with a Slovak person, and if the law allows it, this foreign person may be the sole founder of the company or as a partner he may join an already existing company e.g. through the purchase of shares or stock. No special permission is required for this form of doing business. Besides the procedure prescribed by the Commercial Code, foreign persons, at their entry into the Commercial Register must present a document confirming their existence (e.g. extract from the company register of their mother country) and in case of legal persons a decision of a statutory body on the foundation of or joining the company.

The last form of doing business is moving the address of a foreign company founded with the aim of doing business into Slovakia if this is possible in accordance with an international agreement by which the Slovak Republic is bound. The same also applies to moving the address of a Slovak legal entity abroad. The moving of the address is effective from the day of its entry into the Commercial Register. This way the foreign legal person actually becomes Slovak but at the same time the internal relations of the company continue to be regulated by the law of the country whose nationality it had in the beginning. Liability of its partners or members towards third parties must not be lower than specified by Slovak law for an identical or similar form of a legal entity. In the last three cases the foreign person preparing to start doing business in Slovakia should seek legal assistance from a Slovak attorney.

Business Companies in the Slovak Republic and Their Characteristics

Business companies are dealt with in the second part of the Commercial Code. Business companies are as follows: unlimited partnership, limited partnership, limited liability company and joint-stock company. They are defined as legal entities founded with the aim of carrying out business activities although in case of a limited liability company and a join-stock company the law allows for the founding also because of other reasons than doing business.

Legal as well as natural persons may be founders or partners of a company. They may be founders or partners in only one unlimited liability company. Any abuse of partner rights, especially of majority or minority of votes in a company, is prohibited by operation of law.

From the point of view of acquiring a legal personality it is important to define two terms: founding of a company and the origin of a company. A company is usually founded through a foundation deed signed by all its founders containing basic data about the company and its founders, representatives, means and liability for the company obligations.

A company comes into existence on the day of entry into the Commercial Register. While the founding of a company means constituting the company as far as the obligations and adjustment of relations between partners or founders are concerned, the origin of the company means a possibility of the company to exist like a legal entity towards third subjects, to be a bearer of rights and obligations, to acquire a legal personality. This does not mean that in this period the partners have to wait passively till the ruling of the court on the entry in the Commercial Register becomes effective. Before the origin of the company i.e. before the decision of the register court on entry of the company into the Commercial Register, only the persons liable jointly and severally may act on behalf of this company. If the company approves these activities within three weeks after its origin then the company is liable for these activities from the beginning. However, these must be activities of future partners or statutory bodies of the company and the company may take over only those obligations which are connected with its origin.

A proposal for an entry in the Commercial Register must be handed in within 90 days from its founding.

Founding of a company as well as its origin are possible to realize via a plenipotentiary having special full powers.

A company may also be founded by only one person. In this case the partnership deed is replaced by a foundation deed.

During its existence the company may change its legal form into another legal form of a company or a cooperative. After the change of a legal form the company is not dissolved as a legal entity. After the entry of the change of a legal form into the Commercial Register a company or a cooperative exists in the legal form into which it was changed. The effects of the change of a legal form of a company start with the entry of the change of the legal form into the Commercial Register. An exact procedure at the change of a legal form of a trade company or cooperative is stipulated by the Commercial Code in § 69b. A company is dissolved on the day of its erasure from the Commercial Register. This erasure is preceded by its abolition, with or without liquidation, if its property is transferred to its legal successor. Liquidation is neither required if the company does not own any property, if the proposal to declare bankruptcy was rejected due to lack of property or if the company has no property left when the bankruptcy is over.

INVESTMENT FUND AND INVESTMENT COMPANY

Investment funds and investment companies are legal entities which accumulate financial means from investors - natural and legal persons - for purpose of using them to acquire interest in doing business.

They represent forms of collective investment. They have their own legal personality and financial responsibility. They can be formed only as capital companies. The investment fund can be formed only as a joint stock company and the investment company only as a joint stock company or a limited liability company.

Besides general requirements a state permission is also needed for their foundation. Due to the fact that the investment fund and investment company are engaged in business activities using the investments of the population the law stipulates stricter regulations for their activities (compulsory distribution of economic risk, selection of a business partner and transactions) as well as increased participation of the state in the control of their activity (more on investment funds and investment companies in Chap. Capital Market).

Obligation Relations With a Foreign Element

Obligation relations in the origin of which participates at least one participant having residence or place of doing business or address on the territory of another state than other participants are regulated by clauses of the Commercial Code - Catch III, if these obligations are regulated by the Slovak law order. These special clauses will be used together with other generally binding clauses of the Commercial Code. For this type of relations an expression "obligation relations in the international business" is used but these are not international relations in the literal sense of the word. Trade practices generally accepted in each particular field are taken into account in international business. On the basis of a contract any practices chosen by contracting parties are applicable if they are sufficiently specified.

The debtor is obliged to ask for an export permit, transit permit or another official permission which is required for the fulfillment of his obligation in the place of performance. The creditor has the same obligation in case of an acceptance of fulfillment. Legal regulation valid at the time of fulfillment regardless of the legal regulation valid at the time of closing the contract is decisive for the existence of the obligations mentioned above. A lawfully dismissed application for a permit results in the impossibility of fulfillment. A party which unsuccessfully applied for a permit is obliged to compensate possible damages to the other party. In these cases it is more efficient to close a contract with a dilatory condition in case of obtaining an official permit.

For the fulfillment of an obligation it is necessary to agree upon the currency. If the financial fulfillment is agreed upon by parties in certain currency and the debtor according to the contract closed with a creditor or according to an international contract or another legal regulation should fulfil his obligation in another currency the medium exchange rate between both currencies valid at time when the financial fulfillment in the place specified in the contract should take place is decisive for the exchange rate.

Interest on late payment; in case of a delay in payment interest is paid in the same currency. Its rate is 1% higher than interest rates set or provided by banks for credits for periods corresponding to period of delay of the debtor in the country of the residence of the debtor. If the parties agree in the contract upon prohibition of further export of purchased goods the buyer is obliged at any moment upon the request of the seller to prove to him where the goods are. He is responsible for keeping his obligation not to export the goods in any case i.e. also when the goods are exported not by him but by somebody else under the consequence of the compensation of originated damages to the seller.

Through the agreement on the restriction of the sale the seller pledges not to sell certain goods to certain group of customers or into a certain country or that he will sell these goods only in restricted amount or under conditions specified in the agreement. This agreement must be in the written form and its validity depends on the validity of the contract of purchase in which it is included or together with which it was agreed.

The obligation expires after the break of the contract by the buyer or after two years from the latest delivery of goods unless the aim of the agreement is the fulfillment resulting from an international contract or protection of rights from industrial or other intellectual property. This period is cogent.

Through a contract on an exclusive sale the supplier pledges not to deliver goods specified in the contract in a certain area to another person but to the buyer. This contract must be in a written form, too. During the period of the validity of the contract the supplier must not deliver the specified goods directly or indirectly to anybody else in a restricted area but to the buyer or to persons who are entitled to it by the contract. The contract does not deprive the supplier of the right to advertise or to conduct a market survey in a specified area.

The breach of an obligation results only from the delivery of goods to other persons and not from closing the contract which creates the obligation for this delivery. The contract expires in the period which was agreed upon in the contract or elapsing one year from its closing. The notice period is effective at the end of a calendar month following the month in which it was delivered to the other party.

If the supplier delivers at variance with the contract also to other buyers the buyer may abandon the contract and demand compensation for the originated damage.

If it results from the contract or from circumstances under which the contract was closed and which are known at the closing of the contract to both parties that the fulfillment from the principal contract depends on the fulfillment of the accessory contract it is supposed that the fulfillment from the accessory contract represents a dilatory condition of operation of the principal contract. If the obligations from the principal contract are being fulfilled in advance the failure to keep the obligation from the accessory contract has the nature of a separating condition. We talk about so-called dependent contracts which fall under contracts on interrelated businesses.

Multilateral barters come also under contracts on interrelated businesses. They are businesses in which several persons close one contract or several interconnected contracts according to which a mutual delivery of goods between participants having place of residence on territories of different countries should take place. The purchase price is supposed to be paid only between participants having the place of residence on the territory of the same country.

No participant may postpone delivery of goods to a participant with a place of residence on the territory of another country only because another participant with a place of residence on the territory of the same country did not fulfil to him. Participants with a place of residence on the territory of the same country bear liability to a participant with a place of residence on the territory of another country jointly and severally, this means that the creditor may ask for fulfillment of the obligation from any of them.

A participant in a multilateral exchange trade is not entitled to back out of a contract at a delay of one of the other participants if another participant already fulfilled his obligation unless the renouncee provides recompense for the damage caused by his backing out of the contract. Compensation of damages concerns also damages for fulfillment already provided because backing out of one contract results also in discharge of a contract according to which the fulfillment was provided and the entitled person becomes entitled to its return.

Backing out of a contract which represents a multilateral exchange trade results in discharge of not only this contract but also of other contracts representing multilateral exchange trade. The jurisdiction of Slovak courts in the case of a dispute is regulated either by concurrent norms of the Law No. 97/1963 Coll. of Laws on International Private and Procedural Law, as amended by later legislation, or by a written agreement of the participants of a contractual relationship.

2.2 Support of Investment

In order to increase inflow of direct foreign investment since it assumed power the Slovak government has prepared and realized a whole set of measures to raise the interest of foreign investors in investing capital into doing business in Slovakia. In March 1999 it approved the concept "Strategies of support of foreign investment into the Slovak Republic". It includes goals, areas, tools and measures aimed at improving the investment climate in Slovakia. It tackles present problems of foreign investors as well as stimulation incentives to support inflow of direct foreign investment in the legislative, financial and institutional areas.

In 1999 and 2000, in accordance with this concept, several measures were taken to increase competitiveness mostly in the area of industry. They should considerably influence its growth as well as increase the inflow of direct foreign investment. They cover several areas.

2.2.1. Area of Privatization

In 1999 an amendment to the Law No. 92/1991 on conditions of the transfer of property of state to other persons (law on large privatization) abolished Law No. 192/1995 on securing interests of the state in privatization of enterprises of strategic importance. This Amendment enables the privatization of 14 state enterprises and joint stock companies which have the character of "natural monopolies". The company Slovenské telekomunikácie (Slovak Telecommunications) was privatized this way in 2000, in 2001 and 2002 parts of property interests of the state in power engineering plants - Slovenský plynárenský podnik (Slovak Gas Industry), Transpetrol and Rozvodné energetické podniky (Distribution Power Engineering Plants) were sold.

2.2.2. Tax and Fiscal Support

BA set of financial measures to support direct foreign investment was adopted by the government on 1 January 2000. The most important measures include:

- lowering income taxes for natural persons as well as significantly lowering of income tax for legal persons (from 40% to 25%). From 1 January 2004 a uniform tax rate, so-called flat tax rate has been introduced from all tax bases and for all kinds of incomes in the amount of 19%.

- a legal regulation, effective from 1 January 2000 (Law No. 366/1999 Coll. of Laws on Income Taxes, § 35 - Tax Allowances) enables the government to offer up to a five year tax holiday for those entrepreneurial subjects which invest a minimum EUR5 million into production whose line of business is the production of goods which used to be imported into Slovakia or were not exported or the production is export oriented. The Law applies to all legal subjects founded before 31 December 2002 in which the interest of a foreign partner is a minimum 75%. In the case of investment into regions with an unemployment rate exceeding 15% it is enough to invest EUR2.5 million and in some selected services, including tourism and software engineering only EUR1.5 million. Tax allowances of 50% can be obtained in the course of the next five years if the deposit totals another EUR5 million and in case of investment into regions with an unemployment rate over 15% EUR2.5 million are sufficient,

- amendment of the Law No. 466/2000 Coll. of Laws on income taxes contains a new element § 35a - Tax Allowances - also enabling the government to grant a five year tax holiday to entrepreneurial subjects which invest into the production of goods worth EUR4.5 million. The law applies to all legal subjects founded before 31 December 2003 in which the share of a foreign partner is a minimum 60%. In districts with unemployment rate over 10% it is enough to invest EUR3 million and in selected services (tourism) EUR2 million. Also in accordance with this amendment it is possible to obtain tax allowances of 50% in the next five years if the deposit is in amount of another EUR4.5 million. In the case of regions with an unemployment rate over 10% it is EUR3 million.

The amendment of the Law on Income Tax No. 472/2002 Collection of Laws amended the regulations §35a and 35 in the way that it conditions the provision of a tax credit by meeting the terms of Law No. 231/1999 Collection of Laws on state subsidies. This means that tax allowances can be provided to the amount of 50% of demonstrated investment at the most. In accordance with the closing regulation § 58d the supplemented regulations §35a and 35 will be applied to a tax payer who for the first time applies for a tax credit for the tax period in the year 2002.

All tax allowances which were until now stipulated in §35, 35a and 35c of the Law No. 366/1999 Collection of Laws as amended by later legislation are canceled. The tax allowances will only continue to apply to the tax payers to which the decisions on tax allowances were issued before 31 December 2003. The tax allowances for receivers of investments incentives in accordance with the Law No. 366/1999 Collection of Laws on income taxes as amended by later legislation will also be applied after 1 January 2004 to tax payers to which the decision on granting investment incentives containing tax allowances was issued before 31 December 2006 at the latest. The entitlement to the allowance for these tax payers will be preserved until the allowance is completely used in accordance with conditions stipulated in the decision on granting the investment incentives.

A relatively new element in support of investment is represented by the Law on Investment Incentives No. 565/2001 Coll. of Laws. This law enables an investor to obtain a 10 year tax holiday up to the amount of 50% of investment. These can total up to 100% of tax liability during this period. Application for this kind of support is conditional upon an approval process, with the final decision of the Government being based on the proposal of the Ministry of Economy.

Basic requirements to get this kind of support include investment of means for new business premises, or their enlargement, in the amount of SKK400 million or SKK200 million in regions with an unemployment rate of over 10%, achievement of 80% of earnings from the core business activity. In 2002 the investment of companies applying for investment incentives on the basis of the Law 565/2001 totaled app. SKK5 billion. They included the investment of Hirocem Rohožník (production of cement), Gábor Bánovce n. Bebravou (shoe production), Siemens Automotive, Michalovce (car electrocomponents).

Industrial Parks

Another tool to support foreign investment is also represented by systems of support to create industrial parks.

Law No. 193/2001 Coll. on support to the establishment of industrial parks is based on the principle "from down upward". Initiative in establishment of industrial parks is left to municipalities. The territory on which a municipality establishes an industrial park must be stipulated in the territorial and planned documentation of the municipality.

Development of industrial zones is based on subsidies from the state budget up to 70% of legitimate costs. Only villages and towns are entitled to apply for this support and it is aimed at preparation of the area in the period when at least two investors are already known. Villages and towns with already accepted individual investors will be preferred in the process of decision making over granting the subsidies. These subsidies may be aimed at building technical infrastructure for an industrial park, compensation for expropriation of lots necessary for establishment of industrial parks, covering costs to purchase or rent lots, forest fund or direct transfer of lots owned by the Slovak Republic into the ownership of a village or town. In order to get a subsidy a village or town has to meet certain criteria stipulated by law. A technical evaluation is prepared by the SARIO agency. If the SARIO prepares a positive technical evaluation the Ministry of the Economy will submit the request of the municipality to the Slovak government. This means that the government of the Slovak Republic will decide the allocation of subsidies on the basis of a proposal of the Ministry of the Economy.

Recently the Ministry of Economy of the Slovak Republic has been preparing several projects for the establishment of industrial parks in which very favorable conditions will be offered to investors. Three industrial parks and economy zones are being especially well worked on. One of them is Industrial Park Záhorie concentrated on microelectronics and electrical engineering in the area of Malacky (this park has not been established in accordance with the Law No. 193/2001 Collection of Laws). There already is a business premise under preparation - Plastic Omnium (France) in this park. In a comparative study Empirica Delasse (Koln - Germany) this park won the first place in Europe. From a broader point of view it should be situated in the region of Bratislava (Slovakia) - Vienna (Austria) - Gyor (Hungary). New industrial parks built on the basis of the law include Industrial park Vráble and Industrial park Devínska Nová Ves. Another ten industrial parks in various regions of Slovakia are in the preparation and approval process.

Recently the Ministry of the Economy of the Slovak Republic has been preparing an amendment of the Law No. 193/2001 Collection of Laws where the main proposed changes include: one investor in a park, the municipality will participate by 10% and the state 90% and the municipality will be allowed to sell land and technical infrastructure to an entrepreneur doing business in the industrial park.

TAXES

The last wide-ranging reform of the Slovak tax system was carried out in 1993 and was brought about by the substantial changes that accompanied the transition from a centrally planned socialist economy to a market-oriented environment. However, gaps and insufficiencies in these laws made plentiful amendments necessary. Far too numerous exceptions and conditions resulted in ambiguous regulations, making it necessary to issue new directives and interpretations. The outcome of this was a too complicated and unclear legal tax environment.

Different tax treatment for different tax base bands (e.g. personal income tax levied by income brackets), for different kinds of taxable income (e.g. tax on capital revenues lower than ordinary income tax), and for different types of taxable persons (e.g. privileges to selected investors, branches, etc.) proved inappropriate as it encouraged tax payers to try to "optimize" their tax liability by moving to more privileged categories, by using a more favorable time distribution of their income, and even by transferring revenues to more favored taxable persons.

The aim of the last tax reform was precisely to rectify these insufficiencies and deformations.

Direct taxes

Income tax

The Income Tax Act, one of the key elements in the tax system of the Slovak Republic, has undergone many changes in the past few years. These amendments were made necessary both by changes in other related legal regulations and by adjustments in the tax policy of the country.

The new Income Tax Act simplifies the way tax is levied on incomes by eliminating the special income tax rate that was being applied, which varied between 5% and 25% and which was collected in the form of deductions. Since 1 January 2004 Slovakia has introduced a flat 19% personal and corporate income tax rate and increased the tax-exempt income of every taxpayer to 19.2 times the living minimum valid on 1 January of the relevant taxable period. Thus, the tax-exempt base for this year amounts SKK 80,832. The new Income Tax Act eliminates lump-sum tax. With the aim to support non-profit organizations it introduces a tax exemption on incomes from their main activity, while their incomes from additional activities are tax exempt provided that they do not exceed the threshold of SKK 300,000. The tax base of individuals whose income derives exclusively from handcraft activities can be decreased by an expense lump-sum up to 60%.

Deductible tax allowances for children have been replaced by a monthly tax bonus of SKK 400 for each dependent child, which applies to individuals whose taxable income from dependent activities amount 6 times the minimal wage. This tax bonus also applies to self-employers with a taxable income amounting 6 times the minimal wage.

Enterprise Possibilities

BIn principle there are two ways of a foreign person enterprise on the territory of the Slovak Republic:

1. by establishing an organizational unit of the enterprise: * a subsidiary plant - it is an organizational unit registered in the Commercial Register. The head of * plant authorized to all legal acts is the person registered in the Commercial Register * a permanent operation unit - it is an organizational unit registered in the Commercial Register. * * The head of an establishment does not have a legal status of a head of a subsidiary plant.
2. by establishing a head office in the territory of the Slovak Republic.

A foreign person establishes himself as a Slovak legal entity or acts as a partner of a Slovak legal entity already registered. Such commercial company has a status of Slovak home legal entity. Independent establishment of a home legal entity, in compliance with the law is possible only with a limited liability company (spol. s.r.o) or a joint stock company (a.s.). A foreign person can act and be registered as a statutory representative or an authorized agent only if the person is a holder of a residence permit in the Slovak Republic.

It follows from the above that a foreign person doing business in Slovakia cannot maintain a single-entry book-keeping and thus in the following chapters we shall deal with the double-entry book-keeping system.

Employment of Foreigners

Foreigners taking part in legal relationships emerged pursuant the Employment Services Act have the same legal status as citizens of the Slovak Republic if have been granted a work permit and a permit for a temporary stay for employment purposes.

Prior to arriving in the Slovak Republic foreigners shall submit a written work permit application at the relevant authority. This application can be filed by themselves, by their prospective employer, or by the natural person or legal entity at whose premises the work is to be carried out. The relevant office granting work permit is the office in whose territorial circuit the foreigner is going to perform his/her work.

Employers seated in the territory of the Slovak Republic can only employ foreigners who have been granted a temporary stay permit for employment purposes in the territory of the Slovak Republic and a work permit by the relevant office unless stipulated otherwise by the law. Among the activities of the Office in connection with the employment of foreigners are:

• to inform the Central Office of any job vacancies available to foreigners,
• to provide information to foreigners about:
  • employment possibilities in their territorial circuit,
  • grant foreigners work permit,
  • inform the Central Office of the amount of work permits granted for the relevant month, namely within the 20th day of the following calendar month.

Work Permit Application

The essentials of the work permit application are:

• name, surname and date of birth of the foreigner,
• address in the country of permanent residence and address for delivery of documents,
• number of travel document and name of entity that issued it,
• name, address, identification number and type of economic activity of employer,
• type of work, place of performance and planned duration of the work.

Part of the work permit application is a promise by the prospective employer to employ the foreigner.

Work Permit

When conceding a work permit, the relevant local Office for Labour, Social Affairs and Family shall take into consideration the situation in the labour market. The competent office can grant a work permit when the job vacancy cannot be occupied by a registered job seeker. Conceding a work permit is not granted by law.

Regardless of the situation in the labour market the Office can grant a work permit to a foreigner:

• if this is stipulated in an international agreement that binds the Slovak Republic,
• who will be employed for a specified period for the purpose of improving his/her qualification in the performed job (work-study program) for a period not longer than one year,
• under 26 years of age, who is engaged in occasional and temporary attachments in the frame of exchange scholarships or programs for the youth the Slovak Republic participates in,
• who carries out a systematic didactic or scientific activity as an educational employee, as an academic employee of a university, or as a scientific, research, or development employee in research activities in the Slovak Republic,
• who carries out spiritual activities by order of a registered church or religious society,
• who has been granted a permit for a tolerated stay and has been provided temporary refuge pursuant Act 48/2002 Coll. on the Stay of Foreigners, or cannot be deported pursuant § 2 letter e) of Act 480/2002 on Asylum.

Work permit is also required if the foreigner

• stands in working relationship with an employer seated or who has an organizational unit with labour-law personality seated outside the territory of the Slovak Republic, and who is sending him/her based on an agreement concluded with a legal or natural entity to carry out work in the territory of the Slovak Republic,
• will be employed in the cross-border area of the Slovak Republic and at least once a week will return to one of Slovakia's bordering states, in which he/she has permanent residence.

Work permit obligation does not apply for foreigners:

• with permanent residence permit in the territory of the Slovak Republic,
• with Expatriate status,
• who have been granted asylum,
• who have been provided temporary refuge,
• whose employment activities in the territory of the Slovak Republic have not exceeded seven consecutive calendar days or a total of 30 calendar days within one calendar year, who are:
  • educational or academic employees of a university, or scientific, research or development
  • workers or participating in specialized scientific events,
  • performing artists taking part in an artistic event,
  • pupils or students under 26 years of age,
  • persons supplying goods or services in the Slovak Republic, or supplying or installing goods
  • based on a business agreement, or carrying out guarantee repairs and reparation works,
  • employed on the basis of an international agreement that binds the Slovak Republic, which
  • specifies that employing foreigners does not require work permit,
  • family members of a member of a diplomatic mission, of an employee of a consular office, or of
  • an employee of an international governmental organization seated in the territory of the Slovak
  • Republic if the international agreement concluded in the name of the government of the
  • Slovak Republic guarantees reciprocity,
  • members of a rescue unit providing aid on the basis of an international agreement on mutual
  • aid for the elimination of the effects of accidents and natural disasters, and in cases of
  • humanitarian aid,
  • members of the armed forces or of a civic unit of the armed forces of the sending state
  • (pursuant an Agreement among member states of the North Atlantic Treaty Organization and
  • other states present in the Partnership for Peace concerning the status of armed forces),
  • conduct systematic professional preparation activities at schools and school premises included in
  • the network of schools, school premises or pre-school premises,
  • sent to the territory of the Slovak Republic by an employer seated in another Member State of
  • the European Union to carry out services provided by this employer,
  • associates or statutory bodies or members of a business society developing duties for the
  • business society by conducting activities in the territory of the Slovak Republic, or members of
  • a cooperative or statutory body or other bodies of a cooperative conducting activities for the
  • cooperative in the territory of the Slovak Republic,
  • employed in international public transport if sent to the territory of the Slovak Republic by their
  • foreign employer to carry out work,
  • accredited in the area of information media.

The Office shall not grant permission for employment to foreigners applying for asylum, or to foreigners who fail to meet any of the requisites for conferring permission for employment stipulated by the Employment Services Act.

Validity of Work Permit

The validity of the work permit expires:

• when the period it was conferred for expires,
• when the employment is terminated before the period it was conferred for expires,
• when the period the stay permit conferred to the foreigner expires, or
• when the stay permit terminates for any other reason.

The Office shall confer permission for employment for a period not longer than one year; in case of seasonal employment, for a period not longer than six months in one calendar year. In this instance, the period between two employment stays in the territory of the Slovak Republic shall be at least six months. Taking into account the situation in the labour market, the Office can prolong this permission on the foreigner's request and do it repeatedly for a period not longer than one year. A condition necessary for prolonging the work permit is that the foreigner is employed at the same employer's. Foreigners shall submit a written application for the prolongation of the work permit not later than 30 days before the valid work permit expires.

The employer has the obligation to inform the Office for Labour, Social Affairs and Family of the initiation and termination of an employment relationship with a foreigner in writing within seven working days after the relationship is initiated or terminated.