A country in the middle of Europe, Slovakia offers many advantages to foreign investors who decide to set up companies on its territory. With a fast-growing economy, this EU member can offer a stable legal environment, as well as access to EU funds. Also known as the "Tatra Tiger", Slovakia got the nickname from its fast-growing economy since 2001, which triggered a significant number of economic reforms.
In 2017, the inflow of foreign direct investments in Slovakia reached 2,2 billion USD which represented 58.4% of the country's total Gross Domestic Product (GDP).
There are many reasonswhy a foreign investor should choose Slovakia and they are presented below. Before we get to the main reasons for investing in this great country, we would like to let foreign entrepreneurs know that our Slovak company formation specialists can help with the registration of any type of business here.
In the infographic below, we present the main reasons for investing in Slovakia:
1. Slovakia's favorable geographical location
Foreign businessmen who would like to invest in Slovakia should know that this country has a strategic geographical position due to which, the potential for export is substantial. This country’s convenient location has managed to create an economic connection between the Eastern and Western regions of the European continent. Being the heart of Europe has secured its place on the export market, constantly trading manufactured goods, machinery, fuel, food and tobacco.
Slovakia’s favorable geographical location has helped in the country in developing other industries, apart from the trading one. Among these, we remind the following:
the research and development sector which has started becoming an important part of the economy in 2010;
innovation and technology have also seen a great development once a large number of foreign investors has started taking an interest in the talented workforce;
the BPO (business process outsourcing) industry is also an important segment of Slovakia’s economy;
information technology or IT has also earned a front seat among the country’s most developed economic sectors;
tourism is another great industry which has grown its potential in the past few years;
the manufacturing industry is one of the traditional economic sectors of Slovakia, most of the products manufactured here being exported.
If you want to invest in Slovakia in one of the sectors mentioned above our company registration agents in Slovakia can definitely help you.
2. Most rapidly-ascending member of the Euro Zone
Another reason for forming a company in Slovakia would be the fact that this is the fastest growing member of the Eurozone and the country with the lowest external debt.
3. Stability in economy and politics
Slovakia is a great place to start a business in because it also offers economical and political stability. Comparing to other countries, Slovakia has had good political stability for the last two decades or so. For more details about Slovakia’s economyand on how to invest in Slovakia, please contact our experts in company formation.
This country has quite low labor costs and at the same time high labor productivity. Added to these two advantages, its workforce is highly skilled and adaptable.
The taxation system, the availability of an educated workforce compared to other EU countries of its size have also contributed to Slovakia’s development within the European Union. At this point, Slovakia is one of the few European countries to offer high labor productivity.
Not only does Slovakia has a cheap labor force, but the costs of living here are also among the lowest in the European Union. This has led to a large number of foreign citizens to relocate to Slovakia for doing business and seeking employment.
If you need guidance on the company registration procedure in Slovakia, our local experts are at your disposal with complete services, so that you can start operating right away.
4. Slovakia's currency - Euro
Another aspect that could persuade a foreign entrepreneur to invest in Slovakia by starting upa company is its official Euro currency. After using the Slovak Koruna for 16 years, in the year of 2008, the European Union agreed that Slovakia should enter the Eurozone. The advantage here is the easiness of trading (the hurdles of exchanging money are absent).
5. A fully-extended industry
The Slovak Republic has a highly developed industry, especially in sectors such as engineering and electro - energy and also a range of investment opportunities, including areas like electronics, pharmaceuticals, and machinery.
6. The Slovak government supports foreign investors
Apart from these 7 reasons which recommend Slovakia as a great investment destinationfor foreign entrepreneurs, there are also incentives enabled by the government which has helped with the growth of foreign direct investment here. Among these, here is what makes Slovakia unique from an investment point of view:
- foreign companies operating here are imposed with a flat tax rate of 19% on their income;
- the Slovak government does not make any distinction between local and foreign investors;
- foreign investors have access to all the programs developed to support the economy, such as financial aids and tax exemptions;
- foreign investors can set up industrial premises in Slovakia and even own the majority of shares in local companies;
- foreign companies can also join in public-private partnerships started by the government and can access European funds.
Slovakia is a great country to invest in, and if you are a foreign entrepreneur who wants to open a company in Slovakia, you can rely on our local advisors for help in registering the business with the Trade Register.
7. Its fast-developing infrastructure
Last, the growing infrastructure of this country can also be considered a reason for investing in Slovakia and further improvements are planned for developing its railway system.
Investment incentives available in Slovakia
Slovakia has become one of the most important economies in the EU thanks to a large number of foreign investors coming here and helping with the development of this country. However, this development was possible thanks to the incentives granted by the government, among which:
- there are four categories of investment promoted by the government;
- the industries promoted by the government benefit from various incentives.
The categories of investment for which incentives are available are:
- industrial production;
- technology centers;
- business services centers;
- joint projects of industrial and technology centers.
With respect to the incentives available for these sectors, these come under the form of grants for the purchase of various assets for the centers, income tax deductions, contributions for the creation of jobs or lower prices for the transfer or rental or real estate property for the projects to be developed. If you want to invest in Slovakia in one of the sectors listed above, our incorporation agents are at your disposal.
The main law which provides for the incentives granted for foreign investments was enabled in 2018 and is one of the newest at the level of the EU.
With a modern and investment-targeted legislation, Slovakia has quickly become one of the most appealing countries in Europe when it comes to foreign investors and if you want to invest in Slovakia by starting a business here, our Slovakcompany formation consultants can help you register it.
Therefore, if you want to start a business in a European country, Slovakia represents a good option.
Attractive investment sectors in Slovakia
There are many economic sectors available for doing business as aforeign investor in Slovakia and among these there are a few that met a great development in the past few years. Tourism is one of the sectors to have an important contribution to the country’s economy thanks to the amenities created by the government which have helped with the promotion of Slovakia as a tourism destination.
The government supports tourism through several incentives, among which 100% tax reliefs on profits for the first 5 years of activity of companies owned by foreign investors who must inject at least 1,5 million euros in tourism and other related activities.
For investors looking for expansion in industries related to wood processing, Slovakia is a great destination, as 3 quarters of its land (1,852 hectares) is dedicated to industrial activities. Slovakia is one of the largest timber producers in the world. Most of the wood processing and manufacturing operations are completed by foreign private companies. Among the facilities offered by this country are the low business setup costs and the cheap workforce.
Real estate, textiles, information technology and agriculture are also among the industries worth investing in Slovakia. These are also the economic sectors in full expansion at the moment.
If you want to open a company in Slovakia in any of these industries or you have your eyes set on a different sector, our local agents can handle the registration procedure on your behalf.
The automotive industry in Slovakia
Foreign investors interested in starting businesses in competitive industries such as automotivecan choose Slovakia, as this sector is quite developed here. It is also one of the traditional branches of the Slovak economy, as in the past 20 years it was one of the sectors attracting most of the foreign direct investments. The cheap and highly-skilled workforce completed by the geographical location which is close to countries producing most of the auto vehicles for the European market have attracted key players in this industry to set up factories here. Thanks to the investments made by foreign large companies, Slovakia is now a world leader in motor vehicle production per 1,000 citizens.
Among the sub-sectors investors can set up companies in are car spare parts production and sale.
The electronics sector in Slovakia
Another successful industry is the electronic and electrical components sector which is another key component in the Slovak economy. Driven by innovation, this sector has evolved a lot in the past few years with the help of government support schemes. With strong ties with the automotive industry, it also offers plenty of opportunities to foreign entrepreneurs interested in company formation in Slovakia.
The qualified labor force, technology and the cooperation between companies and top universities that invest in research and development facilities represent some of the most important reasons to choose to invest in Slovakia in the electronics sector.
The pharmaceutical industry in Slovakia
Biotechnology, life sciences, medication and medical devices production are just a few of the industries providing the resources to start a business in thepharmaceutical sector in Slovakia. These are successfully completed by the production of cosmetics and beauty products. However, this sector is still in its early stages in Slovakia, which is why it represents a great opportunity for those interested in entering an emerging market and developing a new industry in Slovakia.
If you want to open a company in the pharmaceutical sector in Slovakia you will need various special licenses and permits and our local consultants can help you set up a business and apply for the necessary permits to operate.
The main reasons to consider Slovakia for investment
Slovakia relies on strong economic and political stability which has led to good international relations with countries all over the world. Slovakia is also a member of the European Union and in January 2009 it has adopted euro as its official currency, thus eliminating exchange rate risks and strengthening the banking system.
Slovakia is one of the few European countries to maintain the public and external accounts to low levels compared to its Gross Domestic Product (GDP). Then, the attractive business environment with a favorable taxation system have encouraged foreign investors to open new companies or expand existing activities here. Moreover, the Slovak government has conceived various foreign investment grants under which subsidies for investment costs ranging between 20 and 50% are offered.
Slovakia is one of the most attractive investment destinations in the European Union for non-EU businesspersons. Our company formation advisors in Slovakia can provide the necessary support in starting a business here.
No restrictions on real estate ownership
Another strong point which recommends Slovakia as an investment destination is the possibility of acquiring real estate property without any restrictions for foreigners. Compared to other EU countries, Slovakia lifted these restrictions upon is accession to the EU in 2004. However, forest and agricultural land purchase restrictions are still in place for foreign citizens and companies. Other than that, any foreign citizen canbuy properties in Slovakia without registering a business.
If you are prospecting the Slovak real estate market in search for a property, our consultants can help you with real estate due diligence services.
Slovakia is a great connection corridor between Central and Eastern Europe
Located in the heart of Europe, Slovakia is suitable for those engaged or seeking to engage in economic operations with clients or business partners in Central and Eastern Europe, however, it also offers access to Western Europe through its border with Austria. Slovakia is also crossed by the Danube, thus allowing maritime access to the Black Sea and the North Sea to Rotterdam, the largest logistics center in Europe.
Slovakia alone provides access to a market of 250 million consumers. Our Slovak company formation agents can assist with the creation of businesses in any industry.
Forms of investment aids and incentives in Slovakia
Just like any other European country, Slovakia has adhered and adapted its regulations and forms of investment aids and incentives to those other countries on the continent. The government offers various types of aids to companies, especially small and medium-sized ones, under the form of:
- subsidies for various expenses related to the acquisitions of assets used in the production process;
- income tax reliefs for the creation of new jobs;
- transfer of immovable property at lower prices compared to the asset value established by the market.
Investment aids are offered for both the creation of new companies, as well as the extension of existing businesses. The creation of research and development (R&D), shared services and tourism facilities are also awarded under various schemes. Most of the aids are attracted by investments in the research and development sector and are driven by the amount of money invested in new technology, as it follows:
- where the minimum share of investments is 60%, the amount funded by the government is 6 million euros;
- where the minimum share of investments is 50%, the minimum amount awarded by the government is 3 million euros;
- where the minimum share of investments is 40%, the minimum amount awarded by the government is 1,5 million euros;
- if the minimum share of investments is 30%, the minimum amount awarded by the government is 1 million euros.
The fact that many of the country’s regions can benefit from such schemes is also a great reason for foreign businesspersons to consider Slovakia as an investment destination.
Slovakia is divided into 8 regions that have their own governments, with Kosice and Presov as the largest ones.
The 2020 World Investment Report released by the United Nations indicates that FDI inflows increased in 2019 at 2,5 billion USD from the 1,1 billion USD registered in the previous year. In 2019, Slovakia’s total FDI stock reached 60 billion USD.
At the moment, the most attractive industries in terms of FDI are manufacturing, financial and insurance services, wholesale and retail. We also invite you to watch our video below:
Foreign investments statistics in Slovakia
In the last few years, foreign direct investments (FDIs) have had significant fluctuations in Slovakia; the highest surge was registered in 2017 when they reached 2,2 billion USD, followed by a drop in 2018 when they represented 53,6% of the country’s GDP. The country ranks 45th in the World Bank 2020 Doing Business Report.
According to statistics:
- the most important investing country is Slovakia is the Netherlands with a 25.6% share of all FDIs;
- manufacturing attracts most of the FDIs with a share of 32%;
- financial and insurance services attract 18.8% of the FDIs;
- the Economic Intelligence Unit predicts an increase of 42% of FDIs in the coming years.
Call us now at +421 918813359to set up an appointment with our consultants, who are handling company formation in Slovakia. Alternatively you can incorporate your company without traveling to Slovakia.
As our client, you will benefit from the joint expertize of local accountants and international consultants. Together we will be able to offer you the specialized help you require for your business start-up in Slovakia.