By EB5 Investors Magazine Staff
Located in the central part of Europe, Slovakia shares a border with Austria and Czech Republic on the west, Poland on the North, Ukraine on the east and Hungary to the south. For the foreign investor, its strategic geographical location provides easy access to business centers throughout the European Union.
Slovakia has been a member of the EU since 2004, joined Schengen area in 2007 and adopted the euro in 2009.
The Slovak Trade and Investment Agency (SARIO), a governmental investment and trade promotion agency that operates under the Ministry of Economy, describes Slovakia as “an ideal investment destination” because of its political economic stability and common European currency, competitive taxation system tax, skilled and educated workforce and “the highest labor productivity in the CEE region with favorable labor costs.”
While there is no citizenship by investment program or residency by investment program in Slovakia, the federal government encourages foreign investment through residence permits. It has rules granting financial incentives to foreign investors, such as tax credits and subsidiary incentives. Criteria such as the geographical location and type of sector invested in Slovakia determine the financial grants.
“The most feasible option to obtain a residence permit in Slovakia is a residence permit for the purpose of business,” says Karina Ogandjanian of SlovakiaInvest Group, based in Bratislava.
She says the base can be employment, study, family reunion, status of Slovaks living abroad, or special activities.
Ogandjanian says in order to prepare and fill out documents for a residence permit for the purpose of business, investors have the option of buying a ready-made company with a nominee director and then apply for a residence permit. She says another option is company registration and then submission of the documentation for a residence permit.
“In general, the first residence permit on the basis of business is being issued for 1 to 1.5 years. Term of making a decision by police after applying for TRP is 90 days,” says Ogandjanian.
She says to renew the residence permit in the future, the company must have a profit in the minimum required amount. She says the minimum required net income is 12,500 euros per year.
“Thus, the income, profit-loss, for the year should be not less than 15,500 euros. You pay an income tax at a rate of 22 percent, about 3,500 euros and to get the necessary extension of the residence permit for one year profit, 12,500 euros. The residence can be extended for a period of one to three years, depending on the size of your profit,” says Ogandjanian.
Having a temporary residence in Slovakia for five years, gives eligibility to obtain a permanent residence. Obtaining citizenship after 10 years of legal residence is possible but is on a case by case basis. Investing considerably into certain sectors of the economy could shorten the wait time for citizenship.
“In case of special or larger investments it shall depend on the amount of the investment and the region and shall be discussed with the investor and representative of our government individually,” says Adriana Ručkayová of Ručkayová Law Firm in Slovakia.
Slovakia’s most popular investment opportunities are in the following sectors: R&D, design and innovation, technology centers, ICT & SW development, high-tech sectors and tourism centers. Other traditionally strong sectors include machinery and precision engineering, metallurgy and metal processing, electronics and chemistry and pharmacy and automotive, according to SARIO.
Slovakia stands out for its growth in the car industry and is the largest per capita car producer in the world, producing over one million cars in 2016. Kia Motors is among the three major car producers with a fourth manufacturer, Jaguar Land Rover, building a new manufacturing facility that will begin producing cars in 2018. The auto industry has been the driving force of Slovakia’s economy and significant source of foreign direct investment.
Slovakia’s economy continues to perform well in terms of macroeconomic outcomes and public finances, according to the 2017 Economic Survey of the Slovak Republic by the Organization for Economic Co-operation and Development. The survey said GDP growth surpassed 3 percent on average in 2015 and 2016 with projections to remain robust in the next two years. A sustained increase in living standards, according to the survey, has been attributed to international competitiveness, fiscal and financial stability and foreign direct investment.
In the second quarter of 2017, GDP increased by 3.3 percent from 2016, per the National Statistics Office. The World Economic Forum’s 2017-2018 Global Competitiveness Report (GCR) ranks Slovakia 59th, moving up six spots since last year. Slovakia, however, dropped six spots to 39th place in the World Bank’s Ease of Doing Business Report.
For potential investors interested in Slovakia, investment promotion agency, SARIO, provides counsel about the Slovak business and investment environment, sector and regional analyses, implementing investment projects, investment incentives and site location and real estate consultancy.