EXECUTIVE SUMMARY

Slovakia has a small, open, export-oriented economy and a population of 5.45 million people. It joined the EU and NATO in 2004 and the Eurozone in 2009. Slovakia is an attractive destination for foreign direct investment (FDI), with a favorable geographic location in the heart of Europe and a skilled workforce. Government authorities generally encourage and display a positive attitude towards FDI. The current ruling coalition, which took power in March 2020 and continued its work in an interim capacity following a no-confidence vote in December 2022, has implemented a range of measures to improve the investment and business climate.

The Slovak economy grew by 1.7 percent in 2022, slowed by persisting supply-chain shortages related to the COVID-19 pandemic, and Russia’s full-scale invasion of neighboring Ukraine with associated inflation and energy crises. As a heavily industrialized and energy-intensive economy, Slovakia was particularly affected by surging prices and uncertainty on the energy markets. In response to the energy crisis, the Slovak government took unprecedented steps to reduce the country’s legacy dependence on Russian primary energy imports, and in 2023 set aside €3.4 billion (2.8 percent of GDP) to offset ballooning energy costs. Record-high energy prices and quickly growing food prices drove headline inflation in Slovakia to 22-year highs in 2022 at 12.8 percent year-over-year.

Attracting higher value-added investment is a priority for the current ruling coalition, as well as attracting investment in less-developed regions of Slovakia. The government made important progress in implementing the national Recovery and Resilience Plan, which presents a roadmap for spending €6.3 billion in EU grants by 2026 on key reforms and investments in the areas of green economy, education and research, healthcare, digitization, and rule of law. The government also launched implementation of EU Structural and Investment Funds in the 2021 – 2027 programing period, in which Slovakia received an allocation of €13.6 billion for investments into energy and the environment, research and innovation, infrastructure, and social capital. Inefficiencies hindering access to EU funds persist, however. Slovakia’s government continued its anti-corruption agenda and measures in 2022, resulting in an improvement in the business community’s perception of corruption’s impact on the business environment.

Slovakia remains the largest per capita car producer in the world, with four established car-manufacturers, an additional international automaker announcing plans to open a plant, and hundreds of suppliers. Manufacturing industries, including automotive; machinery and transport equipment; metallurgy; electronics; chemicals; and pharmaceuticals remain attractive and have the potential for further growth.  Due to the government’s focus on reducing dependence on Russian energy imports and growing demand from consumers, green energy production, energy efficiency products, and diversely sourced fossil-based and nuclear fuels are also sectors with potential.

Positive aspects of the Slovak investment climate include:

  • Membership in the EU and the Eurozone
  • An open, export-oriented economy close to western European markets
  • Investment incentives, including for foreign investors
  • A low-carbon energy mix
  • A sound banking sector deeply integrated with Europe

Challenging aspects of the Slovak investment climate include:

  • Legacy dependence on Russian primary energy imports
  • High sensitivity to regional economic developments
  • Weak public administration and an inefficient judiciary
  • Significant regional disparities, suboptimal national transport network
  • Relatively low rates of public and private R&D investment
  • Heavy reliance on EU structural funds, chronic deficiencies in allocation of funds
  • Tax rates above the regional average
Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2022 49 of 180 http://www.transparency.org/research/cpi/overview
Global Innovation Index 2022 46 of 132 https://www.globalinnovationindex.org/analysis-indicator
U.S. FDI in partner country ($M USD, historical stock positions) 2021 779 https://apps.bea.gov/international/factsheet
World Bank GNI per capita 2021 $20,640 http://data.worldbank.org/indicator/NY.GNP.PCAP.CD

Policies Towards Foreign Direct Investment

Slovakia has one of the most open economies in the EU.  The government’s overall attitude toward foreign direct investment (FDI) is positive; FDI plays an important role in the country’s economy, with major foreign investments in manufacturing and industry, financial services, information and communication technologies (ICT), and business service centers, where U.S. companies have a significant presence.

The benefits of investing in Slovakia, including access to skilled labor, the country’s EU and Eurozone membership, and its central location in Europe have attracted a significant U.S. commercial and industrial presence, with investments from Accenture, Adient, Amazon, Amphenol, AT&T, Cisco, Dell, Garrett, GlobalLogic, Hewlett-Packard, IBM, Lear, Oracle, Panattoni, U.S. Steel, Smithfield Foods, Whirlpool, and others.

The Ministry of Economy coordinates efforts to improve the business environment, stimulate innovation, and attract investment.  Under the Ministry of Economy, the Slovak Investment and Trade Development Agency (SARIO) is responsible for identifying and advising potential investors, as well as for providing in-depth information on the Slovak business environment, investment incentives, the process for setting up a business, and advising on suitable locations and real estate leasing. The government encourages investment through tax incentives and grants to support employment, regional development, and training. The current ruling coalition, in power since March 2020, has made it clear that it intends to prioritize government incentives for investments in less-developed regions of Slovakia. Section Four of the Regional Investment Aid Act (57/2018 Coll.) specifies the eligibility criteria for receiving assistance.

According to the National Bank of Slovakia’s most recent data from 2020, inward FDI flows to Slovakia reached €1.7 billion, and inward FDI stock was €52 billion.  EU Member States, including the Netherlands, Austria, the Czech Republic, Luxembourg, and Germany are the largest foreign investors in Slovakia.  South Korea remains by far the largest investor among non-EU countries.

The Act on a Special Levy on Regulated Sectors (235/2012 Coll.) imposes a special tax on regulated industries, including the energy and network industries, insurance companies, electronic communications companies, pharmaceuticals, air transport, and others.  The levy applies to profits generated from regulated activities above €3 million.  A special levy on the banking sector, in effect since January 2012, was abolished effective January 2021. However, some representatives of the ruling coalition have publicly commented on the possibility of reintroducing the levy as a means to cover increased government expenditure on energy subsidies and family support. In December 2022, the government introduced a new windfall tax on electricity generation as well as a “solidarity contribution” which applies to companies active in the sectors of oil, gas, coal, and refineries. Parliament failed to approve a cabinet-sponsored extraordinary levy on Slovakia’s gas transmission system operator, however.

The Slovak government requires ride-sharing and app-based hospitality platforms that are active on the local market to register a permanent office in Slovakia for tax collection purposes. Those that do not take this step face withholding taxes ranging from 19 to 35 percent on the fees collected within Slovak territory.

The government employs a formal process to involve employers in policymaking (such as setting the minimum wage) via a social dialog process that includes government representatives, trade unions, and employer/business associations. The government also regularly engages in direct talks with major investors and employers to address their needs or concerns.

Limits on Foreign Control and Right to Private Ownership and Establishment

Foreign and domestic private entities have the right to establish and own business enterprises and engage in all forms of remunerative activity in Slovakia.  Businesses can contract directly with foreign entities.  Private enterprises are free to establish, acquire, and dispose of business interests, but must pay all Slovak obligations of liquidated companies before transferring any remaining funds from Slovakia. All new businesses registered after October 2020 must provide the national registration numbers of their partners, authorized representatives, and members of the boards of directors and supervisory boards when registering a business. Foreigners must provide their passport or residence permit numbers when registering a business.
In November 2022, the Slovak Parliament approved a new comprehensive National Security Screening mechanism for foreign investments (Act 497/2022 Coll.), which entered into force on March 1, 2023. Under the new legislation, the Slovak government may screen transactions in which a foreign investor acquires “effective control” of a Slovak legal entity. The thresholds for effective control depend on whether the entity being bought/sold is categorized as belonging to Slovakia’s high-risk critical infrastructure. For non-critical investments, the threshold for effective control is a 25 percent share of registered capital or voting rights. For “critical investments” (definition provided by Government Regulation 61/2023 Coll.), the threshold for “effective control” is reduced to a 10 percent share of capital or votes. Under the FDI screening mechanism, the cabinet may, on recommendation of the Economy Ministry, ultimately prohibit a foreign investment from moving forward if it is found to present a risk to the security or public order of Slovakia or the EU. The government may also demand the fulfillment of a specific set of mitigation conditions to approve a foreign investment. The new Screening mechanism does not apply to greenfield investments, and, with the exception of investments into “critical infrastructure installations,” it does not apply to investments coming from other EU member states, which are considered to pose a low risk on national security.

Slovakia has no formal performance requirements for establishing, maintaining, or expanding foreign investments.  Large-scale privatizations are possible via direct sale or public auction.  Aside from the national security screening mechanism, there are no other formal requirements to approve FDI. However, the government may play a role in approving any government incentives it grants, a process managed by the Ministry of Economy.  The Act on Regional Investment Aid (57/2018 Coll.) specifies that only three categories of projects may be subsidized: industrial production, technology, or business services.  An amendment to the Act, in force since January 2021, slightly relaxed the conditions for receiving investment aid by increasing the maximum time allowed to finish work on an investment project from three to five years.

The Slovak government treats foreign entities established in Slovakia in the same manner as domestic entities. Foreign entities face no impediments to participating in R&D programs financed and/or subsidized by the Slovak government. As of January 1, 2023, the tax deductible for R&D spending was reduced from 200 to 100 percent. At the same time, a new deductible for select higher value-added investments in moveable property came into effect, ranging from 15 to 55 percent of the investment value.

The Slovak government holds stakes in a number of energy companies.  It has historically been less open to private investment in energy assets, which the government considers to be in the national security interest.  There are no domestic ownership requirements for telecommunications or broadcast licenses.  The Act on Civil Air Transport (143/1998 Coll.) sets out rules for foreign airline operators seeking to operate in Slovakia.

Other Investment Policy Reviews

Slovakia’s investment and business climate is independently assessed on an annual basis by the European Commission during the so-called European Semester. For more information, please see the European Commission’s latest Country Report on Slovakia from 2022 as well as its Analysis of the Recovery and Resilience Plan of Slovakia  from 2021. The OECD’s most recent Economic Survey of Slovakia , released in January 2022, provides an independent assessment of major challenges faced by Slovakia, evaluates the short-term outlook, and makes specific policy recommendations.

The following local civil society organizations carry out regular reviews of investment policy-related concerns in Slovakia – the Institute of Economic and Social Studies ( INESS ), the Institute for Economic and Social Reforms ( INEKO ), Transparency International Slovakia ( TIS ).

Business Facilitation

According to the World Bank’s Doing Business 2020 report, Slovakia ranks 118 out of 190 countries surveyed on the ease of starting a business, up from 127 in 2019.  It takes, on average, 21.5 days to start a business and involves seven procedures. There are private business development companies that help navigate the process of establishing a new business. The main agencies with which a company must register are the business registry, tax office, social security agency, and, if the company employs at least one employee, a healthcare insurance company.

In 2022, the government approved a package of nearly 200 measures meant to decrease the administrative burden on businesses. The Ministry of Economy also implemented routine regulatory fitness checks and reviews of EU directive implementing legislation to ensure that implementing laws do not create additional administrative burdens beyond what is required by EU law.

The Central Government Portal “slovensko.sk” provides useful information on e-Government services for starting and running a business, citizenship, registering vehicles, social security, etc.  Checklists outlining steps needed for registrations, applications for permits, etc., are available on the websites of the business registry, tax office, social security agency and health insurance companies. The Economy Ministry is working on streamlining the information into one common platform.  The government has also announced plans for a major overhaul to the e-Government service portal meant to streamline access to public services.

Outward Investment

Slovak companies have not made significant outward foreign direct investments, registering just €5.2 million in 2020 (note: As of March 2023, the most recent data on FDI flows from the National Bank of Slovakia is from 2020. End note).

Several state agencies share responsibility for facilitating outward investment and trade.  SARIO is officially responsible for export facilitation and attracting investment.  The Slovak Export-Import Bank supports exports and outward investments with financial instruments to reduce risks related to insurance, credit, credit guarantees, and financial activities. It assists both large companies and small and medium sized enterprises (SMEs) and is the only institution in Slovakia authorized to provide export and outward investment-related government financial assistance.  The Ministry for Foreign and European Affairs runs a business center that provides services for exporters and helps identify investment opportunities. Slovakia’s diplomatic missions, the Ministry of Finance’s Slovak Guarantee and Development Bank, and the Ministry for Investments, Informatization, and Regional Development (MIRRI) also play a role in facilitating external economic relations. Slovakia does not restrict domestic investors from investing abroad.

Slovakia has signed 64 Bilateral Investment Treaties (41 remain in force) and another 78 treaties with investment provisions (57 remain in force). Some are legacies of the former Czechoslovakia, while others have come into force following independence in 1993. The 1992 U.S.-Slovakia Bilateral Investment Treaty governs the basic framework for investment protection and dispute resolution between the two countries, with amendments of May 2004 taking into account EU membership.

Slovakia signed a Bilateral Income Tax Treaty with the United States in 1993.  The United States and Slovakia agreed to the Foreign Account Tax Compliance Act (FATCA) in July 2015, and Slovakia subsequently approved the Act on Automatic Exchange of Information on Financial Accounts (359/2015 Coll.) to fully comply with FATCA. Slovak financial institutions are required to report tax information of American account holders to the Slovak Government, which then forwards that information to the U.S. Internal Revenue Service (IRS).

Slovakia is a member of the OECD Inclusive Framework on Base Erosion and Profit Shifting and party to the 2021 Statement on a Two-Pillar Solution to Address the Tax Challenges Arising from the Digitalization of the Economy.

Transparency of the Regulatory System

Businesses in Slovakia frequently complain about the country’s complex and unpredictable legislative and regulatory environment. The current ruling coalition has undertaken some efforts to address this issue. As of June 1, 2022, all government ministries as well as 20 non-ministry central government institutions are legally bound to adhere to a “one-in-two-out” principle, meaning every new regulation that will increase the administrative burden by €1 must be matched with a proposal to decrease the administrative burden by €2. The Ministry of Economy flags violations through a mandatory interdepartmental consultation procedure on all draft legislation and prepares an annual report on implementation of the rule.

Regulations are drafted on the local and national level. The Legislative and Information Portal of the Ministry of Justice, Slov-Lex, is a publicly accessible centralized online portal for laws and regulations, including draft texts and information about the interdepartmental and public review processes. Draft bills, including investment laws proposed by ministries through a standard legislative procedure, are available for public comment through the portal, with a comment period of usually between two to three weeks, although this period may be shortened to one week in some cases, leaving little time for public comment. Affected business associations note that government reactions to comments are often superficial and generic.

While the process of the government proposing and adopting new laws and regulations follows clearly defined rules, MPs or parliamentary groups have the option of proposing legislation without having to adhere to the same legislative rules and without public consultations, thus rendering the legislative process less predictable and less transparent. Legislators sometimes apply the “accelerated legislative procedure,” which allows for limited or no public consultation and is, by law, conditioned on extraordinary circumstances, threat to public safety, or imminent economic damage. In an effort to reduce abuse of the procedure, the President has repeatedly exercised her suspensive veto right in cases when the accelerated procedure was used to pass legislation without clearly meeting this criteria. In 2022, the President also referred an act passed through the accelerated procedure to the Constitutional Court, which ruled that conditions for an accelerated procedure had not been met, struck down the legislation, and formulated a new binding doctrine related to the use of the procedure.

Legislation and regulations are, in most cases, not reviewed using scientific data assessments and critics assert that some mandatory impact assessments are conducted superficially. Analytical institutes at some ministries produce data-driven assessments of proposed policies or large investment projects, but not all ministries have the personnel and/or technical capacity to ensure a uniform and high-quality level of data-driven policymaking across the whole of government. Impact assessments for proposed legislation are available online, as are most policy and/or investment assessments prepared by the analytical units at government ministries.

The Commercial Code ( 98/1991  Coll.) and the Economic Competition Protection Act (136/2001 Coll.) govern competition policy in Slovakia. As an EU Member State, Slovakia follows relevant EU legislation. The Anti-Monopoly Office, a part of the EU’s European Competition Network (ECN), is an independent and neutral state administrative body responsible for ensuring a competitive marketplace.

The Public Procurement Office (PPO) is an independent authority responsible for the supervision and regulation of public procurement. Public procurement legislation is frequently amended in the pursuit of striking a balance between protecting competition and preventing corruption, while keeping the bureaucratic burden and average tendering time at acceptable levels. The PPO has made efforts to improve transparency and communication with stakeholders, as well as to strengthen supervisory activities. Since March 2021, the PPO accepts self-declarations from U.S. companies that are bidding in public procurements, rather than requiring companies to produce non-standard documentation issued by U.S. state or federal entities – which had been overly burdensome to obtain. In March 2022, an amendment to the public procurement act entered into force that increased the minimum procurement value for required public tenders from €5,000 to €10,000. Additionally, it limits repetitive formal complaints, put in place to prevent abuse of the complaint procedures as a means to stall tenders. The amendment also introduced changes to increase the transparency of the tendering process through digitization, strengthen the independence of the PPO, and prohibit selected public servants from doing business with the state.

Oversight over the legality of administrative and regulatory processes, and decisions of the central government, as well as municipalities, is carried out by the prosecution service and a dedicated administrative court system consisting of first-instance courts and a Supreme Administrative Court. Complaints related to administrative malpractice can also be raised with the Public Defender of Rights and, in cases where complaints include breaches of fundamental rights and freedoms, also in the Constitutional Court.

The government does not currently require companies’ environmental, social, and governance (ESG) disclosure. However, as an EU member state, Slovakia is bound by the EU Taxonomy Regulation, which seeks to create a common framework to determine whether certain economic activities can be regarded as environmentally sustainable. All measures implemented through Slovakia’s Recovery and Resilience Plan, including investments and reforms, must be in line with the environmental objectives laid down by the EU Taxonomy.

As an EU Member State, Slovakia conforms to the European System of National and Regional Accounts (ESA 2010), which is the EU’s most recent internationally compatible accounting framework, as well as the International Financial Reporting Standards (IFRS-EU). Slovakia meets the minimum criteria of the U.S. Fiscal Transparency Report. State budget proposals, enacted budgets, and closing statements are substantially complete and publicly available. Although departures from budget goals are common, these are mostly connected to external factors such as the COVID-19 pandemic and Russia’s war against Ukraine, and remain well below 10 percent of the overall budget. Over the past years, the government has introduced a number of changes that have improved fiscal transparency and led to better forecasting. The Ministry of Finance publishes monthly reviews of budget execution, which provide an overview of public revenues and expenditures broken down by source and type. Annex 6 of the State budget describes the Debt Management Strategy including volume, total cost, debt service, structure, financing, forecast, and risk assessments.

In April 2022, Parliament approved sweeping changes to construction and zoning legislation with the aim to significantly accelerate, streamline, and digitize the process of obtaining construction permits and prevent the ex-post legalization of buildings built without requisite permits. Due to its complexity, the new legislation is scheduled to enter into force in April 2024.

International Regulatory Considerations

Slovakia is subject to European Court of Justice (ECJ) jurisdiction and must comply with all EU legislation and standards, including the Trade Facilitation Agreement (TFA). The national regulatory system is enforced in areas not governed by EU regulatory mechanisms. Slovakia is a WTO member, and the government notifies the WTO Committee on Technical Barriers to Trade of changes to technical regulations.

Legal System and Judicial Independence

Slovakia is a civil law country. The Slovak judicial system is comprised of the Constitutional Court and general courts, including the Specialized Criminal Court, the Supreme Court, and the Supreme Administrative Court.  General courts decide civil, commercial, and criminal matters, and review the legality of decisions by administrative bodies. As of June 2023, a new system of three separate first-instance administrative courts will enter into force as part of a wider judicial reform. The Supreme Administrative Court serves as the second-instance administrative court, and as a disciplinary court for judges, prosecutors, and some other legal professions. The Specialized Criminal Court focuses on cases involving corruption, organized crime, serious crimes like premeditated murder, crimes committed by senior public officials, and crimes related to extremism, such as hate crimes. Enforcement actions are appealable and are adjudicated in the national court system. The right to appeal regulations is limited to some state institutions and selected public officials.

The Slovak Constitution and the European Convention on Human Rights guarantee property rights.  Slovakia has a written Commercial Code and Civil Code including contract law in the civil and commercial sectors.  The basic framework for investment protection and dispute resolution between Slovakia and the U.S. is outlined in the 1992 U.S.-Slovakia Bilateral Investment Treaty.

Court rulings by EU Member States are recognized and enforced in compliance with existing EU regulations.  Third country rulings are governed by bilateral treaties or by the Act on International Private Law.  Contracts are enforced through litigation or arbitration.

While laws guarantee judicial independence, Slovak public perception is among the lowest in the EU.  According to the 2022 EU Justice Scoreboard, 25 percent of the general public and 29 percent of the business community rated the independence of the justice system as “very” or “fairly” good. Only 33 percent tend to trust the justice and legal system in Slovakia, based on the Winter 2022 – 2023 Eurobarometer survey. In 2019 and 2020, law enforcement authorities opened numerous investigations into judicial corruption, arresting approximately 20 judges on suspicion of corruption, while several additional judges resigned from office amid allegations of misconduct. Businesses and NGOs report that the justice system remains relatively slow and inefficient, characterizing some verdicts as unpredictable and poorly justified.  Investors generally prefer international arbitration to resolution in the national court system.

The government is pursuing an ambitious set of judicial reforms, aiming to address alleged corruption ties at local levels, low public trust, and inefficiency. It is also following the recommendations of the Council of Europe Commission for the Efficiency of Justice (CEPEJ) in its reforms. Judges remain divided on the need for reform, even as changes to the court system are scheduled to enter into force in June 2023. Accountability mechanisms ensuring judicial impartiality and independence are used with more frequency, including disciplinary proceedings and a more efficient asset verification of judicial officials. Courts use a digital system for random case assignment to increase transparency. As of 2021, the government significantly reduced the functional immunity of judges related to their discretion in decision-making to prevent arbitrary and poorly justified rulings, introducing a new criminal offence of “abuse of law,” inspired by German law. In February 2023, a Slovak court handed down the first sentence under this criminal statute.

Laws and Regulations on Foreign Direct Investment

Slovakia is a politically and economically safe destination for foreign investment. Investment incentives are available to motivate investors to place new projects in regions with higher unemployment and to attract projects with higher added value.  In March 2023, a new comprehensive national security screening mechanism for high-risk foreign investments entered into force (see Section 1 for more detail).

The Slovak Investment and Trade Development Agency (SARIO) is a specialized government agency in charge of attracting foreign investments to Slovakia and serves as a one-stop shop. Their website offers easily accessible information on laws, rules, procedures, and reporting requirements relevant to investors or those wanting to register a business. The Slovak Business Agency (SBA) runs a National Business Center (NBC) in Bratislava and several other cities; it provides information and services for starting and establishing businesses. Startups can use a simplified procedure to register their company in order to facilitate the entry of potential investors. The Interior Ministry operates Client Centers around the country where many formal administrative procedures can be completed under one roof.

In the World Bank’s Doing Business 2020 report Slovakia placed 45 out of 190 countries in the report’s overall ranking.

Competition and Antitrust Laws

The Anti-Monopoly Office of the Slovak Republic is an independent body tasked with the protection of economic competition.  This office intervenes in cases of cartels, abuse of a dominant position, vertical agreements, and validates that state aid and mergers comply with antitrust law. Decisions of the Anti-Monopoly Office can be appealed to an independent Council and, in the second instance, to administrative courts. The key antitrust legislation regarding fair competition is the Competition Law (136/2001 Coll.). Slovakia complies with EU competition policy. Certain decisions related to competition policy and enforcing competition rules are directly under the purview of the European Commission.

In January 2022, the Anti-Monopoly Office fined three Slovak companies nearly €9 million, the second highest issued fine in the institution’s history, for allegedly entering an illegal cartel agreement related to a €38 million renovation of an electricity substation for the Slovak transmission system operator. The involved companies appealed the decision to the Council of the Anti-Monopoly Office, which in February 2023 overturned the first-instance decision and returned the matter to the lower instance for additional investigation.

Expropriation and Compensation

The Slovak Constitution guarantees the right to property and there is an array of additional legal acts stipulating property rights.  The Act on Expropriation of Land and Buildings (282/2015 Coll.) mandates that expropriation must only occur to the extent necessary, be in the public interest, provide appropriate compensation based on fair market value, and shall only occur when the goal of expropriation cannot be achieved through agreement or other means. In April 2021, the Slovak Parliament voted to extend by 10 years a sunset clause on expropriations of property for roads, which expired at the end of 2020. Expropriations are used by the government primarily for acquiring land on which planned highways are built, or large industrial parks, and only in the event that direct negotiations with landowners fail.

In December 2022, Parliament approved in an accelerated legislative procedure a new 55 percent “solidarity contribution” on “excess profit” generated by companies active in the segment of oil, natural gas, coal, or refineries (Act 519/2022 Coll.). In March 2023, Parliament further increased the contribution to 70 percent for fiscal year 2023. The contribution, which is based on EU Council Regulation 2022/1854, is payable also retroactively for fiscal year 2022 on all profit exceeding 120 percent of the average profit over the past five years. Representatives of Slovakia’s sole oil refinery, which is expected to be the primary contributor under the new tax, have called the contribution discriminatory, and have announced plans to launch arbitration proceedings against Slovakia. Industry representatives argue that by selecting a 55, and later 70, percent rate, Slovak authorities went well beyond the minimum 33 percent rate recommended by the EU Regulation, thereby harming the interests of business operating in Slovakia and damaging their competitiveness.

In response to surging energy prices, in 2022 the government issued several decrees and regulations under “general economic interest” statutes, requiring the suppliers of electricity, gas, and heat to provide their commodities to households and other “vulnerable consumers” at well-below-market prices. While the government announced that suppliers would be duly compensated, as of March 2023 it remains unclear when, how, and to what extent.

Dispute Settlement

ICSID Convention and New York Convention 

Slovakia is a contracting state to the International Centre for Settling International Disputes (ICSID) and the World Bank’s Commercial Arbitration Tribunal (established under the 1966 Washington Convention). Slovakia is a member of the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitrage Awards, which obligates Slovakia to accept binding international arbitration. The Finance Ministry leads on bilateral investment treaty matters and manages and represents Slovakia in international arbitration. Investment contracts with foreign investors in Slovakia are covered by respective ministries depending on the sector, in most cases by the Ministry of Economy.

Investor-State Dispute Settlement 

The basic framework for investment protection and dispute resolution between Slovakia and the United States is the 1992 U.S.-Slovakia Bilateral Investment Treaty with an additional protocol that came into force in 2004 when Slovakia joined the EU.

To date, twelve known cases of international arbitration have concluded. In October 2021, a U.S. firm registered a request to commence arbitration proceedings against Slovakia at the ICSID, with a claim related to oil and gas extraction.

The legal system generally enforces property and contractual rights, but decisions are often protracted. According to the World Bank Doing Business 2020 report, Slovakia ranked 46 out of 190 countries in the “enforcing contracts” indicator, with a 775-day average for enforcing contracts. The report notes that Slovakia simplified the process by implementing electronic processing services. Slovak courts recognize and enforce foreign judgments, subject to the same delays.

Although the commercial code and other legislation generally appear to be applied consistently, the business community continues to cite limited protection of creditor rights, corruption, political influence, lengthy procedures, obstruction related to environmental impact assessments and permitting, and weak enforcement of court rulings as persistent problems. U.S. and other investors have described instances of multi-million-dollar losses that were settled out of court.

International Commercial Arbitration and Foreign Courts 

There are two acts applicable to alternative dispute resolution in Slovakia – the Act on Mediation (420/2004 Coll.) and the Act on Arbitration (244/2002 Coll.). The Slovak Act on Arbitration is largely modeled after the UNCITRAL model law.  Local courts in Slovakia recognize and enforce foreign arbitral awards.

Alternative dispute resolution mechanisms in Slovakia are relatively fast compared to the court system.  The list of permanent arbitration courts authorized by the Slovak Ministry of Justice is published on the Ministry’s website.  Decisions should be reached within 90 days of filing.  It is possible to lodge an appeal to a civil court against an arbitration decision within three months of the date of its issuance or lodge a complaint about an arbitration decision to the chairman of the permanent arbitration court or to the Ministry of Justice.

Alternative dispute resolution proceedings for consumer disputes can also be initiated by filing a motion with one of the alternative dispute resolution entities from a list maintained by the Ministry of Economy.  Dispute settlement takes place through written communication and has a 90-day timeframe for completion.  Unless the parties reach an agreement, the alternative dispute resolution entity will prepare a justified opinion. If any attempt to settle the dispute by mutual agreement fails, and the arbitration entity issues an opinion, there is no avenue for appeal.

The other option for extrajudicial dispute settlement is mediation.  Mediation can be used even after a court proceeding has started.  The agreement resulting from mediation is legally enforceable only if it has the form of a notarial record or court settlement.  The list of mediators is published on the website of the Association of Mediators.  In the case of an unsuccessful mediation, parties can still take the case to arbitration or to court.

Bankruptcy Regulations

The Bankruptcy and Restructuring Act (377/2016 Coll.) governs bankruptcy issues. Companies can undergo court-protected restructuring, and both individuals and companies can discharge their debts through bankruptcy. After its implementation, the International Monetary Fund praised this law for speeding up the bankruptcy process, strengthening creditor rights, limiting the discretion bankruptcy judges may use in adjudicating cases, and randomizing the allocation of cases to judges to reduce potential corruption. The Bankruptcy and Restructuring Act contains provisions to prevent preferential treatment for creditors over company shareholders, reduce arbitrariness in bankruptcy administrators’ conduct, and impose stricter liability rules for those initiating the bankruptcy proceedings. In March 2023, the Parliament narrowly rejected an amendment to the law, which would have introduced more transparency related to debtors and ongoing insolvency and restructuring proceedings. The Government is expected to re-introduce the amendment later in 2023. The Commercial Code also contains provisions on bankruptcy and restructuring preventing speculative mergers during ongoing bankruptcy proceedings.

Investment Incentives

The Economy Ministry manages and coordinates investment aid with other relevant agencies (see Policies Towards Foreign Direct Investment in Chapter 1). Eligibility for investment incentives is defined in the Act on Regional Investment Aid (57/2018 Coll.). Investors are encouraged to implement projects in less-developed regions and to invest in high value-added activities.

Investment incentives are available to foreign and domestic investors for projects in sectors including industrial production, technology, and shared service centers.  The incentives are provided as tax relief, cash grants, contributions for newly created jobs, and transfers of state or municipal property at a discounted price. Eligible costs include acquisition of land, acquisition and construction of buildings, acquisition of technology equipment and machinery, as well as intangible assets (e.g., licenses, patents, etc.) and wages of new employees for a period of two years.

Apart from investment aid, the Economy Ministry offers innovation vouchers, that companies can use to upgrade their products, services, or technology through cooperation with research and development institutions. The Economy Ministry also provides special loans through its Investment Fund. Individual ministries run EU-supported projects to spur investment in their respective areas of responsibility.

State aid granted by the Slovak government must comply with valid EU regulations.  The Anti-Monopoly Office of the Slovak Republic is the coordinating body for state aid granted by individual ministries, as per the Act on State Aid (358/2015 Coll.), and there is a dedicated state aid web portal. The European Commission must approve state aid schemes above a certain threshold.

Producers of electricity from renewable sources receive feed-in-tariffs, which are included in the final cost of electricity paid by all consumers. The government also has numerous schemes in place to support clean energy investments, including energy storage, energy efficiency, low-carbon transport and fuels, and decarbonization. These schemes are managed by the Ministries of Economy and Environment and are primarily funded from the EU Structural and Investment Funds and the EU Recovery and Resilience Facility. While Slovakia has made important progress in reducing carbon emissions and increasing the share of renewables in its energy mix since the fall of communism in 1989, there is still significant potential for green investments to reduce the high dependence of the country on primary energy imports from Russia, and to reduce the energy intensity and carbon footprint of the economy, which remain among the highest in Europe.

Foreign Trade Zones/Free Ports/Trade Facilitation

Slovakia eliminated all foreign trade zones and free ports in 2006.  There are no Special Economic Zones in the country.

Performance and Data Localization Requirements

There are no special requirements for foreign IT providers to turn over their source code or to provide access to encrypted documents. However, according to the Act on Electronic Communications (351/2011 Coll.), entities providing public networks or public services that use coding, compression, encryption, or other form of signal transfer concealment must, at their own expense, provide information requested through a legally issued wiretap or network monitoring order to relevant authorities. Slovakia follows the EU General Data Protection Regulation (GDPR) regulating data protection and privacy. There are no automated or systemic mechanisms in place enforcing rules on local data storage. Slovakia follows the EU regulation on the free flow of non-personal data 2017/0228 (COD) that sets out the principle that non-personal data is allowed to be located and processed anywhere in the EU without unjustified restrictions, with some exceptions on the grounds of public security. The relevant authority for data localization is the Ministry of Investments, Informatization, and Regional Development and the Office for Personal Data Protection.

Slovakia does not engage in “forced localization,” with the exception of military equipment tenders, where, in some cases, the involvement of the local defense industry is either specifically required or is considered in the evaluation of submitted bids.

Foreign entities have equal access to investment incentives, as per the Act on Regional Investment Aid (57/2018 Coll.). For more details on eligible projects, please see Section 1 on Investment Incentives.

Real Property

A reliable system of record keeping for both mortgages and liens exists. Secured interests in property and contractual rights are recognized and enforced.

Less than 10 percent of the land in Slovakia lacks a clear title, however, there are instances when a property’s owner is unknown.  In such cases, real estate titling can take a significant amount of time to determine.  Legal decisions may take years, limiting the utility of the court system for dispute resolution.

The fragmentation of land ownership and complications in user relations in Slovakia have their roots in Hungarian inheritance law and later in collectivization. Parcels commonly have a very high number of co-owners.  Currently there are approximately 8 million parcels, 11 million recorded owners of land, and 98 million co-owning relationships.  On average, one parcel has 11.1 co-owners, and one owner has an average of 22.61 parcels.  To address this issue, the Agriculture Ministry started a robust land ownership reform in 2019, projected to last 30 years, that will gradually consolidate, i.e., compact parcels and simplify ownership records in the cadaster database. A dedicated web portal allows users to verify land information and property ownership. The reform is extremely financially demanding – project modifications alone are budgeted at €1.1 billion (1 percent of GDP). To make records of ownership relationships more transparent, the Slovak Ministry of Agriculture has been preparing a new Registry of Land-use Relations, to be launched in 2023.

Foreign individuals and private companies can acquire real property without restrictions.  In 2021, plans by the Hungarian government to buy Slovak agricultural land through its State Capital Fund met with fierce opposition in Slovakia. While diplomatic talks resulted in the proposed land purchases being withdrawn, in October 2021 the Agriculture Ministry launched an amendment to the Act on the Acquisition of Ownership of Agricultural Land (140/2014 Coll.), with the aim of preventing future foreign government purchases of agricultural land in Slovakia. New regulatory requirements introduced by the legislation include establishing preemption rights for the government and selected public entities and mandatory publication of all offers for the transfer of agricultural land and expressions of interest in such land. As of March 2023, work on the amendment is ongoing.

Squatting is illegal in Slovakia and ownership of unoccupied property will not revert to squatters or other parties unless they are entitled to own the land.

Slovakia was 8th out of 190 countries in the World Bank’s 2020 Doing Business “registering property” indicator, averaging 16.5 days to register a property compared to average of OECD high income countries of 23.6 days.

Intellectual Property Rights

Slovakia is not included in USTR’s Special 301 Report Watch Lists or the Notorious Markets List.

The Slovak legal system provides strong protection for intellectual property rights (IPR). The country is bound by robust EU regulations and adheres to major international IPR treaties, including the Berne Convention, the Paris Convention, Beijing Treaty on Audiovisual Performances, and numerous others on design classification, registration of goods, appellations of origin, patents, etc.  The protection of IPR falls under the jurisdiction of two government agencies: the Industrial Property Office of the Slovak Republic– the central government body that oversees industrial property protection including patents, and the Culture Ministry– responsible for copyrights, including software. The Financial Administration, which is part of the Finance Ministry, plays an important role in enforcing IPR and deals with customs, including the fight against counterfeit goods. In case of IPR infringements, rights holders can bring a civil lawsuit in the district courts in Bratislava, Banska Bystrica, and Kosice and, if applicable, have the right to claim lost profits.  The courts can issue injunctions to prevent further infringement of IPR.  In certain cases, violation of IPR can be considered a criminal offense. Intellectual property theft is uncommon in Slovakia.

There were 1,185 suspected breaches of IPR in 2021 for goods imported from third countries (down from 1,826 cases in 2020), primarily in the form of perfumes, cosmetics, jewelry and accessories, sports shoes, and toys. The value of seized counterfeit goods decreased by eight percent from 2020 to €380,000. The number of domestic IPR infringement cases jumped from 364 in 2020 to 840 in 2021 with a 56 percent increase in the total value of goods at €2,050,000.

For additional information about national laws and points of contact at local IP offices, please see WIPO’s country profiles at  http://www.wipo.int/directory/en/ .

Capital Markets and Portfolio Investment

The Bratislava Stock Exchange (BSSE) is a member of the Federation of European Securities Exchanges (FESE).  An effective regulatory system exists that encourages and facilitates portfolio investment. BSSE is a joint-stock company whose activities are governed primarily by the Stock Exchange Act (429/2002 Coll.). The stock market in Slovakia is among the smallest in Europe, and dominated by bonds, which constitute 95 percent of the sales volume.  In 2021, the total volume of transactions at the BSSE reached €241 million (a 26 percent increase compared to 2020).  As of December 31, 2022, the total nominal value of book-entry securities in Slovakia’s Central Depository of Securities reached €110 billion, compared to €102 billion in 2021. The nominal value of shares was roughly €37 billion and the value of bonds €72 billion.

The European Single Market and existing European policies facilitate the free flow of capital.  Slovakia respects International Monetary Fund (IMF) Article VIII by refraining from restricting payments and transfers for current international transactions.  Credit is allocated on market terms in Slovakia through a range of instruments and is available to foreign investors under the same conditions as apply to domestic entities.

Money and Banking System

Slovakia joined the Eurozone on January 1, 2009, becoming part of the Euro system, which forms the central banking system of the euro area within the European System of Central Banks. The National Bank of Slovakia (NBS) is the independent central bank of the Slovak Republic.

Most banks operating in Slovakia are subsidiaries of foreign-owned institutions.  Slovak branches operate conservatively and showed strong resilience during the 2009 financial crisis and subsequent EU-wide stress tests.  The combined total assets of the financial institutions active in the Slovak market were more than €114 billion and the total capital adequacy ratio of Slovak banks reached 19.2 percent on average at the end of June 2022.

Despite economic turmoil caused by the COVID-19 pandemic, and more recently, the combined inflation and energy crises, Slovakia’s financial and banking sector continues to be stable and profitable. The share of non-performing loans (NPL) continued its decline throughout 2022 and fell below 3 percent. The net profit of Slovak banks reached €828 million in 2022, compared to €726 million the previous year. The annualized return on equity of Slovak banks decreased slightly to 7.2 percent in Q2 2022 but remained close to the EU median of 8.2 percent. While rates on mortgages and other consumer credit increased rapidly in 2022, the NPL ratio in the consumer segment is expected to remain broadly stable (2.7 percent for mortgages and 10.8 percent for consumer loans by 2024 in the central bank’s most pessimistic scenario) as the NBS has put in place relatively strict macroprudential measures. Throughout 2022, the NBS raised capital cushion requirements for banks and commercial banks, reacted to the growing overall risks in the sector by increasing allowances for loan and lease losses, and by preventively classifying an increasing share of loans into level 2 according to IFRS 9.

Foreign nationals can open bank accounts by presenting their passport and/or residence permit, depending on the bank.

Foreign Exchange and Remittances

Foreign Exchange

Slovakia joined the Eurozone on January 1, 2009.  The exchange rate is free floating.

The Foreign Exchange Act (312/2004 Coll.) governs foreign exchange operations and allows for easy conversion or transfer of funds associated with an investment.  The Act liberalizes operations with financial derivatives and abolishes any limits on the export and import of domestic and foreign banknotes and coins.  It also authorizes Slovak residents to open accounts abroad and eliminates the obligation to transfer financial assets acquired abroad to Slovakia.  Slovakia meets all international standards for conversion and transfer policy.  Non-residents may hold foreign exchange accounts.  No permission is needed to issue foreign securities in Slovakia, and Slovak citizens are free to trade, buy, and sell foreign securities.

Remittance Policies

The basic framework for investment transfers between Slovakia and the United States is set within the 1992 U.S.-Slovakia Bilateral Investment Treaty.

Slovakia does not impose limitations on remittances. Dividends are taxed at seven percent. Transfer pricing for controlled transactions must be based on market prices. An obligation to pay a 21 percent tax applies to companies that are moving their assets or activities abroad.

Sovereign Wealth Funds

Slovakia does not maintain a Sovereign Wealth Fund.  Slovak Investment Holding (SIH) is a fund of funds fully owned by the Slovak Guarantee and Development Bank.  Resources are allocated as revolving financial instruments, through financial intermediaries or directly to final beneficiaries, and focus on strategic domestic investment priorities in transport infrastructure, energy efficiency, waste management, SMEs, and social economy.

There are 93 fully or partially state-owned enterprises (SOEs) in Slovakia that employ approximately 85,000 employees. SOEs are mostly active in strategic sectors, including health and social insurance, ground transportation, and energy.  Gas industry SOEs are the most profitable with SPP Infrastructure (gas infrastructure) at the top of the list with a profit of €268 million in 2021. Of the three largest employers in Slovakia, two of them are SOEs: ZSR, a rail infrastructure company with a net loss of almost €20 million in 2021 and €3.8 billion in assets, and the Slovak postal service Slovenska Posta, with a net loss of almost €12 million in 2021 and assets worth almost €800 million. ZSR employs more than 13,500 people and Slovenska Posta has a staff of over 12,000. Five SOEs are among the ten largest employers in Slovakia.

Among these Narodna Dialnicna Spolocnost (National Highway Company) has the most assets, totaling almost €11 billion.  The second largest is SPP Infrastructure with almost €6 billion.  The 30 state-owned enterprises with the most assets total roughly €25 billion in assets collectively.  In 2021, the Slovak state budget received roughly €484 million in revenue from SOEs with €255 million coming from SPP and another €193 million from key electricity distribution companies ZSE, SSE, and VSE. Slovenske Elektrarne (SE), a major utility company with 34 percent state ownership, has assets worth almost €14 billion. According to the government’s Value for Money unit, 37 percent of SOEs are rated as being in a good financial health, while the same percentage are rated as have serious financial problems.

In 2019, Transparency International Slovakia (TIS) published a ranking of 100 Slovak companies with state, municipal, and regional ownership, assessing their openness in publishing economic results and access to information. TIS deemed these SOEs to be generally non-transparent, with limited openness to public control. In December 2020, the Supreme Court responded to a TIS complaint regarding SPP’s concealment of the salaries paid to its board members, ruling that SOEs manage public funds and citizens have a right to know how they manage them.  Wider concerns over transparency of public tenders persist, including those involving the SOEs.

A company is designated as a SOE in Slovakia based on its ownership, not the legal structure of the company. Most SOEs are structured as joint-stock companies governed by boards that include government representatives and government appointees, and the government plays a key role in SOE decision making.  SOEs with more than fifty employees, €4 million in assets, or an €8 million turnover threshold are required to publish their audited financial statements in accordance with the Accounting Act.  They submit their audited financial statements to the Finance Ministry’s dedicated portal.

Slovak SOEs are largely organized by their respective sectoral ministry. Most ministries publish a list of companies in which they have partial or full ownership on their web portals.  The list includes SOE equities and profits broken down by enterprise and is publicly available.

SOEs competing in the domestic market operate in accordance with commercial considerations, on terms that other market participants would offer or accept. SOEs competing in the domestic market provide non-discriminatory treatment in their purchase and sale of goods or services. SOEs competing in the domestic marketplace also compete internationally, mainly in the EU. So far, Slovak SOEs have not made investments in the United States.

Slovakia’s Act on State-Owned Enterprises (111/1990 Coll.) is consistent with the OECD Guidelines on Corporate Governance for SOEs.

Privatization Program

Foreign investors are free to participate in privatization programs for SOEs, however, no privatization efforts are currently under way.  Privatization programs are usually executed through direct sale, although Slovakia tends to complete large privatization projects through public tenders, especially in the energy sector.

According to the Act on Transfer of State Assets to Other Entities (92/1991 Coll.), respective ministries play a central role in the SOE privatization process.  Previous privatization programs commonly resulted in foreign investors bidding and winning the tenders.

As an OECD member, Slovakia adheres to the OECD Guidelines for Multinational Enterprises which lay out a due diligence approach to responsible business conduct.  A  National Contact Point (NCP)   promotes these guidelines among the wider public (business community, government, trade unions, etc.) and to facilitate resolution when specific instances have been identified. Slovakia has adopted and agreed to support and monitor the implementation of the OECD Due Diligence Guidance for Responsible Business Conduct but has not adopted any specific requirements for businesses to conduct due diligence or reporting regarding human rights or other responsible business conduct issues.

The NCP can be contacted here:

Ministry of Economy of the Slovak Republic
The Strategy Unit
Department of Bilateral Trade Cooperation
Mlynské nivy 44/A827 15 Bratislava 212
Slovak Republic
Tel.: +421 2 4854 2309 E-mail: nkm@mhsr.sk 

Many companies and NGOs adhere to the principles of RBC and actively promote and advocate for this concept. The most significant program is the Via Bona Awards, developed by the Pontis Foundation, which annually recognizes Slovakia’s best RBC programs.  The American Chamber of Commerce in Slovakia also plays an important and active role in promoting and advocating for RBC.  Organizations active in promoting and monitoring RBC are able to do their work freely and are often able to secure funding from government sources.

As an EU member state, Slovakia adheres to the 2017/821 regulation based on the Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas. The country also enforces similar domestic measure through Act 332/2020 Coll. regulating supply chain due diligence for companies that source minerals from conflict-affected areas.

The Slovak Public Procurement Act has integrated several RBC objectives into the public procurement process.

In 2018, the Slovak Association of Corporate Governance, a non-profit civic organization grouping CEOs and managers from two dozen companies, issued a Code of Administration for state-owned companies to use as a guideline. The Ministry of Interior refers to the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions on its website. The Ministry of Labor, Social Affairs and Family continues to refer to Howard R. Bowen’s 1953 text on Social Responsibilities of the Businessman for its definition of social responsibility. The Ministry of Labor has not noticeably increased awareness of RBC in recent years but has added the topic of Corporate Social Responsibility to its webpage on social responsibility.

Slovakia is a party to the Aarhus Protocol. Consumer protection is guaranteed and enforced through the Civil Rights Act, Consumer Protection Act, and the Act on E-Commerce. In line with OECD Guidelines, Slovakia adopted key legislation on product safety, protection of the economic interests of consumers, and legislative norms on consumer health protection enforced by the Department of Consumer Protection at the Ministry of Economy. The Slovak Trade Inspection authority supervises the implementation of Consumer Protection Act (634/1992 Coll.).

In 2018, the Slovak National Centre for Human Rights established a National Focal Point for Business and Human Rights with the aim to mitigate negative impacts of business activities on human rights in Slovakia. Slovakia accepted the United Nations Guiding Principles on Business and Human Rights and has a dedicated working group tasked with preparing a national action plan on business and human rights.

Slovakia’s principle human rights challenges are related to the poor living standards and societal discrimination of the sizable local Roma minority, which according to some estimates makes up nearly 10 percent of the total population of Slovakia. According to civil society organizations, a large part of the Slovak Roma minority lives in marginalized settlements without access to basic amenities and services, and faces discrimination in almost all aspects of life, including access to education and employment. Human rights organizations also cite a lack of acceptance in society and instances of physical or verbal violence against members of the LGBTQI+ community (see section 10. Political and Security Environment for details on a recent terrorist attack against the community). Inequities in the labor market affect women and mothers, where women are less likely to be offered employment and face a 16 percent pay gap. A lack of affordable childcare effectively prevents many women from reentering the labor market after maternity leave.

Slovakia adopted Act 330/1991 Coll. that regulates the process of land consolidation and ownership rights, under which an individual or entity whose property was wrongly confiscated may have ownership reinstated. There have not been any public claims filed by indigenous or other communities for land or natural resources ownership.

The Slovak government respects the rights of workers and enforces the law prohibiting child labor and discrimination effectively, though does not specifically prohibit discrimination based on HIV status. The law concerning acceptable conditions of work and occupational health and safety is enforced effectively. There have been occasional reports of abuse targeting migrant workers and members of the Roma minority by private employers. Despite progress in recent years, the Slovak government continues to face some challenges in effectively enforcing legislation prohibiting forced or compulsory labor and trafficking in persons. NGOs reported male and female migrants, especially from non-EU countries, substance abusers, people with disabilities, and marginalized Roma, and children in welfare systems or aging out of such systems were particularly vulnerable to become trafficking victims.

The Acts on Environmental Impact Assessment (24/2006 Coll.), Air (137/2010 Coll.), and Waste (313/2016 Coll.) govern environmental protection affecting businesses.  The mandatory Environmental Impact Assessment (EIA) process applies to a number of industries, including mining, energy, steel, chemical, pharmaceutical, wood, food, agriculture, and infrastructure projects.  The Act on Air defines legal obligations for emitters, including emissions limits, monitoring, and reporting in line with valid national and EU legislation.  The Act on Waste establishes the obligations for companies producing packaging as well as rules on waste recycling and recovery.

Slovakia’s corporate governance legislation that protects and facilitates the exercise of shareholder rights and ensures equitable treatment of all shareholders, including minority and foreign shareholders. All shareholders have the right to obtain effective redress for violation of their rights and the right for compensation arrangements pursuant to this legislation. The primary sources of the legislation are the Commercial Code, the Accounting Act, and the Securities Act.

Slovakia has ratified the Extractive Industries Transparency Initiative (EITI) but is not a participant in Voluntary Principles on Security and Human Rights Initiative (VP). Slovakia is not a signatory of The Montreux Document on Private Military and Security Companies nor a participant in the International Code of Conduct for Private Security Service Providers’ Association (ICoCA).

Additional Resources

Department of State

Department of the Treasury

Department of Labor

Climate Issues

Slovakia’s environmental regulatory framework is in line with EU policies. Limits imposed by Slovak environmental legislation are stricter than the OECD average, though some critics note an implementation and enforcement lag. The government’s “Environmental Policy Strategy until 2030,” adopted in 2019, outlines a path toward increased environmental protection and reduced use of non-renewable resources by 2030. In 2020, Slovakia adopted its Integrated National Energy and Climate Plan (INECP) for 2021 to 2030 to meet its EU greenhouse gas emission (GHG) reduction commitments. The INECP addresses five dimensions: decarbonization, energy efficiency, energy security, internal energy markets and research, innovation, and competitiveness. Slovakia has committed to the EU Green Deal and endorsed the EU Commission’s “Fit for 55” legislative package, with the aim of achieving a 55 percent reduction of GHG emissions by 2030 and carbon neutrality by 2050. In January 2020, the Slovak government passed the “Low-Carbon Development Strategy until 2030 with a View to 2050.” This Strategy provides a roadmap to transition to a low-carbon economy and introduces sectoral GHG emission reduction targets through 2030. Both the INECP and the Low-Carbon Strategy will be updated in 2023, to reflect the new EU-wide GHG emission reduction target of 55 percent and updated EU emissions calculations. As of March 2023, the government is working on a new comprehensive Climate Change and Low-Carbon Transformation Act.

The state provides regulatory incentives, many of which can be co-financed with EU funds. However, the government continues to face challenges in calibrating for maximum uptake; in March 2022 the Environment Ministry reported that only 38 percent of the total allocated for the State Program for Remediation of Environmental Burdens budget was expended.

In response to the energy crisis caused by Russia’s weaponization of energy, the Slovak government took unprecedented steps to reduce the country’s legacy dependence on Russian primary energy imports, and in 2023 set aside €3.4 billion (2.8 percent of GDP) to offset ballooning energy costs for both households and businesses. In addition, energy intensive industry leaders have advocated for higher levels of reimbursement from the Environmental Fund for offsetting electricity prices in areas with a high risk of carbon leakage. The Fund, which is currently valued at over €1 billion and receives contributions from the sale of emission allowances, returned an estimate €11million to industry in 2022, compared to roughly €3 million in 2021.

Some large industrial emitters are working with the government to develop comprehensive emission reduction action plans that include state aid schemes. Electromobility and hydrogen have been government priorities, with the government taking steps to increase the number of EVs in their fleets and supporting plans to build out an EV charging station network. State energy authorities have been working on a plan to increase electricity network capacity, solutions to which may be an opportunity for foreign investment.

As one of the EU’s most industrialized countries with a large energy-intensive economy, Slovakia will have to invest significant public and private resources to achieve its ambitious climate and environmental objectives. Slovakia has allocated €2.17 billion of its €6.3 billion Recovery and Resilience Plan towards green investments in energy efficiency and building renovation, renewable energy, sustainable transport, decarbonization, and climate adaption and biodiversity. Some 40 percent of the €13.6 billion of European Structural and Investments Funds available to Slovakia in the 2021-2027 programing period will also be spent on green investments. Polluters may access significant public funding for projects related to decarbonization, energy efficiency, energy storage, and renewable sources from the Modernization Fund and the Environmental Fund, which are funded from profits from Emission Trading Schemes (including the EU ETS) covering about 50 percent of all emissions.

Slovakia is also eligible for nearly €1 billion in EU funding from the EU’s “Just Transition Fund” to transition away from coal. Slovakia committed to end the use of domestic coal in electricity and heat generation by 2023. It pledged to end state aid for coal mining beginning January 2024.

In January 2022, the government launched a new deposit return scheme for plastic bottles and aluminum cans in which larger retailers are required to participate. In the first full year of implementation, the scheme achieved a return rate of recyclable packaging of over 70 percent, and the government aims to increase this number to 90 percent by 2025.

Slovakia has supported EU legislative proposals aimed at limiting forest degradation by removing products that contribute to deforestation from EU supply chains. Farmers and foresters are able to claim financial support to transition to climate-friendly practices, such as planting hedges or trees, growing legumes, using catch crops and cover crops, conserving agriculture and peatland maintenance, afforestation, and forest restoration.

The Slovak Environmental Inspectorate provides regulatory relief to certified companies by reducing the frequency of inspections to once every ten years. Landowners are granted property tax relief for land use choices, such as leaving intact habitats such as swamps, sodium-rich soils, peat bogs and groves, windbreaks, and water protection zones. Slovakia also introduced tax incentives for environmentally friendlier modes of transport such as a tax exemption for electricity and natural gas in railway, water, and public transport. Slovakia however remains below EU average in the implementation of environment-friendly regulatory incentives. Slovakia’s National Action Plan for Green Public Procurement (GPP) mandates that central and local contracting authorities apply GPP rules. The Slovak Environment Agency organizes educational activities on green public procurement for public authorities. Within its Strategy for a Greener Slovakia, a component of the Environmental Policy Strategy, the Slovak government committed that GPP will cover at least 70 percent of the total value of public procurement by 2030.
Slovakia ranked 20th on the 2021 Global Energy Innovation Index, and scored 4.5 points in the 2022 MIT Technology Review’s Green Future Index, putting it at 46th place. According to Global Green Growth Institute’s 2019-2020 Global Green Growth Index, Slovakia ranked 7th in Europe, improving 10 places since 2005.

Giving or accepting a bribe constitutes a crime according to Slovak law.  Since 2021, the law was expanded to include a definition of indirect corruption, making it a crime to accept or offer unjustified benefits or undue advantages. Slovak criminal law incorporates criminal liability for legal persons, including corporations.

Survey data suggest that corruption concern among the public and investors are present, though gradually improving.  In their 2022 evaluations, the European Commission and the Group of States Against Corruption (GRECO) noted slow progress in the fight against corruption in the country. According to the 2022 Eurobarometer survey, 76 percent of respondents believed that corruption is part of Slovakia’s business culture (above the EU average of 61 percent).  While 41 percent of respondents noted an increase in the level of corruption, this was down from 52 percent in 2019, and 45 percent said the level stayed the same. However, in Transparency International’s 2022 Corruption Perceptions Index, Slovakia ranked 49th out of 180 countries, up eleven spots since 2020, and improved its score to its all-time best.  Transparency attributed the trend to the increased efforts and performance in the investigation and prosecution of corruption, as well as the government’s anti-corruption measures.

There is no data available on whether U.S. firms identify corruption as an obstacle to foreign direct investment. A regular business climate survey conducted by seven foreign chambers of commerce showed positive movement in the business community’s assessment of the government’s fight against crime and corruption, moving from a negative attribute in surveys since 2004 to a neutral one in 2021 and 2022. In 2022, the survey continues to flag transparency concerns in the public procurement.

The ruling coalition’s agenda has focused heavily on strengthening anti-corruption measures.  In 2020, it amended legislation regulating selection procedures for the Prosecutor General and the Special Prosecutor, and introduced new leadership in key law enforcement institutions. A new Whistleblower Protection Office commenced operations in September 2021.  In 2019, Parliament streamlined an anti-shell company law that requires private companies to reveal their ownership structure in the Register of Public Sector Partners before entering into business contracts with public entities.  Disclosure of contracts in the Central Registry of Contracts by public authorities and state-owned enterprises is compulsory.

In addition to EU legislation, the public procurement law provides for fair and transparent government procurement, and the Public Procurement Office (PPO) oversees its implementation, including countering possible conflicts of interest. The PPO has a reputation for being effective and independent. A major reform of public procurement law designed to reduce red tape and gold-plating by speeding up procurements organized by government agencies and municipalities entered into force in 2022.

Since 2021, a new law on asset seizure and forfeiture prevents the legalization of assets through their transfer to third parties, and thus extends to family members or close associates. The Office for the Management of Seized Assets should provide for streamlining of the related processes in close cooperation with law enforcement.

In January 2020, a regulation on conflicts of interest in the civil service was adopted by Cabinet decree, introducing a Code of Conduct for Civil Servants (400/2019 Coll.). NGO analysts and GRECO point out that conflict of interest and asset declaration regulations lack the necessary level of detail to be implemented and enforced in practice. In its Integrity Review, the OECD recommends Slovakia consider strengthening institutional and technological capacity to process, verify, and audit asset declarations for public officials, and to strengthen parliamentary oversight of adherence to integrity standards. Despite the government’s commitment to address the absence of lobbying regulation, neither a regulatory framework for lobbying nor an associated mandatory register of lobbyists and a code of conduct have been introduced. The OECD Integrity Review published in March 2022 acknowledges Slovakia’s progress towards a strategic approach to public integrity but recommends a range of measures to step up its implementation and delivery of goals. These include applying a risk-based approach, allocating appropriate financial resources, strengthening monitoring and evaluation, and fostering a culture of public integrity.

Corruption-related probes, including those against former high-ranking officials and influential businesspeople advanced in 2022; during which 83 individuals were indicted for corruption-related crimes, down from 136 in 2021 and 124 in 2020.

Government authorities do not require private companies to establish internal codes of conduct that would prohibit bribery of public officials. Businesses have, however, adopted such measures voluntarily, especially those with foreign ownership that often have company-wide internal codes of conduct. In many cases such companies extend these codes of conduct to their contractors.  Public entities and private companies with at least 50 employees are required by law to set up an internal channel to report corruption or unlawful conduct.

NGOs investigating corruption do not enjoy any special protection, however, they are regularly consulted by government agencies, such as the Prime Minister’s Office, the Ministry of Justice, and the Public Procurement Office.

Slovakia is a party to international treaties on corruption.  Among them are the OECD Convention on Combating Bribery of Foreign Public Officials, the UN Anti-Organized Crime Convention (UNTOC), the UN Anti-Corruption Convention (UNCAC), and the Criminal Law Convention on Corruption and Civil Law Convention on Corruption.  Slovakia is a member of the Group of States against Corruption (GRECO) and the Open Government Partnership (OGP). The Corruption Prevention Department of the Prime Minister’s Office is a member of the Council of Europe’s Network of Corruption Prevention Authorities. Slovakia is a party to the International Anti-Corruption Academy (IACA).

Resources to Report Corruption  

Contact details of government agencies responsible for combating corruption:

Daniel Lipsic
Head of the Special Prosecutor’s Office
Office of the Special Prosecution under the General Prosecutor’s Office
Suvorovova 4343
902 01 Pezinok
Telephone: +421 33 690 3196
Podatelna.USPGP@genpro.gov.sk

Lubomir Danko
Director of the National Criminal Agency
Ministry of Interior, National Police Headquarters
Racianska 45
812 72 Bratislava
Telephone: +421 964052102
korupcia@minv.sk 

Contact details of “watchdog” organizations:

Michal Pisko
Executive Director
Transparency International Slovakia
Bajkalska 25
82718 Bratislava
Telephone: +421 905 613 779
pisko@transparency.sk 

Zuzana Petkova
Executive Director
Stop Corruption Foundation
Stare Grunty 18
841 04 Bratislava
petkova@zastavmekorupciu.sk 

Peter Kunder
Executive Director
Fair Play Alliance
Hubeneho 7
P. O. Box 75
830 05 Bratislava
Telephone: +421 911 724 189
kunder@fair-play.sk 

Politically motivated violence and civil disturbance are rare in Slovakia, but with the protracted post-COVID-19 pandemic economic recovery, antagonistic domestic political scene, and Russia’s full-scale invasion of Ukraine, the country has seen an increased level of political and societal polarization.  Several political marches and civic protests occurred throughout the year, often attracting hundreds to thousands of people, which remained largely peaceful.

Slovakia will hold early elections on September 30, 2023, to replace a provisionally-mandated government appointed in January 2023. Transfers of power have historically been orderly, occurring without incident.

There have been no recent reports of politically motivated damage to property, projects, and installations nor violence directed toward foreign-owned companies.

Slovakia is one of the most industrialized economies in the EU with almost 28 percent of the workforce employed in industry, 70 percent in services (including construction), and the rest in agriculture.  The unemployment rate fell to from 6.96 percent in January 2022 to 5.82 percent in January 2023, though unemployment still remains above the pre-pandemic low of 4.92 percent in December 2019.  Long-term unemployment remains prevalent in poorer regions, especially in the marginalized roma communities.

Foreign companies frequently praise the labor force’s motivation and productivity, and especially commend younger workers for their proficiency with foreign languages.  However, businesses consistently note the growing gap between their labor market needs and the qualifications of recent graduates, as well as the education system’s insufficient focus on teaching critical thinking and soft skills.  Slovak PISA (Program for International Student Assessment) scores are persistently below the EU average. The health and IT sectors are among those facing the most severe long-term labor shortages, but most regions also report shortages in workers for lower-skill construction and machinery operation jobs.

The minimum wage law indexes a minimum wage to overall wage growth in the economy.  The minimum wage increased 8.4 percent to €700 per month in 2023.  Due to record-high inflation, nominal wages in the economy grew by approximately 7.7 percent on average, whereas real wages decreased by 4.5 percent in 2022.  The average nominal wage in 2022 increased to €1,304 per month, with wages in the hospitality, construction, and retail segments increasing the most at 26, 14.3, and 13.1 percent y-o-y, respectively. In 2021, the average hourly labor cost was €14.2, significantly lower than the EU average of €29.1.

According to Eurostat, the gender pay gap increased from 15.8 percent in 2020 to 16.6 percent in 2021 and remained well above the EU average of 12.7 percent. The gender employment gap declined from 7.7 to 6.4 percent in 2022.  A lack of affordable childcare facilities for children below three years of age combined with three years of paid maternity and parental leave discourages mothers from returning to work and exacerbates the gender pay gap.  According to the European Commission Education and Training Monitor from January 2022, participation in early childhood education in Slovakia remains among the lowest in the EU.  As part of its Recovery and Resilience Plan, Slovakia has allocated significant resources to improve the availability of formal childcare and early childhood education.

The Slovak Labor Code (311/2001 Coll.) governs the national labor market, including for foreigners.  Businesses cite burdensome labor regulations, frequent and arbitrary changes to the labor code, and a lack of stakeholder input as some of the obstacles to doing business in Slovakia.  Employers also note that the system for determining the annual increase in the minimum wage are disconnected from productivity gains, weighing on production costs and reducing the competitiveness of local businesses in comparison to foreign competitors.

As of March 2022, a permanent “kurzarbeit” social insurance program entered into force, under which employers may reduce their employees’ work hours instead of laying them off, while receiving a government subsidy of up to 60 percent of a worker’s salary. The “kurzarbeit” scheme may be triggered in an extraordinary situation, including, for example, the COVID-19 pandemic.

On January 1, 2020, the Amendment to the Act on Employment Services (5/2004 Coll.) simplified the process for hiring non-EU nationals by decreasing wait times for temporary residence permits from 90 to 30 days and reducing the wait time for work permits to 20 days.

The number of foreign nationals from both EU and non-EU countries in the Slovak labor market has been steadily increasing since Slovakia’s 2004 accession to the EU, except for a notable dip at the onset of the COVID-19 pandemic. In 2022, the number of foreign workers in Slovakia increased significantly in connection with Russia’s full-scale invasion of Ukraine and the ensuing refugee flows. In the first 12 months more than 1.1 million refugees crossed the border into Slovakia, and more than 110,000 Ukrainians received temporary protection status in Slovakia, allowing them to access the labor market under the same conditions as Slovak nationals. A large share of these temporary protection status holders continues to reside in Slovakia. According to government estimates, more than 18,000 Ukrainian refugees have found legal employment in Slovakia as of March 2023. Prior to Russia’s February 24 full-scale invasion of Ukraine, there were an estimated 167,000 foreign nationals residing in Slovakia, of which 66,000 were legally employed.

The Anti-discrimination Act (365/2004 Coll.) and the Labor Code ban discrimination in the workplace based on gender, race, nationality, sexual orientation, health impairment, age, language, religion, and political affiliation. It does not, however, specifically prohibit discrimination based on HIV status. Activists frequently allege that employers refuse to hire Roma; an estimated 70 percent are considered unemployed, although many are believed to work in the informal economy.

Slovakia has a standard 40-hour workweek, and the law mandates a maximum workweek of 48 hours, including overtime, except for employees in the health-care sector, whose maximum work week is 56 hours.  The Labor Code caps overtime at 400 hours annually and sets minimum remuneration for overtime and work during public holidays or on weekends.  There are no general concerns regarding compliance with international labor standards.

The Labor Code differentiates between layoffs and firing.  The cost to lay off employees stipulated by the Labor Code is generally less expensive than in Western Europe, ranging from two to three months’ severance pay, depending on the employee’s time in service.

Social insurance contributions are compulsory and include healthcare, unemployment, and pension insurance.  Both employers and employees must pay social contributions – the employer’s combined social and health contributions amount to 35 percent of wages. The combined tax and mandatory contribution premium on labor in Slovakia is above average in the region.

Collective bargaining is voluntary and takes place without interference from the state. There is a formal trialogue used in negotiating national minimum wage levels for the following year. In absence of an agreement, which was the norm for several years, the minimum wage is automatically adjusted using a mathematical formula based on average wages. Provisions agreed in multi-employer as well as single-employer collective agreements are legally binding for the contracting parties.  EU Agency Eurofound reports up to 35 percent of employees in the national economy are covered by a collective agreement.  At the sectoral or regional level, the coverage is about 10 percent. No official national data exist on collective bargaining coverage.  The standard mechanisms for dealing with collective labor disputes is conciliation – used in vast majority of cases – and arbitration.

Union membership has declined in recent years.  A “tripartite arrangement” is used as a discussion platform including state representatives, labor unions, and employer associations.  Slovakia is a member of the International Labor Organization and has ratified all eight core conventions.  Labor strikes are infrequent in Slovakia.

As a high-income economy, Slovakia does not qualify for DFC support outside of energy infrastructure projects and political risk insurance. Slovakia is a member of the World Bank Group’s Multilateral Investment Guarantee Agency (MIGA) which also provides political risk insurance.

Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy
Host Country Statistical source* USG or international statistical source USG or International Source of Data:  BEA; IMF; Eurostat; UNCTAD, Other
Economic Data Year Amount Year Amount
Host Country Gross Domestic Product (GDP) ($M USD) 2021 $105.67 2021 $116.53 www.worldbank.org/en/country
Foreign Direct Investment Host Country Statistical source* USG or international statistical source USG or international Source of data:  BEA; IMF; Eurostat; UNCTAD, Other
U.S. FDI in partner country ($M USD, stock positions) 2021 N/A 2021 779 BEA data available at https://apps.bea.gov/international/factsheet/
Host country’s FDI in the United States ($M USD, stock positions) 2021 N/A 2021 N/A BEA data available at https://apps.bea.gov/international/factsheet/
Total inbound stock of FDI as % host GDP 2020 56 2021 51.6 UNCTAD data available at

https://unctad.org/topic/investment/world-investment-report

* Source for Host Country Data: Statistical Office of the Slovak Republic, available at www.statistics.sk , data published on December 21, 2022; National Bank of Slovakia, available at www.nbs.sk , preliminary data published on December 1, 2021.

(Note: Final end-of-year data are usually published in Q2 of the next year. Values from host country sources are converted from their original euro denomination with the conversion rate valid at the end of the respective year.  Data on FDI is inconsistent since much of U.S. FDI is channeled through subsidiaries located inside the EU. The most recent host country statistical data on FDI is from 2020. Complete data on FDI positions are not available since it has been suppressed for confidentiality reasons/to avoid disclosure of data of individual companies. . End note.)

Table 3: Sources and Destination of FDI
Direct Investment from/in Counterpart Economy Data
From Top Five Sources/To Top Five Destinations (US Dollars, Millions) in 2021
Inward Direct Investment Outward Direct Investment
Total Inward 59,367 100% Total Outward 5,418 100%
The Netherlands 12,613 21.2% Czech Rep. 2,548 47.0%
Austria 9,607 16.2% Poland 427 7.9%
Czech Rep. 7,817 13.2% United Kingdom 384 7.1%
Germany 4,148 7.0% Austria 356 6.6%
Rep. of Korea 4,056 6.8% Cyprus 208 3.8%
“0” reflects amounts rounded to +/- USD 500,000.

* Source for Country Data: International Monetary Fund .

Senior Economic Officer
U.S. Embassy Bratislava
Hviezdoslavovo námestie 5
811 02 Bratislava
+421 (2) 5922 3069
contact_bratislava@state.gov

On This Page

  1. EXECUTIVE SUMMARY
  2. 1. Openness To, and Restrictions Upon, Foreign Investment
    1. Policies Towards Foreign Direct Investment
    2. Limits on Foreign Control and Right to Private Ownership and Establishment
    3. Other Investment Policy Reviews
    4. Business Facilitation
    5. Outward Investment
  3. 2. Bilateral Investment and Taxation Treaties
  4. 3. Legal Regime
    1. Transparency of the Regulatory System
    2. International Regulatory Considerations
    3. Legal System and Judicial Independence
    4. Laws and Regulations on Foreign Direct Investment
    5. Competition and Antitrust Laws
    6. Expropriation and Compensation
    7. Dispute Settlement
      1. ICSID Convention and New York Convention 
      2. Investor-State Dispute Settlement 
      3. International Commercial Arbitration and Foreign Courts 
    8. Bankruptcy Regulations
  5. 4. Industrial Policies
    1. Investment Incentives
    2. Foreign Trade Zones/Free Ports/Trade Facilitation
    3. Performance and Data Localization Requirements
  6. 5. Protection of Property Rights
    1. Real Property
    2. Intellectual Property Rights
  7. 6. Financial Sector
    1. Capital Markets and Portfolio Investment
    2. Money and Banking System
    3. Foreign Exchange and Remittances
      1. Foreign Exchange
      2. Remittance Policies
    4. Sovereign Wealth Funds
  8. 7. State-Owned Enterprises
    1. Privatization Program
  9. 8. Responsible Business Conduct
    1. Additional Resources
    2. Climate Issues
  10. 9. Corruption
    1. Resources to Report Corruption  
  11. 10. Political and Security Environment
  12. 11. Labor Policies and Practices
  13. 12. U.S. International Development Finance Corporation (DFC), and Other Investment Insurance or Development Finance Programs
  14. 13. Foreign Direct Investment Statistics
  15. 14. Contact for More Information
2023 Investment Climate Statements: Slovakia
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