Slovakia Market Entry

Slovakia Market Entry

Subchapters:

  • Market entry
  • Forms and conditions of operation on the market
  • Marketing and Communications
  • Issues of intellectual property protection
  • Public procurement market
  • Payment terms, payment ethics and resolution of commercial disputes
  • Visas, fees, specific conditions of travel to the territory
  • Employment of citizens from the Czech Republic
  • Fairs and events

Market entry

The Slovak Republic (SR) is the first choice for export for most Czech companies and entrepreneurs. It is due to geographical, linguistic and cultural proximity. Before entering the Slovak market, it is necessary to pay attention to market research, find out potential interest in the product or service and prepare a business and marketing plan. As in the Czech Republic, the competition is huge. The Slovak customer makes a decision based on quality and price. The sale of Czech products is usually carried out directly to a Slovak customer, especially for goods of an investment nature (e.g. machinery, means of transport, energy equipment) or to a wholesale network (consumer goods, food, etc.). The Slovak retail network is under the strong influence of large multinational chains. For food, the retail network is very concentrated and difficult to enter. Slovak importers do not want to trade through intermediaries and are looking for direct contacts with manufacturers, which usually means a lower price for the end customer in the Slovak Republic. An important factor is the provision of warranty and post-warranty service. Check smber for agriculture and fishing facts of Slovakia.

Czech products are often used due to their price competitiveness compared to products from Western Europe. On the other hand, however, Czech companies continue to underestimate their own promotion. For distribution activities in the Slovak Republic, a Czech company does not need to set up an organizational unit in the Slovak Republic. The decision to establish or not to establish an organizational unit of a foreign company in Slovakia depends on economic factors and the field of activity. If it is only a short-term test, the Czech company does not need to set up an organizational component. However, if a Czech company plans to expand its activities in Slovakia, sooner or later the establishment of an organizational branch of a foreign (Czech) company in Slovakia cannot be avoided. A Czech company can ensure the distribution of products in Slovakia either with its own employees or contractually through local sales representatives. In the case of sales representatives, it is not labor law, but about a commercial relationship. This is governed by §§ 652 to 672a of Act No. 513/1991 Coll., Commercial Code, as amended.

The Slovak Republic, like the Czech Republic, is part of the EU customs union, which means the application of the same customs rates and common rules to third countries and the absence of customs duties and other restrictions on mutual trade. Trade with third countries is governed by special customs regulations (e.g. the Customs Code, regulations of the European Commission and the Council of the EU). Import and export restrictions in Slovakia apply to the following goods:

– defense industry products
– import, export, transfer of specified products for civilian use (weapons, ammunition, black powder, smokeless powder)
– dual-use goods and technology – selected dangerous substances and preparations (chemical substances)
– drug precursors – explosive precursors – trade with steel, textiles, clothes, wood
– instruments of torture

Trading in the above-mentioned products is subject to an approval (licensing) procedure. The State Institute for the Control of Medicines requires that holders of permits for the distribution of medicines to the wholesale trade report the importation of medicines that are not registered in the Slovak Republic, according to § 18 paragraph 1 letter h) Act No. 362/2011 Coll. on medicines and medical devices. Unregistered medicines can only be imported into the Slovak Republic on the basis of a permit from the Ministry of Health of the Slovak Republic.

Import and export of goods within the EU are not subject to customs duties and there is no customs procedure. Companies and entrepreneurs are obliged to report their trade flows in the EU territory when the set values ​​are exceeded, by registering in the Intrastat system. If in a calendar year the value of a company’s cumulative exports to EU countries reaches 400,000 euros, then this company must register with Intrastat. The cumulative value of imports is 200,000 euros. If these values ​​are exceeded, the report on the export of goods and the import of goods is made electronically via the CEP system to the relevant customs office on a monthly basis. The minimum value of a business transaction for reporting to Intrastat is 200 euros.

Trade with third countries is burdened with more administration. In customs proceedings, the entrepreneur can represent himself or use the services of an expert. It is advisable to use this service if the entrepreneur does business with third countries on an exceptional basis and it does not make sense for him to employ his own customs declarant. Customs clearance is usually provided by transport companies (forwarders). The customs procedure begins with the submission of a customs declaration, which must contain all required attachments (e.g. invoices, purchase contract, proof of transport of goods, proof of goods insurance). The customs declaration for the export and import of goods is submitted electronically. VAT is not applied when exporting goods. Customs procedures for imports from third countries are mandatory for every shipment from July 1, 2021. On the basis of the customs declaration, the customs office assesses the customs debt, which consists of import duty, VAT and possibly also consumption duty. All EU-based entrepreneurs communicating with customs must apply to register and be assigned an EORI (Economic Operators Registration and Identification system) number. This number is used when dealing with customs authorities throughout the EU. In Slovakia, the registration office is the Financial Directorate of the Slovak Republic in Poprad.

Forms and conditions of operation on the market

A Czech company can do business in Slovakia through the following forms:

– limited liability company (sro)
– joint stock company (as)
– limited partnership (ks)
– public company (vos)
– branch of a foreign company

The main form of business is a limited liability company (sro). It can be founded by one or more natural persons, but also by one or more legal entities. The minimum deposit of each partner is 750 euros. The share capital of a limited liability company is at least 5,000 euros. The main advantage of an s.r.o. is the limitation of liability to the amount of the basic capital. On the other hand, a sole proprietor guarantees all his assets. Establishing an s.r.o. usually takes 7-10 working days.

Necessary documents for setting up a company include: founding agreement, signature samples of executives, statement of the founder, statement of the deposit manager, etc. Registration in the Commercial Register at the relevant district court is a necessary step for setting up a company. Registration costs 150 euros (sro, limited partnership, public trading company) or 750 euros (joint stock company). The share capital of a joint-stock company is at least 25,000 euros.

Each company must also electronically apply for registration at the Tax Office to pay income tax (assignment of VAT number), at the Social Insurance Company (for paying social insurance contributions for its employees) and at the Health Insurance Company (health insurance contributions).

A Czech citizen can also do business in Slovakia as a self-employed person. For registration, the following documents must be submitted to the local trade office:

– an extract from the criminal record
– a notarized copy of the Czech business license
– a document proving the right to use real estate (if the address of the place of business is different from the place of residence)
– consent to the processing of personal data.

The trade office registers the applicant with a health insurance company, at the Financial Office (assignment of an ID number). The trade license certificate is issued within 3 working days of the delivery of the required documents. Entrepreneurs are registered in the Trade Register. In the first year of business, the self-employed person does not have to pay Social Insurance contributions and only pays minimum health insurance. Trades are divided into free, craft and bound. For free trades, it is enough to meet the general conditions for running a trade. In the case of crafts and related trades, it is also necessary to meet special conditions for running a trade (e.g. education, length of experience in the field). The license for a free trade costs 5 euros and 15 euros for a craft or tied trade. Business can be suspended for a minimum of 6 months and a maximum of 3 years. The entrepreneur keeps simple accounting.

Marketing and communication

The costs of advertising products or services in the mass media (HSP) or on billboards near highways or first-class roads in Slovakia are high. Probably only large Czech companies can afford this. For example, advertisements for Škoda cars, Pilsner Urquell beer, telecommunications services from the O2 company, energy services from ČEZ ESCO or Energetický průmycelyho holding (EPH), banking services from mBank or Fio were recorded on various TV channels, radios and in print media in Slovakia.

The vast majority of Czech companies and entrepreneurs use, or can use, professional magazines as well as an electronic monthly magazine published by the Slovak Chamber of Commerce and Industry (SOPK) to promote their products and services on the Slovak market. Offers or requests for business cooperation can also be sent to individual industry associations and unions in Slovakia. Another option is promotion on the Internet or via various social networks (e.g. YouTube, Facebook, Instagram), which is gaining more and more importance in the current modern and progressive era.

The participation of Czech companies and entrepreneurs in industry-specific international fairs and exhibitions still remains a traditional and very effective tool for promoting products or services in Slovakia. Such events in Slovakia are well attended by customers from neighboring countries (Poland, Hungary, Austria) and are of a high standard. Bratislava and Nitra are traditional trade fair cities in Slovakia. Trade fairs and exhibitions in Trenčín have a regional rather than an international character. These can be recommended in the case of tourism for the presentation of the Moravian border regions or districts to Slovak tourists.

Czech companies that are interested in providing a presentation of their products or services or even providing so-called roadshow presentations throughout Slovakia can use the services of a number of marketing and advertising agencies in Slovakia that implement custom projects according to the customer’s wishes.

When communicating with each other, almost no meeting is complete without mentioning the current political situation. However, we recommend speaking with restraint about sensitive political topics. A certain taboo in communication should be religion and the related issue of abortion. Other communication taboos include LGBT, the gender agenda, the Slovak state during World War II and salary issues. We also do not recommend discussing too much the causes of the division of the former common state of Czechoslovakia.

Issues of intellectual property protection

Intellectual property is property of an intangible nature. It is subject to legal protection and its use is therefore subject to the consent of the author or creator. Intellectual property law includes two areas:

1) copyright and rights related to copyright – mainly related to the artistic, cultural area
2) industrial property law – mainly related to the economic, technical area.

In the field of copyright, the Copyright Act No. 185/2015 Coll. regulates relations that arise in connection with the creation and use of an author’s work or artistic performance, with the production and use of a sound recording, audiovisual recording or broadcast, with the creation or production and use computer program or database in such a way as to protect the rights and legitimate interests of the author, performer, sound and audiovisual recording producer, radio and television broadcaster, computer program author, database author and database developer. Copyright protects works (e.g. literary, musical, photographic, architectural), other objects of protection to which related rights are attached (artistic performance, sound and audiovisual recording, computer programs and databases). No registration required for copyright protection,

Industrial property law protects objects created by creative intellectual activity (e.g. inventions, technical solutions, designs, etc.), or goods and services through designations (e.g. trademarks). Registration is required to protect industrial property rights. This is provided by the Industrial Property Office of the Slovak Republic.

The following laws ensure the protection of industrial property rights in Slovakia:

– Act No. 435/2001 Coll. on patents, protection certificates
– Act No. 444/2002 Coll. on designs
– Act No. 506/2009 Coll. on trademarks

Czech companies are recommended to register industrial property rights in Slovakia. Their violation occurs even though the violation may lead to misdemeanor proceedings, civil court proceedings or criminal penalties.

Public procurement market

Since 2016, Act No. 343/2015 Coll. on public contracts (Public Procurement Act) has been in force in Slovakia. Its goal is to streamline procurement processes using the mandatory electronicization of the process. The Act defines the awarding of contracts for the supply of goods, contracts for the execution of construction works, contracts for the provision of services, design competitions, the awarding of concessions for construction works, the awarding of concessions for services and administration in public procurement. The law also defines or regulates, for example:

– electronic marketplace – public procurement announcer and his basic obligations
– financial limits – contract changes, framework agreements and concession contracts during their duration
– documentation during the entire public procurement process
– division of procurement into parts
– conditions of participation in public procurement
– ​​use of subcontractors
– criteria for evaluation of bids
– procurement in the field of defense and security, etc.

Public contracts are published in the Bulletin of the Office for Public Procurement (ÚVO), on the website: www.uvo.gov.sk

The Public Procurement Act No. 343/2015 Coll. is amended annually. The goal of the changes is to streamline and simplify the public procurement process. The latest amendment to the Act on Public Procurement, valid from 1 January 2020, shortened the deadlines for submitting tenders. The preparation of the offer has also been simplified. Fewer documents are submitted, some documents need to be processed once and are valid for 3 years. The financial limits for individual types of orders have increased The limit for direct orders for the purchase of goods, services and in the field of construction is now 180,000 euros. Due to the speculative behavior of business entities, the institute of so-called apparently groundless objections was introduced. The deposit for filing objections has increased tenfold, from 0.1% to 1% of the estimated contract value. The minimum amount of bail is 2,000 euros, the maximum amount of bail has increased to 50,000 euros.

In 2021, an amendment to the law increased the financial limit for so-called small-scale contracts, which do not fall under the scope of the law, from 5,000 euros to 10,000 euros. The amendment deleted the designation of specific and unique requirements of the subject of the contract from the law. The amendment also introduces so-called green quotas in public contracts.

Public contracts in Slovakia are published in electronic form in the Public Procurement Bulletin, which is published by the Slovak Public Procurement Office, headquartered in Bratislava. It is an independent central body of state administration. The main competences of the Office include:

– carries out state administration in the field of public procurement
– supervises public procurement
– cooperates with the European Commission and ensures the fulfillment of information obligations towards the European Commission
– publishes the Public Procurement Bulletin in electronic form
– maintains a list of entrepreneurs and a register of persons prohibited from participating in public procurement
– certifies tools and means of public procurement and accredits legal and natural persons
– methodically guides the participants in the public procurement process
– implements the Public Procurement Act No. 343/2015 Coll.

Several thousand public contracts with a total value of EUR 4-5 billion are implemented annually in Slovakia. The largest number of public contracts is announced by the state administration (71%), followed by regional self-government (24%) and others (5%). Most tenders for small and large orders are conducted electronically. Some of them only give bidders a short time to submit a bid. Therefore, first of all, it is necessary to monitor the way in which the offer is submitted and also the deadline by which the offer must be submitted. It is recommended to monitor your e-mail inbox daily and to respond in time to the request to submit an offer. Applicants for public contracts should register in the List of economic entities. Registration is valid for 3 years, which fundamentally reduces the administrative burden.

Payment terms, payment ethics and resolution of commercial disputes

Payments between Czech and Slovak companies are usually made cashless in euros within the SEPA (Single Euro Payments Area) system. According to Act No. 394/2012 Coll. on the limitation of cash payments, the maximum amount of cash payments in business transactions is limited to 5,000 euros. After the adoption of measures against tax evasion, payment morale in Slovakia improved. According to the Financial Administration of the Slovak Republic, this is evidenced by higher tax collection. In any case, it is necessary to be careful in business dealings and check the creditworthiness of business partners in Slovakia. The due date of invoices in Slovakia usually ranges from 30 to 90 days, depending on the type of goods (food, consumer goods, investment goods) and the length of cooperation between the companies.

In the event of a commercial dispute, we recommend first consulting the matter with a local law office and then, depending on the needs, turn to the court or the Arbitration Court of the Slovak Chamber of Commerce and Industry (SOPK) in Bratislava. Some law firms provide services in the Czech Republic and Slovakia (e.g. Peterka & Partners, Havel & Partners, Cottyn, Kvasňovský & Partners, PRK Partners), and therefore their services can also be used in this direction.

In the case of checking the creditworthiness of a business partner in Slovakia, we recommend contacting CRFI – Slovak Credit Bureau. In addition, it offers services in the field of obtaining information about the ownership structure or searching for key managers of a specific Slovak company. The financial situation of companies can also be verified as a preventive measure through the website of the company Finstat on the website: www.finstat.sk

Visas, fees, specific conditions for traveling to the territory

There is no visa requirement between the Slovak Republic (SR) and the Czech Republic (CR). Citizens of the Czech Republic may cross national borders with a valid passport or identity card. It is recommended that these are ID cards with a machine-readable zone as required when entering the territory of other EU countries. Minors must have their own travel document or be entered in their parents’ travel document. The Slovak Republic has been a part of the Schengen Area since December 2007. When traveling by car to Slovakia, you must have a valid driver’s license, vehicle registration certificate, and proof of payment of liability insurance (so-called green card). When transporting pets, a valid international vaccination certificate and a passport for the animal are required.

The conditions for renting a vehicle in Slovakia are roughly the same as in the Czech Republic, including car rental offices. Urban public transport is also at the same level as in the Czech Republic, the level of railway transport is higher in our country. You can easily get to the city center from the train station in Bratislava by bus, tram, taxi or on foot. You can get from the airport in Bratislava to the city center by bus or taxi (price approx. 5 euros). Several Czech carriers operate in Slovakia (e.g. RegioJet, Leo Express, ČSA).

Areas with an increased risk of danger in Slovakia include the high-mountain areas of the High Tatras. Due to the not entirely satisfactory transport infrastructure, some sections of the roads also belong to the risk areas. Urban crime also exists in Slovakia. In larger cities, you can be robbed at night, you will meet beggars, homeless people, drug addicts and heavily drunk people. We recommend not maintaining eye contact with such persons and not responding to various cues. You also need to be careful with your belongings during various music festivals, Christmas markets, in large shopping centers, night clubs or on public transport. Increased criminality prevails in some areas of central and eastern Slovakia. We do not recommend stopping by car in these regions in the villages in order to buy the various forest fruits that are offered by the roadside.

Employment of citizens from the Czech Republic

The employment of foreign citizens in Slovakia is governed by Act No. 5/2004 Coll. on employment services. Obligations for Slovak employers to register Czech employees follow from the law.

Furthermore, Act No. 351/2015 Coll. on cross-border cooperation in the posting of employees to perform work in the provision of services is in force in Slovakia.

A Czech employer sending employees to Slovakia as part of the provision of services must notify the National Labor Inspectorate (NIP) of the Slovak Republic of the following information no later than on the day of the posting:

– your business name and seat (in the case of a legal entity) and your business name or first and last name and place of permanent residence (in the case of a natural person)
– your ID number (if assigned) and the register where it is entered
– expected number of posted employees (indicate by name)
– name, surname, date of birth, place of permanent residence and citizenship of the posted employee
– start and end date of posting
– place of work and type of work performed by the posted employee during the posting
– name of the service or services that the Czech employer will provide provide through a posted employee in Slovakia
– name, surname and address (in Slovakia) of the person authorized to deliver documents, who will be in Slovakia during the posting (contact person).

The Czech employer fulfills this obligation electronically – fills in the email contact, registers and creates an account. After registration, he will be able to announce the posting of employees and subsequently manage the given data (indicate a change in the currently posted employees or add newly posted employees).

The Czech employer can also fulfill this obligation in written form

– the registration form is available on the website of the National Labor Inspectorate with the appropriate procedure. During the posting of its employees in Slovakia, the Czech employer is obliged to:
– keep the employment contract or other document confirming the employment relationship with the posted employee
– keep and keep records of the posted employees’ working hours
– keep documents about the salary paid to the posted employee for work performed during posting.

According to the law, these obligations apply to each posting (1 day to a maximum of 12 months with the possibility of extension to 18 months).

As of January 1, 2022, the minimum wage in Slovakia is 646 euros per month.

When using health care by Czech citizens in Slovakia, we distinguish two situations.

1) Non-earning stay (tourism, vacation)

Czech citizens are treated under the same conditions as Slovaks. They must present a Czech health insurance card, which is also a European health insurance card. The card should be accepted by all medical facilities that have a contract with one of the Slovak public health insurance companies (VZP, Dovera, Union). A Czech citizen will be provided with necessary health care at the expense of his Czech health insurance company. If, for some reason, a Czech citizen is forced to pay for the health care provided, the original payment invoices and relevant medical reports must be kept and the Czech health insurance company should be contacted for a refund. In any case, we recommend taking out commercial travel insurance before traveling to Slovakia. This will ensure treatment beyond the scope of necessary health care. Commercial travel insurance to the Tatras should also cover risks associated with high-altitude tourism or skiing, including the intervention of the Mountain Service. Some rescue actions of the Mountain Service are subject to a fee.

2) Gainful residence

If a Czech citizen goes to work in Slovakia, he informs the Czech Social Security Administration (ČSSZ) and the health insurance company before leaving. From the date of commencement of gainful activity in Slovakia, he/she will de-register from the Czech health insurance system (no later than 8 days after departure). All you have to do is send the proof of gainful activity to the insurance company (employment contract, confirmation of registration with the Slovak social and health insurance company). After returning home from Slovakia, the citizen of the Czech Republic must re-register with his health insurance company and must present proof of health and social insurance in Slovakia and its duration.

Fairs and events

We fully recommend the participation of Czech companies and entrepreneurs in industry-specific international and regional fairs and exhibitions in Slovakia. These events serve to establish new business contacts and at the same time are an effective tool for promoting products and services. Trade fair cities in Slovakia are Bratislava and Nitra, in the case of regional fairs and exhibitions, Trenčín. Trade fairs in tourism, gastronomy, agriculture and food, construction, engineering, electrical engineering and other fields are held every year in Slovakia.

Below is a list of traditional trade fairs and exhibitions scheduled to take place until the end of 2022. Exact dates for fairs and exhibitions in 2023 are not yet available.

Important international fairs and exhibitions in Slovakia:

CONECO, RACIOENERGIA (construction, energy), 23/3/2022 – 26/3/2022, Bratislava
The international construction fair is focused on construction, renovation, exterior and interior furnishing as well as energy savings

BRATISLAVA AUTO SHOW 2022 (auto show), 2– 1/5/2022
Bratislava International Motor Show – the most comprehensive automotive event of its kind in Central Europe

FURNITURE AND LIVING 2022 (furniture and home accessories), 27.4. – 1.5.2022, Nitra
30th edition of the international fair of furniture, home accessories, design and architecture

EXPO ITF SLOVAKIATOUR (tourism), 28.4. – May 1, 2022, Bratislava
International Tourism Fair

DANUBIUS GASTRO (gastronomy), 28.4. – 1/5/2022, Bratislava
International trade fair that maps trends in the gastronomy segment

INTERBEAUTY (cosmetics, beauty), 28.4. – 1/5/2022, Bratislava
The international fair focuses on the sectors of consumer goods, clothing, cosmetics, hygiene, beauty and health

IDEB (defense technology), 10.5. – 12022, Bratislava
The IDEB International Defense Technology Fair includes a presentation of defense technology, dynamic demonstrations of armed forces interventions, a conference dedicated to security issues, including cyber security

INTERNATIONAL ENGINEERING FAIR , 2– 27/05/2022, Nitra
27th International Fair of Machines, Tools, Equipment and Technologies

AGROKOMPLEX (agricultural and food exhibition), 18.8. – 21.8.2022, Nitra
47th annual international agricultural and food exhibition

MODDOM (furniture, home accessories and interior design), 19.10. – 23/10/2022, Bratislava
This International Fair offers a selection of furniture, accessories and a number of novelties from interior design. The furniture fair is accompanied by the ART exhibition, because art and living clearly belong together.

AGROSALÓN (agriculture), 7.12. – 10.12.2022, Nitra
The international agricultural fair Agrosalón is one of the most important fairs of its kind in Slovakia. It represents a stable background for the successful communication of experts in the given sector and presents innovations and technologies in agricultural technology and mechanization.

LIGNUMEXPO-LES (woodworking industry), September 2022, Nitra
International fair of machines, equipment and materials for the woodworking industry and international forestry exhibition

Slovakia Market Entry