Slovakia: Investing

FDI in Figures

Foreign direct investment (FDI) has increased considerably over the last decade, driven by the privatisation of the banking, energy and telecommunication sectors. Many foreign investors were able to incorporate themselves into the companies previously associated to the public sector. This is the case of large firms such as PSA and Hyundai who are installed directly in the country. 

Since 1998, when Slovakia became open to privatization, European companies, especially French and German, have invested heavily in the country, creating hundreds of sites and employing tens of thousands of employees. Often working in partnership but also sometimes in competition, French and German companies together represent over 60% of foreign direct investment in Slovakia, especially in the key energy, automotive, telecommunications and services sectors.

The 2008-2009 fall in international investment and the crisis of the eurozone which deepened in 2011 have had an impact on the country and continue to weigh heavily on foreign investment flows bound for Slovakia. The country is indeed highly vulnerable, given that a very large share of its FDI directly depends on the eurozone.

Despite the crisis in Europe, the continued upgrading of national infrastructure in 2012 still presents great opportunities for FDI and the country remains attractive to foreign investors. However, Slovakia's economy is now more than ever dependent on the economic health of its European neighbors, especially Germany and France.

Why You Should Choose to Invest in Slovakia

Strong Points

The country's main advantages are:
- A strategic geographical position: the country is situated in the center of Europe;
- A workforce that is inexpensive and well qualified;
- its advantageous tax system, with a single tax rate of 19%;
- The existence of several financial aids favoring foreign investment and can range from 20 to 50% of investment costs, depending of the projects;
- A large growth potential;
- The adoption of the Euro since January 1st, 2009, which has made disappear the risks of foreign exchange;
- A low cost of living in relation to the rest of Europe.

Weak Points

The main weak points of the country are:
- Important technical and administrative barriers: requirement of import licenses especially for raw materials, energy and some agricultural products;
- High energy costs: Slovakia must import 90% of its energy needs.
- Deficient infrastructures. Although, governmental reforms have been set up, the infrastructures are not yet well developed and the country has no access to the sea.
- The small size of its domestic market with a population that has a low purchasing power.

Government Measures to Motivate or Restrict FDI

The Slovak government encourages foreign investment, since it is one of the main driving forces of the economy. It has also established financial incentives such as tax credits and subsidiary systems. These aids are granted depending on the type of project, geographical location and the sector of activity.
The country's low tax rate is one of the key elements that attracts FDI. Slovakia also benefits from European financial aids and many investors can benefit of the large renovation and modernization projects of the country.

Procedures Relative to Foreign Investment

Freedom of Establishment

Foreign investors have freedom of establishment.

Acquisition of Holdings

A majority holding interest in stock of a local company is legal in Slovakia.

Obligation to Declare

Several authorizations are necessary to set up a factory (planning license, building permit, occupation license). An authorization is also needed to carry out commercial activity. It has to be obtained from the competent local authorities.

Requests For Specific Authorizations

There are special authorizations in the sectors of electricity, telecommunications, banking services and insurance.

Investment Opportunities

Investment Aid Agency

Slovak Investment and Trade Development Agency (in English)

Tenders, Projects and Public Procurement

Slovakian Public Procurement Office
Tenders Info, Tenders in Slovakia
Globaltenders, Tenders & Projects from Slovakia
Ted - Tenders Electronic daily, Business opportunities in EU 27
DgMarket, Tenders Worldwide

Other Useful Resources

"Invest in Slovakia" a SARIO document (in English)
The Slovak Ministry of the Economy on investment (in English)
National agency for the development of SMEs, NADSME (in English)

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