Slovakia: Country and Foreign Investment

Slovakia History, Population, Language and Culture

The people of Slovakia are descended from the Slavic peoples who settled in the Danube river basin in the 6th and 7th centuries BC. Throughout history, the Slovak people have been subjected to rule and domination by invading tribes or armies, notably the Magyars.

In more modern times, the Slovaks joined the Czechs to form the new republic of Czechoslovakia in 1918. After World War II, Slovakia became part of the Soviet bloc, though still within a united Czechoslovakia. Following the collapse of the Soviet bloc in 1989, Czechoslovakia separated into the Czech Republic and Slovakia – the Slovakia republic subsequently came into existence on January 1st, 1993. In 2004, Slovakia joined NATO and became a member of the European Union.

The population of Slovakia is estimated to be 5.46m (as at July 2010), consisting of 85.8% Slovak, 9.7% Hungarian, 1.7% Roma, 1% Ruthenian/Ukrainian, and 1.8% other and unspecified (2001 Census). The national language is Slovak.

Slovakia's culture is steeped in tradition, and folk art and craft continues to be handed down the generations, supported by the Centre for Folk Art Production. Slovak literature was late in developing in the absence of a literary language – the first Slovakian novel was written by Bajza (1755-1836). The early 20th century saw the rise of the Slovakian Modernists, led by poet Ivan Krasko (1876-1958). Modern cultural development was hampered by communist rule, particularly in literature and film-making; however, Slovakia now enjoys a vibrant cultural scene. Music, however, has played, and continues to play, an important role in Slovakia's cultural history.

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Slovakia Government

The government is the head of the Executive and is made up of the Prime Minister (Robert Fico since July 2006), his Deputies (of which there are five) and government ministers. The government is appointed by the President of the Slovak Republic on the recommendation of the Prime Minister. For its policy and administration the government is responsible to the Slovak parliament. The National Council of the Slovak Republic comprises elected representatives, of which there were 150 at the 2006 elections. Following the 2006 elections, the Slovakian government was formed by a coalition of three parties. The current President is Ivan Gasparovic, who took office on June 15, 2004.

The Slovakian legal system is based on Austro-Hungarian codes and is still evolving. The Constitutional Court is the highest court in the land and the only one that can sue the President.

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Slovakia Economy and Currency

Slovakia has been an EU member state since May 1, 2004 and adopted the Euro (EUR) as its currency in January 2009. The so-called "Tetra Tiger" economy between 2002 and 2005 saw a sustained growth in GDP reaching 10.4% in 2007, the highest of any EU country. However, long-term unemployment remains high and the country’s financial deficit reached 7.93% of GDP in 2009, more than triple the original forecast at over EUR4bn.

Tourism now employs 44% of the population and the country has a growing and successful automotive industry, with recent large investments by Volkswagen, Peugeot and Kia. Electronics, mechanical and chemical engineering and IT are also significant industries in the country. Though declining in terms of the number of people employed, agriculture is still very important, with the production of cereal crops and sugar beet and the breeding of livestock; 3.5% of the population are employed in agriculture.

In August 2010, the registered unemployment rate in Slovakia was 12.19%, down from 12.33% the previous month. When compared year-on-year, unemployment grew by 2.3% in August. Over 400,000 people were registered as officially seeking work. The unemployment rate is still one of the highest in the EU.

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Slovakia Entry and Residence

Slovakia is part of the EU's Schengen Area, meaning that there is visa-free movement within Schengen of nationals of all those EU Member States belonging to the area. Moreover, citizens of EU Member States and of a number of non-EU countries do not require a visa for visits of up to 90 days within a six-month period from the day of arrival.

Citizens of other countries who do not benefit from visa-free movement within the Schengen Area, and who are visiting Slovakia on a short-term stay for the purposes of tourism, must have a visa to enter the country. The maximum length of a short-term stay in the Slovak Republic must not exceed a total period of 180 days. The visa may be applied for at any embassy or consular office of the Slovak Republic abroad

Foreigners must obtain a residence permit if they wish to remain in the country for more than 90 days within a six-month period from the day of arrival in Slovakia.

For tax purposes, residency applies to anyone whose permanent place of residence is in Slovakia, or who spends more than 183 days in Slovakia during a year.

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Slovakia Business Environment

Most citizens of Slovakia still do not have Internet access at home, though there is an abundance of Internet cafes. The telecommunications industry is growing fast and telephone services and ownership of mobile phones are burgeoning.

There are 18 airports in the country, the most important being at Bratislava and Kosice.

Slovakia is well placed for transportation links on the River Danube to the Black Sea ports of Romania and Bulgaria, and its capital Bratislava is only 25 miles from the Austrian capital, Vienna. The country has over 11,000 miles of highways and 2,274 miles of railways; plans are being laid for further improvements to the country’s road and rail networks.

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Slovakia Investment Incentives

Grants and concessions are available to foreign residents and investors in the form of tax relief, financial grants, training and the creation of new jobs. The Slovak government can also assist with the acquisition of real estate for business use at values lower than market value. The private sector in Slovakia currently contributes 80% to GDP.

The form and amount of aid varies depending on the sector and must comply with EU State Aid regulations. Different conditions apply to the manufacturing, technology and tourism industries. Slovakia passed a new Investment Incentive Act in 2009 to assist research and development facilities.

Businesses in Slovakia benefit from a flat corporate income tax rate of 19%, including on capital gains. Income from dividends is exempt from corporate income tax.

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