The Slovak Republic

Slovakia is the country with a good economic stability located in Central Europe. The population of the country is about 5.5 mln people. Car manufacturing industry remains the main industry; however, the existing number of specialists doesn’t meet the demand of the market so far. Today, we’d like to draw your attention to another growing market in Slovakia – IT. The share of specialists involved in IT sector exceeds 4% of all the working population of the country. It is also claimed amidst the fastest-growing economies in Europe. Opening a business in Slovakia, an entrepreneur can rely on investment incentives and various benefits. To date, Slovakia is a simple and inexpensive way to emigrate to the European Union for start-ups: a loyal attitude towards foreigners makes it easy to get a visa and a residence permit. There are no such strict requirements for doing business here as in other European countries.

According to the Slovak legislation, there has been established a certain set of regulations that envisages tax deduction for certain types of expenses, like R&D, intellectual property revenues, etc.

Annual PIT in Slovakia depends on the income rate, hence:

• 19% is imposed on an annual income up to $40,1252
• 25% is imposed on an annual income exceeding $40,1252

Additional tax amounting to 5% is imposed on constitutional bodies’ representatives, e.g. the President, MPs, etc.

Corporate Income Tax is imposed at a rate of 21%.

Slovak Social and Health Security tax is one of the highest in Europe for employers, employees, and individual entrepreneurs. This tax comprises of the following contributions: pension insurance, disability insurance, reserve fund, sick leave insurance, accident insurance, unemployment insurance, guarantee fund, health insurance.

• Social and Health Security tax for employees amounts to 13.4%
• Social and Health Security tax for employers amounts to 35.2%
• Social and Health Security tax for sole entrepreneurs amounts to 49.15%

In accordance with the Slovak laws, upon the genral provisions, the notice period depends on the employment longitude:

• 1 month – statutory notice period
• 2 months – in case of employment 1-5 years
• 3 months – in case of employment over 5 years

The statutory notice period may be even longer, however, it is all upon the mutual agreement between the parties.

An employment relationship may be terminated by the mutual consent of the parties. An employee may terminate an agreement at own disposal, whereas an employer may terminate a contract in cases stipulated by the Labor Code of Slovakia. The main conditions in the last case are:

• if the employer’s business or a part thereof is wound-up or relocated and the employee does not agree with the change of agreed place of work;
• redundancy due to change in the employer´s business scope, technical equipment, reduction in the number of employees with the aim of increasing work efficiency, or other organizational changes;
• ongoing breach of working discipline (an employee shall be notified about dismissal in written at least within the past months);
• unsatisfactorily fulfillment of the work tasks (an employee shall be challenged within the past 6 months to improve the performance, if an employee fails to do so within the time period provided);

Office rent in Bratislava ranges from $6 to $14/m²without furniture. If it is furnished the prices start at $9/m². The prices usually are indicated without the Administration fee which amounts to $3/m²

Slovak IT market has shown dynamic growth since it’s joined the EU in 2004. The country is not only developing software but also became a strong player in the international arena of computer technologies. The current contribution of the ICT (Information and communication technology) sector to the Slovak GDP reaches 4%. One of the main facts that attract foreign companies to cooperate with Slovak IT sector is that 92% of its specialists are fluent English speakers, 46% – German, 13% – Russian, and 5% – French. Currently, the Slovak IT sector occupies a significant share in the employment – 2.9% of the total employment in the country.

As to the largest international players, there are regional offices of Siemens, IBM International Service Centre, ESET, Accenture, T-Systems, Innovatrics, Sygic, etc. The Slovak specialists claim that the local ICT industry income taxes paid exceed the ex-leading industry – automotive – by several times. The main IT cities of Slovakia are Košice, Žilina, and Bratislava.

Students of the Slovak educational institutions study at least one foreign language at primary school and continue improving it further on. Generally, over 80% of the Slovaks speak at least one foreign language besides their mother tongue. As to the IT, there are several universities offering students programs for learning programming and its sub-fields annually graduating up to 3K students.

The main institutions of Slovakia providing IT education:

• Slovak University of Technology in Bratislava
• The Technical University of Košice
• University of Economics in Bratislava
• Comenius University in Bratislava
• University of Žilina

Although the salaries of Slovak IT engineers are way higher than the average salary in Slovakia and higher than in Ukraine, they are still smaller than those their Western European colleagues get. The distribution of average salary of the Slovak engineers depending on the position and experience are as follows:

• Junior Software Engineer – $1300
• Middle Software Engineer – $2700
• Senior Software Engineer – $3300
• Technical Lead – $3900