In today’s environment, most entrepreneurs are incorporating or scaling their businesses abroad. First of all, this trend is motivated by good tax systems, moderate state regulation, and orientation toward European customers. At the same time, while there are usually no problems with the company’s organization, there are always difficulties and obstacles with obtaining the right to live in another country legally. If you are interested in immigration and EU residency, we suggest you consider Slovakia.
Advantages of Slovakia for immigration
It is a great country with a stable economy, which is strengthened by the national currency euro. In addition, it has a competitive tax system and a large number of professionally trained personnel. Especially appealing is the location of Slovakia with its direct access to many European countries. That is why it is worth exploring the possibilities of relocation in more detail:
- First, there is the Law on Residence of Foreigners, which regulates the legal status of a foreigner and the legal grounds for their stay in the territory of Slovakia and defines the conditions for obtaining a residence permit. And it is not just declarative norms, which de facto are not implemented, and problems with the residence permit arise as in most EU countries. In the case of Slovakia, the process of obtaining it is clear, understandable, entirely consistent with what is written in the law. Thus, you have a hundred percent guarantee not to be rejected.
- Secondly, moving to Slovakia is also called “business immigration.” This is due to the conditions that are put to those wishing to make a relocation. This option is great for freelancers, IT professionals, owners of large businesses. Let’s take a closer look at the requirements:
– Your business must have 22,000 euros in the account for an LLC (SRO), 4,400 for a sole proprietorship;
– Your personal account should have 2650 euros;
– The full list of necessary documents.
If all conditions are strictly adhered to, you are destined to succeed!🙂
We should warn you right away, the extension of the residence permit takes place annually!
And for this purpose, it is necessary to show annual net income (13,000 euro for LLC (SRO), 4,400 euro for sole trader) and to be at least 183 days in the territory of Slovakia. Local legislation prescribes several “rules of the game” that must be respected to avoid losing the opportunity to live in the state legally. In addition, you must rent or buy a house in Slovakia, actually open a business, prepare and submit documents, undergo a medical examination, get insurance, and then a residence permit. Real estate is needed when registering a company to indicate the legal address.
If you fulfill these points correctly, you can get the right to permanent residence and Slovak citizenship after ten years. However, Slovakia does not oblige you to give up your Ukrainian citizenship!
Tax system in Slovakia
If the procedure and requirements of business immigration appeal to you, let’s take a closer look at the tax system. Specifically:
- There is a corporate tax (corporate income tax) of 21% for companies and the possibility to apply its reduced rate of 15% if annual sales do not exceed 100,000 euros.
- Since 2017, there has been a tax on dividends of 7% (when distributing the company’s profits). A nice nuance is the absence of taxation for dividend distribution to foreign nationals, so we recommend thinking about partnerships with other countries.
- The tax rate for individuals is progressive and ranges from 25% to 19%. At the same time, each self-employed person has the opportunity to calculate 20,000 euros as a fixed payment for expenses incurred without additional evidence.
- Subjects of certain economic activities must pay VAT at the standard rate of 20% or at a reduced rate of 10% (when importing goods into the EU, the tax is paid at customs). There are some nuances concerning VAT administration in Slovakia, particularly regarding the delay of tax credit repayment and frequent inspections.
Incorporation of a business in Slovakia
In Slovakia, you can easily organize both an LLC (SRO) and a sole proprietorship. However, there are pros and cons to both options. For example, the sole proprietor has to pay for health insurance, and in relation to the risks of their activities — to be responsible with all their property. However, the amount of funds in the account required to obtain a residence permit and the net income for its extension for the owner of the LLC (SRO) is much higher.
The company incorporation is done quickly (about a month), with a notarial power of attorney.
The next step, opening a bank account, is also no problem at all. Firstly, because you are a resident of the country, and secondly, because the compliance procedure does not contain strict requirements. All that’s left is to get a VAT number and get your business up and running.
On the one hand, weigh the pros and cons because the procedure involves a lot of investment. On the other hand, you will acquire the status of a resident of Slovakia and access the entire European space.
The experts at Finevolution are always happy to advise you on how to do business abroad.