Slovakia Economic Environment
Slovakia joined the EU in 2004, joining the eurozone in 2009. Although economic growth increased sharply after joining the Single Market, it slowed following the 2008 recession and has yet to recover to the pace of previous improvement.
All the same, Slovakia remains an interesting prospect for foreign businesses and investors. Here are six key things to note about the Slovak economy:
- Slovakia is a tax-efficient place for European investors to live, as the country levies no personal tax on dividend income. However, capital gains upon the disposal of investments remains taxable at rates between 19% and 25%;
- The country’s sovereign debt has negative yields, signalling a financial strength rarely found elsewhere in the world. Slovakia’s strong credit rating and shrinking deficit have helped to create this positive borrowing situation;
- Although Bratislava, the Slovakian capital, is very close to the border with Austria, only 5.7% of Slovak exports are sold to their western neighbour. Germany, the Czech Republic, Poland and Hungary all traded more heavily with Slovakia in 2013;
- Slovakia buys even less from Austria, with Austrian products representing only 2.9% of Slovakian imports. Germany and the Czech Republic together account for 30% of Slovakia’s purchases from abroad;
- Foreign investors pay only 22% corporate tax on their local profits, as Slovakia does not charge withholding tax on dividends paid abroad;
- The local economy is manufacturing-led, with 59% of exports being related either to machinery or transportation. Cars are the largest constituent part of Slovakian exports, representing 18% of that category by value in 2013.
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