While a lack of information and red tape has been cited by many foreigners as a massive barrier to the setting up of businesses, Slovak police have said that the process is actually much easier than it appears.
The most common route taken by foreign businessmen when looking to start operations in Slovakia is to set up a limited liability company (spoločnosť s ručením obmedzeným- s.r.o.) run by Slovak legal representatives (konateľ). However, the police are keen to stress that there is an equally easy path - taking a business licence (živnosť) as a self-employed person - that is being promoted through new legislation.
"Our aim is to have legislation [on getting a business licence] equal with legislation in European Union countries, but I can still say that it is much, much easier for a foreigner to get this licence here than for a Slovak to get a similar licence for example in Germany and Austria. We are not discriminatory at all," said Dušan Dudka, head of the tradesman's department at the Interior Ministry, which is in charge of issuing foreigners with business licences.
Consulting agencies advising foreigners on setting up businesses in Slovakia, though, remain convinced that the best way for someone who wants to run a business in the country is to set up an s.r.o. "Foreign investors who consider larger investments tend to set up an s.r.o rather than a živnosť because it is safer in terms of guarantees," said Christian Mandl, president of the Danube Consulting company, focusing on advising of foreign businesses coming to Slovakia .
Dudka, for his part, said that once a foreigner has suitable work and residency permits - a green card - it is easy to get these papers. "And then, with the green card in their pocket, foreigners gain equal status to Slovak SMEs," he stressed.
There are only four criteria a foreigner has to fulfill to apply for a business licence: he or she has to have a long-term permit to run a business in Slovakia, be more than 18 years old, have a valid passport and a clean criminal record in both his or her own country.
Police colonel Michal Kutlík, head of the aliens division at the Border and Aliens Police, explained that a foreigner who wants to get his business licence has to go first to the Interior Ministry, where he is told what documents he has to have in order to get the licence. One of them is a long-term permit for running a business.
"Most foreigners probably find out that they don't have this permit, or even when they have, it's not for business purposes. To get this kind of long-term permit, the Interior Ministry gives them several weeks to come to us [aliens police] and get this paper. Here, a foreigner has to hand in standard documents necessary for getting a long-term permit [see story BFI]," Kutlík said.
The only difference, he added, between a long-term permit for employees and business licence holders is that they have to prove they have money equal to an annual subsistence level - about 50,000 crowns ($1,000) in Slovakia.
"If a foreigner gets his long-term permit he goes back to the Interior Ministry and his papers are put together and he gets his licence in 'several' days.
"However, some additional documents are necessary when a person wants to ask for a licence which requires a diploma, certificate or permission which he or she later has to hand in to prove qualifications. A typical example of this is language teachers," Dudka added.
In this case, he explained, a person has to go to a specific institution (in the case of language teachers the Education Ministry) where they check on additional documents, matching them to similar documents issued in Slovakia. "And that's about it. As simple as that and relatively quick," Dudka said.
The advantages of the živnosť are considerable, compared to working for an employer. For one thing, a self-employed English teacher can write off expenses such as furniture, a car or a computer.
But according to Danube's Mandl, foreigners prefer to have the status of a legal entity rather than sole proprietor and therefore choose to establish s.r.o's. "In this sort of company they [the foreigners] usually have a Slovak partner who for example has Slovak certificates, permissions and diplomas," he said.
Mandl also explained that once an investor pays a 200,000 crown ($4,000) minimum fee necessary for establishing an s.r.o, he or she does not have to back company debts with any movable and/or fixed assets he or she owns. "Meanwhile, the živnosť holder puts on the line everything he owns, which makes a considerable difference," Mandl said.
Mandl admitted that it might take less time to get business licence, but "at the end of the day it's not only about setting up a company but also running it, which is easier in case of an s.r.o."
6. Nov 2000 at 0:00 | Peter Barecz