Slovakia, a country that boasts all kinds of tourist destinations except one – a sea – has still not fully harnessed its touristic potential. Many Slovaks travel abroad to find what already exists in Slovakia and foreign tourists keep mistaking Slovakia for Slovenia or recognise Slovakia only because it was part of the former common state with the neighbouring Czech Republic – Czechoslovakia.
To better tap into the country’s potential, the government has introduced an employer’s compulsory contribution for recreation as well as reduced value added tax on accommodation services. This is already bearing fruit, but hoteliers and other entrepreneurs in tourism perceive the measures as temporary patches over holes created by increased wage costs. It is also too early to assess the impact these two measures will have on tourism in Slovakia.
“We also assume that contributions for recreation are behind the increase in the number of domestic tourists, but a more precise evaluation could be carried out only after one year,” said Marek Harbuľák, general manager of the Association of Hotels and Restaurants (ZHR), as cited by the SITA newswire.
During the first three months of 2019, the number of nights domestic visitors spent in accommodation facilities in Slovakia amounted to 2.3 million, which is a 9.2-percent year-on-year increase, according to the Transport Ministry.
Hotels and other businesses in tourism report the increasing interest of visitors in spending a holiday in Slovakia.
Recreation contributions (recreational vouchers)
- the contribution is up to €500 per year, of which the employer covers 55 percent or €275; the employee covers the rest or €225
- the payment of contributions is obligatory in companies with 49 or more employees, while the beneficiary must have worked in the company for at least two years
- vouchers are exempt of income and payroll taxes
Last October, parliament passed legislation authored by Andrej Danko’s junior coalition party, the Slovak National Party (SNS). The legislation slashes VAT on accommodation services from 20 to 10 percent along with introducing recreational vouchers. Both measures are effective as of January 1, 2019, the first idea of vouchers dating back to 2009. The aim of the measures is to increase demand for accommodation services in Slovakia and thus propel the development of Slovak tourism further.
“The key benefit of recreational vouchers is to enable low-income citizens at least one holiday per year,” said Karolína Ducká, spokesperson of the Transport Ministry, which oversees the tourism sector. “Thanks to the 55-percent participation of the employer, voucher holders have the tendency to make use of related services during their holidays to a much greater extent than if they covered the entire holiday themselves.”
The ministry also expects the vouchers to result in higher occupation of accommodation facilities between main tourist seasons.
Another benefit is the change of Slovak consumer behaviour in terms of holidays spent in their home country.
“Almost half of Slovaks spending a holiday abroad have searched for destinations for which our country has preconditions,” said Ducká.
The voucher scheme was designed so as to maximise the benefits of entrepreneurs in tourism cooperating with accommodation providers.
“The incorporation of tourist products and services, such as tickets to skanzens, wooden churches, castles, wine tastings and so on into holiday packages offered by accommodation facilities not only helps generate revenue for tourist service providers, but comprises a complex tourist product, the backbone of a successful tourist destination,” said Ducká.
Additionally, the vouchers increase employment in tourism, and the collected VAT and paid income and corporate taxes add to the state budget’s revenue.
Under the recreational voucher scheme, private or state employers with 49 or more employees are obliged to cover 55 percent of an employee’s holiday costs a year with costs capped at €500. This means that the employer will pay an employee up to €275 while the employee covers the rest. This benefit is exempt of income and payroll taxes. Only employees who have worked for a company at least two years are entitled to this benefit.
Companies and institutions with fewer employees can pay the contribution as well, but on a voluntary basis.
Employees can use the vouchers for accommodation in Slovakia, with a minimum of two spent nights. Other services provided by recreational facilities also cover family members or people living in the same household. These can include a spa stay or summer camp for the employee’s children.
Vouchers increase interest
Hotels, spas and other accommodation facilities have reported an increased interest by Slovaks in spending holidays in Slovakia; expect the biggest wave to arrive in the summer.