Slovakia Individual Tax Guide

Slovak Republic

Bratislava GMT

EY

Zuckermandel Multifunctional City Centre Block C Žižkova 9 811 02 Bratislava Slovak Republic

Executive contacts

Marián Bíž +421 (2) 3333-9130 Email: marian.biz@sk.ey.com

Vadim Bogomolov +421 (2) 3333-9247 Email: vadim.bogomolov@sk.ey.com

Matej Oravec +421 (2) 3333-9217 Email: matej.oravec@sk.ey.com

Peter Bobčík +421 (2) 3333-9530 Email: peter.bobcik@sk.ey.com

Katarína Hirková +421 (2) 3333-9137 Email: katarina.hirkova@sk.ey.com

A. Income tax

Who is liable. Slovak residents are subject to tax on their world wide income. Nonresidents are subject to tax on their Slovaksource income only.

An individual is considered a Slovak tax resident if any of the following conditions is met:

• The individual has accommodation available in the Slovak Republic that is not used for occasional purposes and at the same time has economic and personal ties with the Slovak Republic.

• The individual has a permanent residency in the Slovak Republic.

• The individual is physically present (that is, usually staying) in the Slovak Republic for at least 183 days in a calendar year. For purposes of the 183-day test, each whole or partial day spent in the Slovak Republic during the calendar year counts toward the number of days. The 183-day test does not apply to the follow ing individuals:

— Individuals staying in the country to study

— Individuals present in the country for medical treatment

Individuals assigned by a foreign employer to the Slovak Republic who continue to be employed and paid by the foreign employer and who perform work for and under the instruction of a Slovak resident individual or legal entity are deemed to be employed by the Slovak resident individual or legal entity and subject to monthly withholding of personal income tax from their employ ment income.

Income subject to tax. The taxation of various types of income is described below.

Employment income. Employment income includes salaries, wages, bonuses, other regular, irregular or one-off compensation of a similar nature and most benefits-in-kind. Employment income also includes fees paid to directors and partners of limited liability com panies and to limited partners of limited partnerships. Income received by a professional sportsperson on the basis of a player contract is also considered to be employment income.

Self-employment and business income. Taxable self-employment and business income consists of income from business activities and professional services. This income may be decreased by deductible expenses. A notional expenses deduction of 60% of taxable income and up to a maximum of EUR20,000 per tax period is available for non-VAT payers. Nonresidents are subject to tax on their Slovak-source business income only.

Rental income, including income from the rental of real estate and movable assets representing appurtenances of the real estate is taxed as self-employment and business income. As a result, expenses can be deducted from such income. A notional expens es deduction and loss carryforward are not possible for rental income.

Investment income. Investment income from Slovak sources, including interest and other income derived from securities, and payments made from supplementary pension insurance schemes is generally subject to a 19% withholding tax. This withholding tax is considered a final tax, and the income is not included in the tax base.

Investment income is not included in the tax base subject to the progressive tax rates (see Rates). It constitutes a separate tax base (few exemptions applicable), which is subject to a flat tax rate of 19% (that is, without application of tax progression).

Dividends. Dividends distributed from profits for accounting periods starting before 31 December 2003 or starting after 31 December 2016 are subject to tax (dividends distributed from profits in other periods might be subject to Slovak health insur ance contributions). Slovak tax residents who participate in the registered capital of the company (regardless of where the legal seat is registered) are generally taxed at 7% on their dividend income. However, a tax rate of 35% applies on dividend income from jurisdictions that have not entered into a double tax treaty or tax administrative treaty with the Slovak Republic (that is, ju risdictions that are not included in the white list published by the Slovak Ministry of Finance). Dividend income should be taxed via withholding tax if its source is in the Slovak Republic, or via a tax return if its source is abroad.

Income from controlled foreign companies. As of 1 January 2022, the application of the rules for controlled foreign companies (CFCs) is extended to include individuals who are tax residents of the Slovak Republic.

An individual’s income derived from CFCs should be included in a special tax base for a period that corresponds to the end of the CFC’s tax period; that is, when the potential claim of the taxpayer arises, not at the time of actual income payment. The income concerned should be subject to a tax rate of 25% or 35%.

Legal entities or subjects with head offices in foreign jurisdic tions should be considered CFCs if the following conditions are met:

• It is taxed at an effective rate below 10% or is a taxpayer in a non-cooperating state (not included in a so-called whitelist of the Slovak Ministry of Finance).

• An individual, who is a tax resident of the Slovak Republic, alone or with other related parties, has effective control or at least 10% participation in it.

The CFC rules will apply for the first time to income attributable to a taxpayer from the economic result of a CFC for the fiscal period ending during 2022.

Taxation of employer-provided stock options. For employerprovided stock options granted after 31 December 2009, the taxable amount equals the higher market price of the stock at the exercise date (that is, on the day on which the option is actually exercised) minus the sum of the following:

• The guaranteed exercise price of the employee’s stock

• The price paid by the employee for the option (if any)

The above amount is taxable on the exercise date. Employerprovided stock options are treated as employment income and taxed through payroll withholdings at the regular income tax rate in the month of exercise.

The income from stock options granted by employers before 31 December 2009 is taxed on the vesting date (that is the date on which the option can be exercised) under the rules applicable until 31 December 2009.

Capital gains derived from the sale of shares acquired under an option plan are calculated as the difference between the sales price and the market price on the exercise date (vesting date for options granted before 31 December 2009). These gains are sub ject to tax at the regular rate (see Capital gains).

Capital gains. Capital gains derived from the sale or exchange of property are taxed as ordinary income at the regular income tax rate (see Rates). In general, capital gains derived from the sale of real estate or personal property are exempt from income tax if relevant conditions stipulated in the law are met (for example, the minimum required holding period). Business assets generally do not qualify for exemption.

Income derived from the sale of securities that are traded on a regulated market or similar foreign market for at least one year is exempt from tax if the period between acquisition and sale of the securities exceeds one year and if such securities had not been included in the business assets. The exemption also applies to income derived from the sale of options and income from deriva tive transactions from “long-term investment savings,” which is income that is paid 15 years from the beginning of a long-term investment, if such items had not been included in the business assets of the taxpayer.

In addition, a general tax exemption of up to EUR500 per year applies to capital gains from the sale of securities that would not be otherwise subject to the tax exemption above (shares included

in the business assets of the taxpayer, shares that are not traded on regulated market or shares that were sold prior to the end of the one-year time period) if the respective tax-free allowance available to the taxpayer is claimed with respect to this type of income.

Income from the sale or exchange of virtual currencies is subject to the personal income tax at a rate of 19% to 25%. Taxable income is realized by sale of virtual currency, exchange of vir tual currency for goods or services, or by exchange of virtual currency for another virtual currency. The income may be reduced by expenses provably incurred to generate the income (for example, acquisition costs of a virtual currency). It is not possible to offset a tax loss against the sale or exchange of a virtual currency with other income; however, losses from the sale or exchange of one virtual currency may be offset against profits from the sale or exchange of another virtual currency in one tax period (a loss carryforward is not possible). Specific rules apply to virtual currencies included in business assets.

Deductions

Deductible expenses. Mandatory sickness insurance, health insur ance, old-age insurance, disability insurance and unemployment insurance contributions paid by employees (see Section C) are deductible from employment income.

Personal allowances and deductions. All taxpayers, including nonresidents, are entitled to a personal allowance. Taxpayers whose tax base for the calendar year does not exceed 92.8 times the subsistence minimum (EUR19,936.22 for 2021) can deduct a nontaxable amount equal to 21 times the subsistence minimum per taxpayer (EUR4,511.43 for 2021). For taxpayers whose tax base for the calendar year exceeds 92.8 times the subsistence minimum, the nontaxable portion of the tax base gradually decreases depending on the taxpayer’s income. Taxpayers who have a tax base for the calendar year higher than EUR37,981.94 are not entitled to any general allowance. Slovak tax residents and Slovak tax nonresidents whose Slovak-source income repre sents more than 90% of their worldwide income may also claim a spousal allowance for a spouse who has no or limited income of his or her own, who lives with them in the same household and who takes care of infant children living with the taxpayer or the following persons:

• A person receiving compensation for care

• A person who is registered with the Labour Office as unem ployed

• A person considered to have a severe disability

The spousal allowance also gradually decreases depending on the taxpayer’s and the spouse’s income. Individuals whose annual tax base exceeds EUR54,480.88 in 2021 are not entitled to the spousal allowance.

The above personal allowances are deductible from the tax base reported for employment income and self-employment and busi ness income only.

In addition, tax residents and Slovak tax nonresidents whose Slovak-source income represents more than 90% of their

worldwide income are entitled to a tax bonus (credit) per dependent child. As of August 2021, taxpayers who are entitled to a child credit according to Slovak tax legislation and who have children above the age of 6 years and up to the age of 15 years should be able to decide whether they will apply the child credit or meal allowance. However, multiple other conditions may apply. Monthly child credit amounts are shown below.

The following are the monthly child credit amounts for the period from 1 January 2021 to 30 June 2021:

• EUR46.44 for one child up to the age of 6 years

• EUR23.22 for one child above the age of 6 years

The following are the monthly child credit amounts for the period from 1 July 2021 to 31 December 2021:

• EUR46.44 for one child up to the age of 6 years

• EUR39.47 for one child above the age of 6 years and up to the age of 15 years

• EUR 23.22 for one child above the age of 15 years

The increased amount of child tax bonus in the amounts of EUR46.44 and EUR39.47 can be applied for the last time in the calendar month in which the child reaches the age of 6 or 15 years, respectively.

Deduction on paid interest. As of 1 January 2018, a tax bonus on interest paid is introduced. In general, it represents a new form of tax advantage for interest paid on housing loans, which replaces the prior governmental mortgage credit support scheme for young people.

An individual is entitled to the tax bonus on the fulfillment of both of the following conditions:

• As of the loan application date, the individual is at least 18 years old and not more than 35 years old.

• The total average monthly income of the individual does not exceed 1.3 times the average monthly wage of an employee in the Slovak economy determined in the year preceding the year in which the loan agreement is concluded.

The taxpayer must claim entitlement to the tax bonus after the end of the tax period through either of the following:

• A simplified tax reconciliation performed by the employer

• A Slovak personal income tax return filed by the individual

The tax bonus is set at 50% of the interest paid in the relevant tax period. However, it may not be more than EUR400 annually and may not exceed the tax liability of the individual.

Business deductions. In general, costs and expenses incurred to generate, assure and maintain taxable income are deductible, including mandatory contributions for social and health insur ance. Expenses of a capital nature, penalties other than payments of contractual penalties, income tax and expenses incurred to generate tax-exempt income are not deductible.

As of 1 January 2017, the notional expenses that self-employed individuals can deduct were increased to 60% of total taxable income. At the same time, the maximum limit of tax-deductible notional expenses was increased to EUR20,000 per year. The

Amendment to the Income Tax Act has also abolished the obliga tion to proportionally decrease the amount of tax-deductible expenses if a taxpayer does not conduct business activity during the entire tax period.

Rates. The basic tax rate is 19%. The annual tax base exceeding EUR37,981.94 is taxed at a rate of 25%.

Interest income represents a separate tax base, with a tax rate of 19% without application of tax progression and also dividend income with tax rates 7% and 35% on the dividend income from jurisdictions that have not entered into a double tax treaty or tax administrative treaty with the Slovak Republic.

A tax rate of 15% applies to taxpayers who earned, with respect to a tax period, taxable income not exceeding EUR49,790 from a business or other self-employed activity.

Relief for losses. An individual may carry forward losses incurred in the tax years immediately preceding the year in which he or she first declares a positive tax base. Effective from 2014, his torical tax losses incurred in the 2010 through 2013 tax years may be carried forward for a maximum period of four years, proportionally each year. The same rules apply to losses gener ated in 2014 and future years. In general, losses may not be offset against employment income. Losses incurred after 31 December 2011 can be offset only against self-employment and business income of the taxpayer. Losses incurred from renting a property cannot be used to offset other profits or carried forward.

B. Inheritance and gift taxes

The inheritance and gift taxes were eliminated in 2004.

C. Social and health insurance

Contributions. If an employee is subject to the Slovak social secu rity system, both the employer and the employee must pay social security contributions. Slovak social security contributions con sist of sickness, old-age, disability, unemployment, guarantee and accident insurance, and contributions to the reserve fund. In gen eral, every person performing an income-generating activity for which he or she is entitled to a regular monthly compensation (and also irregular for the purposes of pension insurance) subject to income tax is deemed to be an employee for Slovak social secu rity purposes. Rental, capital or other income is not subject to social insurance.

Slovak health insurance contributions are for health care. Indi viduals having income subject to income tax (including divi dends paid to employees not participating in the registered capital of a company that are generated from profits for accounting pe riods beginning after 1 January 2011, and capital or other income on which the Slovak withholding tax does not apply) is subject to health insurance. Persons acting as members of statutory or super visory bodies for employers, with a registered seat in the Slovak Republic, are not subject to Slovak health insurance if they do not have permanent residency in the Slovak Republic and are subject to a health insurance system in a non-European Union (EU) state.

The combined rate for the employee’s social and health insurance contribution is 13.4% of his or her assessment base, which is, in general, his or her monthly taxable employment income. The employer’s contribution rate is 35.2% of the employee’s assess ment base. The maximum monthly assessment base for all types of insurance (excluding accident insurance and health insurance) equals seven times the average wage in the Slovak economy, that is, EUR7,644 in 2021. The assessment base for accident insur ance and health insurance is not limited. This means that the actual health insurance contribution (employers’ as well as employees’ part) and accident insurance (employers’ part only) is calculated based on the total amount of income that is subject to the respective insurance under the Slovak legislation.

The following social security and health insurance rates apply for 2021.

Selfemployed

Employer Employee individuals

Benefit % % %

Sickness insurance

1.4 1.4 4.4

Health insurance (a) 10.0 4.0 14.0

Old-age insurance (b) 14.0 4.0 18.0

Disability insurance 3.0 3.0 6.0

Accident insurance

0.8 (c) 0.0 0.0

Guarantee fund 0.25 0.0 0.0

Reserve fund 4.75 0.0 4.75

Unemployment insurance 1.0 1.0 0.0 (d) Total 35.2 13.4 47.15

(a) The health insurance contribution cap was eliminated from January 2017, and the amount of health insurance contribution is now computed from the actual amount of income regardless of the total amount of paid income subject to health insurance in the Slovak Republic.

(b) The Slovak old-age contribution consists of two pillars. The contributions are paid to two different social security institutions, which are the state Social Security Agency and one of the commercial pension fund management agen cies. The rates shown are the total rates of contributions.

(c) Employers remit accident insurance contributions of 0.8% of the employee’s assessment base (no limit applicable).

(d) Self-employed individuals are not required to make contributions for unem ployment insurance. If they elect to be insured, they make contributions at a rate of 2% of a self-determined assessment base (within statutory bounds).

Dividends from profits generated in accounting periods begin ning after 1 January 2011 are subject to health insurance. For dividends from profits generated in accounting periods begin ning between 1 January 2011 and 31 December 2012, a 10% rate and the common maximum assessment basis applies. For divi dends from profits generated in accounting periods beginning on or after 1 January 2013, the rate is 14%.

As of 1 January 2017, the obligation to pay health insurance from distributed dividends is abolished. However, the dividend income distributed from profits achieved for tax periods before 1 January 2017 is still subject to the health insurance, with a maximum contribution base amounting to 60 times the average monthly wage (that is, EUR65,520 for 2021).

Dividends paid by joint stock companies (or similar entities established abroad) whose shares are traded on a regulated

market (including foreign markets) are exempt from health insurance contributions.

The EU regulations on social and health insurance are binding in the Slovak Republic. Consequently, the respective regulations for European Economic Area (EEA) and Swiss citizens, and the applicable totalization agreements for other foreigners (see Totalization agreements) must be taken into account when deter mining the social and health insurance obligations of foreign in dividuals working in the Slovak Republic.

Totalization agreements. To provide relief from double social security taxes and to assure benefit coverage, the Slovak Republic has entered into totalization agreements with the following nonEU jurisdictions.

Australia Korea (South) Serbia

Canada Montenegro Turkey

Iran (a) North Macedonia Ukraine

Israel Quebec United States

Japan (b) Russian Federation Yugoslavia (c)

(a) This agreement was signed 19 January 2016 and is subject to the ratification process.

(b) This agreement entered into effect on 1 July 2019. (c) This agreement was entered into between the former Czechoslovakia and the former Yugoslavia in 1957. The Yugoslavia agreement applies to Bosnia and Herzegovina.

Totalization agreements with EU member states continue to be valid. However, effective from 1 May 2004, the EU regulations superseded these agreements.

Under a strict interpretation of the Slovak law, employers from non-EU and non-EEA countries (without a registered seat or a branch in the Slovak Republic) that have employees in the Slovak Republic are required to register for social security purposes in the Slovak Republic, to remit employer and employee contributions to the Slovak social system and to handle the related admin istration (unless their employees’ income is exempt from tax in the Slovak Republic or unless the Slovak Republic has entered into a bilateral agreement with the respective country).

D. Tax filing and payment procedures

In general, individuals who receive income exceeding 50% of the personal allowance (that is, EUR2,255.72 for 2021; see Section A) are required to file a tax return. An exception applies if indi viduals receive only employment income and/or other income and if all of such income is subject to withholding tax.

Tax returns must be filed by individuals who receive any of the following types of income:

• Income from an employer that is neither a Slovak taxpayer nor a foreign taxpayer under the Slovak tax law

• Foreign-source income (with certain statutory exemptions)

• In-kind compensation, if tax prepayments could not be with held

• Income other than employment income

In addition, individuals having only employment income who did not request that their employer perform the annual tax

reconciliation of their employment income and tax withholdings must file a tax return.

The tax year for individuals is the calendar year. Tax returns for each tax year must be filed within three months after the end of the respective tax year (that is, by 31 March of the year following the tax year). This deadline can be extended by three months on the filing of an announcement with the respective tax authority. If an individual who is a resident for tax purposes in the Slovak Republic receives foreign-source income, the deadline can be extended up to six months (that is, until 30 September) on the fil ing of an announcement.

Employment income received by 31 January of the following year that relates to the preceding year is regarded as income of the preceding year.

Advance tax payments are withheld monthly by Slovak employ ers or foreign persons that qualify as foreign payers of tax from all employment compensation paid by or through them. Indi viduals must make quarterly or monthly advance tax payments for rental and business income, if their last known tax liability exceeded EUR5,000. However, no advance tax payments from such income are paid if an individual also receives employment income that represents more than 50% of his or her personal income (if employment income represents a smaller share, half of the regular amount of advance tax payments is paid).

Individuals performing dependent activities in the Slovak Republic for neither Slovak nor foreign payers of tax must make monthly Slovak tax prepayments based on the actual income received.

In general, married persons are taxed separately on all types of income. The income from joint property, such as interest income or income from the sale or renting of the property, is generally divided between married persons equally, unless agreed other wise. Related expenses are divided in the same percentage as income.

E. Tax treaties

The Slovak Republic has entered into double tax treaties with the following jurisdictions (this list includes the double tax treaties entered into by the former Czechoslovakia, which the Slovak Republic honors).

Armenia India Poland Australia Indonesia Portugal

Austria Iran Romania Belarus Ireland Russian Federation Belgium Israel Serbia Bulgaria Italy Singapore Bosnia and Japan Slovenia

Herzegovina Kazakhstan South Africa

Brazil Korea (South) Spain

Canada Kuwait Sri Lanka

China Mainland Latvia Sweden

Croatia Libya Switzerland

Cyprus Lithuania Syria Czech Republic Luxembourg Taiwan

Denmark Malaysia Tunisia

Egypt* Malta Turkey

Estonia Mexico

Turkmenistan

Ethiopia Moldova Ukraine

Finland Mongolia United Arab

France Montenegro Emirates

Georgia Netherlands United Kingdom

Germany Nigeria United States

Greece North Macedonia Uzbekistan

Hungary Norway Vietnam Iceland

* This treaty has been ratified by the Slovak Republic but not by Egypt, so it is not yet in effect.

The method of elimination of double taxation is applied based on the tax treaty entered into between the Slovak Republic and the source country. However, for employment income from foreign sources, regardless of the method for the elimination of double taxation provided in the respective tax treaty, Slovak tax residents may apply the exemption method if both of the following condi tions are satisfied:

• The income was provably taxed abroad.

• Such treatment is more favorable for the individual.

If the Slovak Republic has not entered into a double tax treaty with the source country, the exemption method can be used for employment income if it is proven that the income was taxed in the source country.

F. Entry visas

Foreigners coming from EU and non-EU jurisdictions must comply with the immigration requirements.

Citizens of the EU/EEA and Switzerland. Citizens of the EU/EEA and Switzerland holding a valid identification card or passport or any other document proving their identity are entitled without any conditions or formalities to stay in the Slovak Republic for three months from the date of entry into the Slovak Republic. They are only required to notify the Foreigner Police about the stay in the Slovak Republic within 10 workdays after their entry into the Slovak Republic. For a stay exceeding 90 days, citizens of EU/EEA or Switzerland must register with the Foreigner Police. This registration needs to be submitted to the Foreigner Police within 30 days after the end of the three-month period beginning on the date of entry into the Slovak Republic. No visa or work permits are required for citizens of EU/EEA or Switzerland.

Non-EU nationals. Foreign nationals residing in jurisdictions for which a visa is not required can enter the Slovak Republic with out a visa and stay in the Slovak Republic for up to 90 days during a 180-day period. After their arrival in the Slovak Republic, they must register with the Foreigner Police within three days (unless they stay in a hotel; in such case, the hotel automatically processes the registration).

This possibility of staying in the Slovak Republic without a visa does not apply to non-EU nationals who work or perform other economic activities in the Slovak Republic. These individuals

need a proper type of work or entrepreneur visa unless they meet certain conditions to avoid this obligation.

For all non-EU nationals, a stay longer than 90 days in a 180-day period is possible only with a long-term visa or relevant resi dence permit.

Foreign nationals residing in jurisdictions for which a visa is required must have a valid visa to enter the Slovak Republic. These non-EU nationals must submit an application for a visa three months before arrival in the Slovak Republic at the earliest. Schengen visa. A Schengen visa is a short-term visa issued by the appropriate authorities to an individual for visiting or traveling within the Schengen area. Depending on the type of visa issued by the embassy or consulate of a Schengen country, different restrictions may apply to the particular visa based on the nature of the travel and other relevant circumstances. The most common type of visa issued to travelers can have a duration of a maximum of 90 days in every 180-day period beginning from the date of entry. The Schengen visa can be issued for single, double or multiple entries. It cannot be used for employment activity.

Long-term visa. A long-term visa or national visa is granted for the purpose of granting temporary residence in the Slovak Republic. This visa allows the individual to travel to Schengen countries under the condition that the presence of the individual does not exceed 90 days within a six-month period.

G. Working in the Slovak Republic

Work permits. The Act on Employment Services regulates the employment of foreigners in the Slovak Republic. Non-EU nationals must request permission to work in the Slovak Republic at the locally competent Office of Labour, Social Affairs and Family of the Slovak Republic. The office may require from the employer a written request for permission to employ a foreigner. An employer must report a job vacancy to the Central Labour Office at least 20 working days before applying for the job per mission. The process of reporting job vacancies can be omitted; however, this applies only for selected professions in regions with low unemployment rates as indicated by labor inspectorates.

EU Blue Card. The Blue Card is a type of temporary residence, which is issued to non-EU nationals for the purpose of highly qualified employment in the Slovak Republic. The basic requirement for acquiring the Blue Card is higher professional qualification in the form of university education. In addition, the agreed-upon salary must not be lower than 1.5 times the wage in the Slovak national economy in the relevant field, and an employment contract must be concluded for the duration of at least one year. A Blue Card entitles an individual to enter, reside and work in the Slovak Republic and to travel abroad and back. The application for the Blue Card generally must be submitted at the diplomatic mission of the Slovak Republic for a non-EU national’s country of citizenship or his or her country of residence. If a non-EU national resides legally in the Slovak Republic, the application may be submitted at the competent Foreigner Police for the place of residence. An employer must report a job vacancy to the Central Labour Office at least

15 working days before applying for the Blue Card. The employer must notify the Central Labour Office of the commencement and termination of the employment of a non-EU national within seven days. The Blue Card is issued for a maximum period of four years. If the duration of the employment relationship is shorter than four years, the Foreigner Police issues a Blue Card for the duration of the employment relationship extended by 90 days.

Self-employment. To engage in activities that have the character istics of a trade, an individual must apply for a trade license. This is an authorization to conduct activities that fall into the scope of a trade or business and is valid for the entire territory of the Slovak Republic. A sole trader is personally liable without limit for all debts incurred by his or her business. This applies to all of his or her assets (including private property). The acquisition of a trade license does not always enable an individual to legally start running a business in the Slovak Republic. Depending on the individual’s citizenship and type of residence in the Slovak Republic, in certain cases, an individual may not start conducting a business until he or she obtains temporary residence for the purpose of business and/or registers with the Commercial Register.

Intra-company transfer. The recent amendment (to the Act on Residence of Foreigners, effective from 1 May 2017) involved national transposition of Directive 2014/66/EU on the conditions of entry and residence of third-country nationals in the frame work of an intra-corporate transfer (also known as the ICT Directive). The purpose of this amendment is to facilitate mobil ity and accelerate the procedure for granting temporary residence permits for selected categories of employees who are nationals of third countries. These are the cases with an employer established outside of the EU that transfers an employee for more than 90 days, up to three years for managers and specialists and up to one year for trainees, to a branch within an EU member state (includ ing those covered by the EEA Agreement and the Swiss Confederation). However, once the EU member state implements the terms of the ICT Directive, the third-country nationals with an ICT permit issued in any EU member state (the location of first temporary residence) can enter, stay and work in one or more additional member states that have also implemented the ICT into local law, with little or no interruption to their second ment and vice versa. The main benefit of these new rules is to reduce the administrative burden associated with intra-corporate transfers of workers from non-EU third countries to EU member states. As of 1 May 2018, the secondment of third-country nationals directly by their employer established outside the EU to the Slovak Republic is possible only through the ICT procedure.

H. Temporary and permanent residence permits

Temporary residence. Various types of temporary residence are available for foreigners, depending on the type of their activity in the Slovak Republic (e.g., long-term study, research and develop ment activities, employment). Family members joining a non-EU national for a period longer than 90 days must request temporary residence for the purpose of reunion of the family. This request must be submitted at an embassy of the Slovak Republic or at the

Foreigner Police in the Slovak Republic. On the granting of a temporary residence permit, the foreigner must arrange for health insurance to cover any medical costs and expenses.

Permanent residence. A permanent residence permit grants a foreign national right to reside in the Slovak Republic and to travel abroad and back to the Slovak Republic. Foreign nationals with a permanent residence permit enjoy the same rights and duties as all Slovak citizens in most areas of life (for example, employment, health care and social affairs). The following are the three types of permanent residence:

• Permanent residence for five years

• Permanent residence for an unlimited time period

• Long-term residence for an unlimited time period

One of these types of permanent residence may also be obtained for the purpose of family reunion.