Slovakia: investment incentives for regional development

The basis on which investment incentives are available to Slovak regions is regulated by new laws taking effect from 1 January 2008 .

Eligibility for incentives is conditional on the region’s rate of unemployment and is limited to investment in manufacturing, tourism, technology centres and strategic services. Priority is given to projects providing underdeveloped regions with up-to-date technology.

The investment incentives are a form of state aid and are available solely at the discretion of the Slovakian government. They must not exceed the EC limit on state aid which is 40% of the project cost in West Slovakia and 50% in Central and East Slovakia. There are higher limits in some cases for incentives on smaller projects given to small and medium enterprises. Aid limits for investment projects with eligible costs exceeding €50 million are calculated individually.

The limits can be calculated as a percentage of the eligible investment costs or as a percentage of the wage-cost of the jobs linked to the initial investment or by a combination of both methods.

Incentives may be given:

• by the Economy Ministry, to subsidise the acquisition of certain assets
• by the Finance Ministry, to provide income tax benefits
• by Ministry of Labour, Social Affairs and Family, to create new jobs
• where the state is the property owner or manager, to transfer or exchange intangible assets for less than market value

The legislation also provides favourable income tax treatment for up to five consecutive tax periods for taxpayers investing in qualifying projects, where certain conditions are satisfied. This comes in the form of tax relief for part of their tax base calculated by reference to their equity holding and acquisition costs of non-current assets.

Law: Act 561/2007 Coll. providing for investment incentives superseding Act no. 565/2001 Coll.; Act no. 595/2003 Coll. providing for income tax incentives