Introduction
Slovakia is a parliamentary democratic republic state. The state
is one of the two successors of the end of Communist rule in
Czechoslovakia in 1989 (the other successor state is Czech
Republic).1
Slovakia is a civil law country and its legal regime is based on
Austro-Hungarian codes.
In general, foreigners may acquire real estates, apart from
agricultural and forestry land in Slovakia.
In terms of the protection of private property, private property
rights are protected. The Slovak judiciary is independent and
comparatively effective. However, some court decisions can take a
long time to be made and the country still experience
corruption.2
Slovakia has been appraised for its economic freedom, especially
investment freedom, trade freedom, financial freedom, and fiscal
freedom. In respect of Slovakia's fiscal system, it is fairly
simple and moderate, both the income and corporate tax rates are a
flat rate of 19%. Other taxes include a value-added tax (VAT) of
19% and a property tax.3
Legal Guide
LAW
Slovakia is a civil law country and its legal regime is based on
Austro-Hungarian codes.
As such, court judgments in Slovakia do not have general legally
binding force (i.e. they are not a source of law).4 The highest legislative
body is the National Council and the highest judicial branches are
comprised of the:
- Constitutional Court;
- Supreme court; and
- Special court5
In respect of the real estate sector, the laws are complex. The
following are some of the relevant laws governs the land and
buildings in Slovakia:
- Constitution
- Civil Code
- Act on Ownership of Apartments and Non-Residential
Premises
- Act on Lease and Sublease of Non-residential Premises
- Decree No. 158/2004 Coll. on building materials (in force since
April 2004)
- Act N 90/1998 Coll. on building products (in force since
October 1, 1998) as amended by Act 314/ 2004
- Act No. 162 on the Real Estate Cadastre
- Act 237/2000 amending the Act 50/1976 Coll. on Territorial
Planning and Building Order (Building Act)
- Land-Use Planning and Building Order Act (Building Act)
- Act 138/1992 on Authorised Architects and Authorised Civil
Engineers, as amended
- Act No. 138/1992 Coll. on Authorised Architects and Authorised
Civil Engineers5
OWNERSHIP & RIGHTS
Slovakia is a civil law country and its legal regime is based on
Austro-Hungarian codes. In such legal system, decisions made
by courts do not have legal binding force, as they are not source
of law.
In general, foreign individuals may acquire real estates, apart
from agricultural and forestry land in Slovakia. Furthermore, a
Slovak incorporated company may acquire real estate, even though
the company is owned from abroad.
Pursuant to the Civil Code, ownership and right of possession
can be acquired in Slovakia. In addition, various other rights,
such as the third party rights (such as encumbrances – easements
and/or servitudes, liens and right of pre-emption). Encumbrances
can be established both as a right in rem as well as in personam.
Rights established as purely contractual rights can only exist
between the relevant parties to the contract and is not successive,
unless agreed otherwise. In terms of the pre-emption right, it can
be established in rem only if parties agreed so.6
BUYING PROCEDURE
The buying procedure for an off-plan property is in general as
follows:
1. Reserve the property
Once you have
chosen your ideal property, a reservation agreement is to be signed
with the seller and a reservation deposit needs to be paid (will
form part of the purchase price).
2. Exchange Contract
Before signing
preliminary purchase contract, buyers are suggested to consult a
local law firm or conveyancing lawyer on analyse the risk, any
unfavourable terms of the contract. The conveyancing lawyer
is also able to carry out a due diligence check for buyers for the
purpose of finding out whether the seller is in the legitimate
position of selling the subject property. Upon signing of the
contract, first instalment/payment is often required.
3. Title Transfer
Once the Final Building
Approval is granted by the government, the seller will inform the
buyer to take over the property and sign the final property
purchase agreement and settle the final payments. Following this,
the seller will apply to the Poprad Land Registry for the transfer
of the title deed.
There is no obligation to register any rights in land in
Slovakia although in majority of the cases registration is required
for creation of such rights itself.7
Taxation (for non-resident foreign individuals)
TAXATION when acquiring/buying property
| category |
tax/fee rate |
scope/remark |
| Value Added Tax (VAT) |
19% within 5 years after the official completin of the
contruction |
|
| Property Transfer Tax |
NIL |
abolished in 2005 |
TAXATION when owning/holding property
| category |
tax/fee rate |
scope/remark |
| Income Tax |
19% |
Interest from loans provided to finance real estate,
expenses
and property related costs (e.g. management fees,
insurance etc.) can be exempted from income tax. |
| Property Tax |
- SKK12/m2 for flats
- SKK17/m2 for villas
|
This is an annual tax. |
| Holding Property Tax |
|
A annual local real estate and land tax, which is
imposed
differently depending on region. (e.g. SKK20/m2 in
High
Tatras area) |
TAXATION when Selling/DISPOSing property
| category |
tax/fee rate |
scope/remark |
| Capital Gains Tax (CGT) |
no CGT as such, please refer to the Income tax
column |
|
| Income Tax |
19% of the profit |
|
| Inheritance Tax |
Nil |
abolished in
2004 |
Slovakia has entered double taxation agreements (DTA) with
various countries, including the UK, most other the EU member
countries, the USA and Switzerland. For more information please
refer to Slovakia Ministry of Finance website at: http://www.finance.gov.sk/en/Default.aspx?CatID=285
Top