Bratislava is located in the southwestern corner of Slovakia and is the largest metropolitan area in the country, making it the most important retail market with the best-developed distribution networks. The cities of Kosice, Trnava, Trencin, Zilina, Poprad, and Nitra are the major manufacturing areas in Slovakia and important retail markets.
The Slovak retail sector is composed of private networks of retail and wholesale businesses. The trend towards Western style retailing that offers a wide variety of products, has been greatly influenced by the operations of foreign companies.
Lidl, a member of the Schwarz Group, had sales of EUR 1.7 billion (USD 1,9 billion) in 2021, the highest of any retailer. It operates approximately 160 stores throughout Slovakia, with more than 6,000 employees.
Tesco operates 157 outlets in Slovakia and employs about 8,500 people. The company’s retail stores include hypermarkets and supermarkets, upscale “galleries,” and a number of small-size retail stores called Tesco Express. Tesco also operates gasoline stations and provides mobile phone and financial services. In 2021, Tesco was the second most successful retailer in Slovakia with sales reaching EUR 1.5 billion (USD 1.64 billion).
Kaufland, also part of the Schwarz Group, was the third largest retail chain in 2021, with EUR 1.39 billion (USD 1,52 billion) in sales. Kaufland operates 73 stores and employs about 6,500 people in Slovakia.
The 2021 gross sales of the fourth largest retailer, Billa, which is part of the German retail chain Rewe, reached EUR 718 million (USD 784 million). With 160 stores and more than 4,000 employees, Billa operates both smaller supermarkets and hypermarkets in shopping centers and downtown areas.
Metro Cash & Carry is Slovakia’s fifth largest retailer. Metro’s six large hypermarkets operate on a similar business model as Costco and Sam’s Club chains in the United States. In 2021, the company had sales of EUR 420 million (USD 445 million). The company has about 1,250 employees.
Other international retail chains in Slovakia include Hornbach, OBI, Bauhaus, Drogerie Markt (DM), IKEA, and XXXLutz. Major Slovak retailers include COOP Jednota, Terno and Kraj. The expansion of large retail chains has caused smaller businesses to consolidate or liquidate, laying the groundwork for franchising opportunities.
Slovakia has two major ports on the Danube River, in Bratislava and Komarno. Both ports are operated by the Slovak Shipping and Ports company.
Using an Agent or Distributor
U.S. companies wishing to use distribution, franchising, and agency arrangements need to ensure that the agreements they put into place are in accordance with European Union (EU) and Slovak national laws. The Slovak Commercial Code closely follows EU legislation and recognizes agents, commissioned merchants, and brokers not bound by contract.
There are many agents and distributors in Slovakia competing to represent companies. Numerous Slovak agents, distributors, and trading companies have excellent business savvy, capital resources, and experienced personnel.
The U.S. Commercial Service offers its Gold Key Matching Service (GKS) and International Partner Search Service (IPS), and International Partner Search Plus Virtual Introductions to U.S. companies seeking potential business partners or representatives in Slovakia. The IPS provides U.S. firms with a shortlist of pre-screened Slovak contacts that have expressed an interest in representing a U.S. firm after reviewing the American company’s product information. The IPS Plus Virtual Introductions is the same as the IPS, but also includes virtual introductions via teleconference to the identified contacts (within 30 days of final service delivery). The GKS takes this a step further by arranging one-on-one business appointments with Slovak contacts when a representative from the U.S. firm visits Slovakia. Other customized contact-making services and market research are also available through the U.S. Commercial Service.
For more information how the U.S. Commercial Service can assist you in expanding your sales to the Slovak market, please contact the U.S. Commercial Service’s Global Markets office closest to you. The nearest Global Markets office can be located through the following website or contact the U.S. Commercial Service in Bratislava directly.
Establishing an Office
The Slovak Commercial Code provides for the establishment of branch offices, joint stock companies, simple joint stock companies, limited liability companies (LLCs), limited or unlimited partnerships, cooperatives, silent partnerships, and associations. All companies must register their names with the Slovak Commercial Register. The following procedures and documents are required for company registration:
(a) Lease contract for premises, or any approval of the owner of the premises.
(b) Approval of the office/company’s location by local authorities.
(c) Deposit a minimum share capital of EUR 5,000 (approximately USD 5,462) in a bank account by one or more shareholders.
(d) Trade authorization from the local trade authority.
(e) Satisfaction of minimum capital requirements is required. (This does not apply to businesses/owners from OECD Member states.)
The most common option for foreign companies is the limited liability company (LLC). It is the simplest to establish, permits 100 percent foreign ownership, and allows full repatriation of after-tax profits.
The following rules apply to Limited Liability Companies in Slovakia:
(a) Between 1 and 50 shareholders may form a limited liability company, and the total basic capital must be at least EUR 5,000 (USD 5,462) with a minimum participant deposit of EUR 750 (approximately USD 819) each.
(b) A supervisory board is not required but may be established.
(c) An official appraiser must value non-monetary contributions, and for certain contributions, two appraisers are required.
A Simple Joint Stock Company is tailored for start-ups because it allows easy entry and exit of potential investors from the company. A Simple Joint Stock Company has less strict incorporation and winding down rules; it can be established with a minimum registered capital of EUR 1 (about USD 1.09), and exit possibilities are well recognized under commercial code law, such as drag along, tag along, and shootout rights.
The forms for local office registration and all steps involved in establishing a local office are available on the Slovak Ministry of Justice’s website.
The process of registering a company with the Slovak Commercial Register takes approximately five days.
For the latest Investment Climate Statement (ICS) which includes information on investment and business environments in foreign economies pertinent to establishing and operating an office and to hiring employees, visit the U.S. Department of State’s Investment Climate Statements website.
Franchising
Franchising in Slovakia is growing and includes hotels, fast food operations, gasoline stations, and business services. There is no Slovak legislation specific to franchising. Franchising agreements are treated as commercial contracts and are regulated by the Slovak Commercial Code. U.S. franchises in Slovakia are still limited but include McDonald’s, Domino’s Pizza, Kentucky Fried Chicken, Subway, Marriott, Century 21, Remax, BNI, and FitCurves. Franchisers should be prepared to adjust franchise royalties and other mandatory payments to reflect the size of Slovakia’s small market and to offer creative financial options, as the financial resources of some of Slovakia’s most promising entrepreneurs could be limited.
The Slovak Franchise Association (SFA) supports the development of franchising in Slovakia for existing members as well as for companies planning to implement franchising in the future. The goal of the SFA is to build optimal franchising conditions for both franchisers and franchisees.
Direct Marketing
The main format used in direct sales in Slovakia is person-to-person sales. Party-plan direct selling is not as popular. Healthy and organic product categories, such as food and drinks, are experiencing growth. Wellness products and organic cosmetics are also favored by Slovak consumers. For many years, Avon has led Slovakia’s direct sales segment. Other direct marketing firms include Just, Herbalife, Oriflame, Mary Kay, Avon and Yves Rocher.
Joint Ventures/Licensing
The Slovak Commercial Code permits joint ventures and licensing. However, licensing is less common in Slovakia than it is in some other European countries. There is no specific legislation regulating joint ventures in Slovakia and there is no such legal term in Slovak law, though the law allows for the setting up and operation of various joint venture schemes and structures such as contractual joint ventures and equity joint ventures.
Express Delivery
Major global organizations such as DHL, FedEx, UPS, and others operate in Slovakia and offer express delivery services. Transit times vary but, for packages shipped from the United States to Slovakia, the average time is 2-4 days, including the customs clearance process. Starting July 1, 2021, the EU introduced new VAT eCommerce rules to ensure fair competition for EU businesses and reduce the VAT losses resulting from the import of low value consignments from third countries. The VAT exemption for imported goods having values below EUR 22 was abolished. To ensure VAT is collected at import, an import declaration is required for all goods entering the EU, regardless of their value. The EU provides two methods to collect the VAT on goods in consignments with values that do not exceed EUR 150: the Import One Stop Shop (IOSS) and special arrangements. Detailed information on both methods, as well as procedures and requirements can be found on the eCommerce section of the Slovak Customs Office website.
Due Diligence
The U.S. Commercial Service advises companies on the need to perform appropriate due diligence on their business partners and agents. The Bratislava office of the U.S. Commercial Service can assist U.S. companies in evaluating potential business partners. The International Company Profile Service (ICP) helps U.S. companies evaluate potential business partners by providing detailed reports on Slovak companies which have been personally visited by a Commercial Specialist or Commercial Officer of the U.S. Commercial Service. Through the ICP, clients can request answers to detailed questions about Slovak companies on a variety of issues and receive expert advice from our commercial staff about the relative strength of the firm in its market and its reliability, among other things. For more information, please contact office.bratislava@trade.gov.