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[null,"Prepared By:","Contributors:"]
[null,"Cechova & Partners"]
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["Social Enterprise Law Surveys"]
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["Report Generated: 5/2/2025"]
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["View your report results on next tab"]

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["Question","Slovak Republic"]
["I. Enterprise Form"]
["What jurisdiction(s) do you practice in?","Slovak Republic (“Slovakia”)\n"]
["What are the most commonly used types of for-profit corporate organizational forms in your jurisdiction (e.g., corporation, limited liability company, benefit corporation, social purpose corporation, etc.) used by Enterprises operating a trade or business (rather than for investment or holding company purposes)? Please briefly describe these forms. a. Of these, which are the most common for-profit organizational forms used by Enterprises seeking financing from investors and that will have multiple owners? b. Other than organizational forms specifically designed for Social Enterprises (and discussed below under Question 4), which, if any, are the most common for-profit organizational forms used by Social Enterprises?"," The Slovak Commercial Code provides five main forms of for-profit representation in the Slovak Republic: \n\n \n\t            A joint-stock company; \n\t            A limited-liability company; \n\t            A general partnership; \n\t            A limited partnership; \n\t            A simple joint-stock company; and \n\t            A cooperative. \n \n\n Moreover, special acts allow also establishment of three forms of representation regulated by the European Union laws: \n\n \n\t            European Company (SE); \n\t            European Economic Interest Grouping (EEIG); and \n\t            European Cooperative Society (SCE). \n \n\n The most common for-profit organizational form utilized in Slovakia is the limited liability company (“LLC”). They represent the most widely used form of business companies in the country. It is more appropriate where a simpler and less regulated company is required. An LLC may be established by one or more founders, the number of which shall not exceed 50. Its advantages include a registered capital of only EUR 5,000, shareholder´s liability limited only up to the amount of his unpaid contribution to the registered capital, which thus creates a solid protection in the form of a corporate veil. Contribution to the registered capital may be either monetary or in-kind. Minimum shareholding in the registered capital of LLC is EUR 750 (In case of a sole founder of LLC, the whole amount of the registered capital has to be paid up prior to the registration of the LLC).    \n\n Another common for-profit organizational form is the joint-stock company (“JSC”), which is generally more suitable for larger projects in terms of raising the initial capital and at the same time provides a greater level of anonymity for its shareholders, however ultimate beneficial owners (“UBOs”) are registered with the respective Commercial Register and are as well registered with the Register of UBO´s. The JSC is in principle analogous to an English public limited company. The company is liable for any breach of its obligations with its entire property. A shareholder in a joint-stock company is not liable for the obligations of the company. It is, however, liable to the company to the extent of any amounts unpaid on the shares it holds. JSC may be formed by a private agreement to subscribe for shares or by a public offer for subscription. The legal regulation of the joint-stock company distinguishes between a “private” and a “public” joint-stock company.  Its registered capital in the amount of EUR 25,000 (with certain exemptions where legal regulation specifies a higher amount of registered capital for joint-stock companies operating certain business activities, such as banks, securities traders, and the like) helps to evoke the general impression of a strong and stable business partner. A joint-stock company must have two or more founders, unless the sole founder is a legal entity.    \n\n The remaining organizations mentioned above are not that common in practice. \n\n Please note that an extensive legal reform on business corporations has been announced in Slovakia by the government in the upcoming future. Substantive changes are envisaged (e.g. de-regulation of simple joint-stock companies, changes regarding the registered capital obligations, etc.). \n\n a. LLCs are, by number, the most common for-profit organizational form in Slovakia. Second to them are JSCs. Both of them may have multiple owners and are open to investor’s incentives.   \n\n b.  According to the official Register of social enterprises maintained by the Slovak Ministry of Labor, Social Affairs and Family (“Ministry”), registered social enterprises overwhelmingly favor LLCs (included below under Question 4. as a form of social enterprise). \n\n As for other for-profit organizational forms (not covered in Question 4. below) – we are not particularly aware of such other organizational forms. However, the official Register of social enterprises only comprises such social enterprises, which underwent the process of registration in order to obtain the status of “Registered social enterprise”, thus there may be also other social enterprises (as defined in this questionnaire) not registered at all, operated informally and voluntarily. \n"]
["Do any of your jurisdiction’s traditional organizational forms require or permit the board or managers to consider, balance or prioritize interests other than shareholder value in decision making? What other interests, if any, are they required to or allowed to consider (e.g., interests of employees, customers, the environment, etc.)?","The respective provisions of the Slovak Commercial Code explicitly stipulate such legal requirement for the executive directors (in case of LLC) / members of the board of managers (in case of JSC) in this matter, and that is to perform their duties with due care and diligence and in accordance with interests of the company and its shareholders without putting their own interests or interests of only certain shareholders or third parties over the interests of the company. Thus, nothing in principle restricts the above individuals to take also other (legally permissible) interests into consideration (e.g. if such interests are stipulated in foundation documents), as far as they are in line with the above criterion.\n"]
["Does your jurisdiction have organizational forms specifically designed for Social Enterprises? If so: a. What type(s) of organizational forms are they? b. How do they materially differ from the most closely analogous traditional organizational form? c. What are the main benefits for founders and funders of such organizational forms? d. Are there any restrictions on the use of these organizational forms (such as profit-caps, stakeholder involvement and impact reporting)? If there are, what are they? e. Are there any material differences in timing or costs for forming a Social Enterprise versus a traditional Enterprise? f. How prevalent and well known are Social Enterprise forms?",{"$cut":{"chars":22441,"head":" No, there are no organizational forms specifically designed solely as Social Enterprises (as defined in this questionnaire). \n\n But there are certain organizational forms listed below, which were basically already recognized by law (long) time ago, in relation to which the legislator decided to designate them and choose these organizational forms as suitable for operating as social enterprises. In other words, also other potential organizational forms not explicitly mentioned below may serve as Social Enterprises (as defined by this questionnaire), but they cannot be recognized as social enterprises (in Slovak: Sociálne podniky) under the Slovak regulations (see below) – the term used is the same, but the definition under this questionnaire is broader than the one contained in the Slovak regulations. Where we are referring to the definition under this questionnaire, we use capital letters (“Social Enterprise”). Where we are referring to the social enterprises as understood by Slovak laws, we do not use capital letters (“social enterprise”). \n\n In Slovakia, the existence and operation of social enterprises is governed primarily by Act No. 112/2018 Coll., on Social Economy and Social Enterprises and on changing and supplementing certain acts, as amended (hereinafter the “Act”). \n\n Firstly, it needs to be distinguished that the Act uses various closely-related terms: “subject of social economy”, “social enterprises” or “enterprise with the social impact”, whereas all of them may theoretically fall under the definition of Social Enterprise as defined in this questionnaire. In our answers, we will focus particularly on the social enterprises, but a brief description of other remaining terms is necessary to understand the legislation. \n\n Subject of social economy is a civic association, foundation, non-investment fund, nonprofit organization providing services of general benefit (or “NO” in short, as understood by Slovak laws), special purpose church facility, business company (corporation), cooperative and natural person – entrepreneur, who is also an employer, whereas they: \n\n \n\t are not majority controlled by a state authority, the state authority does not finance them for the most part, does not appoint or elect a statutory body or more than half of its members and does not appoint or elect more than half of the members of the management body or supervisory body; \n\t carry out an economic activity or a non-economic activity within the framework of social economy activities; and \n\t do business or perform other gainful activity in accordance with special regulations, they do not perform them exclusively for the purpose of making a profit or use the profit from them in the manner provided for in the Act. \n \n\n If the subject of social economy meets certain additional conditions stipulated within the Act, it can fall under the definition of (i) social enterprises or (ii) enterprises with the social impact (with the sole exemption of a noninvestment fund, which cannot be an enterprise with the social impact). \n\n \n\t Pursuant to the Act, a social enterprise is a subject of social economy: \n\t which carries out an economic activity on a continuous basis, independently, on its own behalf and under its own responsibility; \n\t whose main goal is to achieve a measurable positive social impact; \n\t in which the goods or services, which it produces, supplies, provides or distributes, or the way in which they are produced or provided, contribute to the attainment of the positive social impact; which, if \n \n\n \n\t makes a profit from its activities, uses more than 50% of the profit after tax to achieve the main objective under point b) above; \n\t distributes a part of its profits according to the Slovak Commercial Code, it is distributed according to procedures and rules that do not interfere with the main goal according to letter b) above; \n \n\n \n\t which involves so called “interested persons” as defined by the Act in the management of its economic activities. \n \n\n As for an enterprise with a social impact , it can be a civic association, founda"}}]
["Are Social Enterprises permitted to be formed and operated as Nonprofits? If so: a. Are Nonprofits that are Social Enterprises treated differently under the law as compared to Nonprofits that are not Social Enterprises, whether from a corporate, tax or other perspective? b. Are there any material benefits of, and/or restrictions on, using a Nonprofit form for Social Enterprises that does not apply to Nonprofits that are not Social Enterprises? c. Is there any type of “hybrid” Nonprofit form that requires less reporting and/or allows for faster formation? If so, please describe the drawbacks of utilizing this form (i.e. fewer tax benefits). d. How prevalent is the use of Nonprofits for Social Enterprises?","Yes, some of the legal organizational forms mentioned above may have also a Nonprofit character (e.g. civic associations, NOs, etc. - see above).\n(a) No, the Act clearly stipulates what constitutes a social enterprise and does not specify more precise differences based on the individual organizational forms.\n(b) Only registered social enterprises (including both Nonprofit, as well as for-profit organizational forms) are eligible to receive certain forms of aid pursuant to the Act and other legal acts (please see below in chapter Funding, question 4.). Thus, it is more beneficial to be registered as a (Nonprofit) social enterprise (e.g. social enterprise in a form of civic association) rather than being “simple” Nonprofit organization without the status of social enterprise (e.g. civic association).\nMoreover, if a NO, foundation, non-investment fund or civic association do not have a status of a registered social enterprise, their income is exempt from tax, except for secondary income, which is subject to the tax deduction. Practically speaking, the same also applies in case of social enterprises, which have gained the status of a registered social enterprise. Moreover, in case of registered social enterprises, another difference lies within the requirements and procedure for submitting the annual report and financial statements, which must follow the respective provisions of the Act.\n(c) Under our knowledge, no.\n(d) Very little. The majority of registered social enterprises in Slovakia is incorporated as LLCs. On the other hand, we cannot answer with such certainty with regard to unregistered social enterprises (i.e. such Enterprises, which are not registered but execute socially beneficial activities voluntarily on their own account).\n \n"]
["Does your jurisdiction allow for worker-owned Enterprises, such as cooperatives? If so, please describe any material benefits of, and/or restrictions on, using such forms.","Yes, the Slovak jurisdiction does recognize and regulate cooperatives (please see above).\n"]
["Are there unique reporting requirements for Social Enterprises? If there are, please describe them. Please also discuss what government bodies Social Enterprises are required to report to."," Under the Act, a registered social enterprise shall prepare an annual report for the calendar year within the deadline specified by its statutory body or its foundation document, but no later than until 30 June of the following calendar year. \n\n The annual report of a registered social enterprise contains in particular: \n\n \n\t an assessment of the achievement of the positive social impact that the registered social enterprise has mentioned in its foundation document, and an overview of the activities carried out in the calendar year; \n\t a financial statement and evaluation of basic data contained therein; \n\t an auditor´s report, if the registered social enterprise has a statutory audit obligation; \n\t a statement of cash receipts and payments; \n\t an overview of incomes differentiated by their source; \n\t status and transfers of assets and liabilities; \n\t the composition of bodies of the registered social enterprise and their changes that took place during the respective calendar year; and \n\t data determined by the general meeting, the board of directors or another similar body of the registered social enterprise. \n \n\n The registered social enterprise submits the annual report to the Ministry by 15 July of the following calendar year, which publishes it on its websites. \n\n Furthermore, the registered social enterprise is obliged to publish an annual report on its websites, if it operates such. \n"]
["In your jurisdiction, has case law and jurisprudence evolved to address Social Enterprises? If there is meaningful jurisprudence around Social Enterprises, please provide some brief examples.","Not to our knowledge.\n"]
["Does your jurisdiction have any ESG requirements for Enterprises generally? If it does, please describe.","Generally, no.\nSlovak legal framework only recognizes general principles such as not to harm anyone, act in accordance with good morals, protection of environment, ensuring health and safety during the work, protection of weaker subjects/parties (e.g. pregnant women, mothers, disabled individuals, vulnerable persons, etc.). Exemptions may apply to certain rare activities or individuals, e.g. asset managers and their duty to take the ESG principles into consideration when integrating the exercise of shareholder´s rights into asset manager´s investment strategy (these principles specify how an asset manager should monitor JSCs, negotiate with JSCs, exercise shareholder´s rights, cooperate with other shareholders, etc.). The abovementioned general principles are stipulated within various legal acts for a relatively long time, but there is no complex and comprehensive legislation on the ESG principles applicable to the Enterprises in general.\nNevertheless, in general, it may be said that especially in connection with globalization, imperfections and issue of existing social systems and structural problems of the labor market, the social economy and social entrepreneurship are becoming increasingly important in Slovakia.\n"]
["Does your jurisdiction have any ESG requirements specifically for Social Enterprises? If it does, please describe.","Yes, those are stipulated primarily in the Act itself.\nPlease kindly refer to the Question 2, where the definition of social enterprise is contained. The Act itself further stipulates what constitutes a “socially beneficial activity”, what constitutes a “positive social impact” (i.e. fulfilment of “public” or “communal” interests, which are defined in the Act as well), who is considered as a “disadvantaged individual”, “vulnerable individual”, etc.\nThus, fulfilment of the principles of socially responsible business arises from the very essence of social enterprises, as their general purpose is to fulfill the public or community interest by providing socially beneficial services, such as provision of social assistance, humanitarian aid, protection and creation of the environment, protection of human rights and fundamental freedoms, etc.\n"]
["Does your jurisdiction have any ESG requirements for investors? If it does, please describe.","Under our knowledge, no. Foreign investments are in general not restricted in the Slovak Republic, and any investor is welcomed to carry out its investment in Slovakia. In order to support foreign and domestic investments, the Ministry of Economy of the Slovak Republic, established The Slovak Investment and Trade Development Agency (SARIO). SARIO provides a wide portfolio of services to domestic and foreign investors. The Investment Projects Department (OIP) of the SARIO Agency is working on the implementation to increase an influx of investments with higher added value, with an emphasis on investments in research and development.\nForeign investors may receive incentives and state aid in the Slovak Republic. Forms in which such aid is varies; it includes direct state aid (e.g. subsidy, grant, contribution, etc.) or indirect state aid (e.g. state guarantee, tax relief, option to acquire property at a lower price in comparison to its market value, etc.). State aid may be provided for various (legally presumed) purposes, e.g. regional development, education of employees, employment support, research and development, environment, etc.\nInvestment aid in the Slovak Republic is fully harmonized with EU legislation. The details on possible types of investments incentives are governed primarily by the Slovak Act on Investment Aid, which includes general conditions under which investment incentives are made available to investors (no specific ESG criteria though). Other particular acts may stipulate further conditions though (depending on the investor’s goal and incentive requested).\nState aid in connection specifically to the social enterprises are described further below.\n"]
["II. Funding"]
["Are any major investor classes (e.g., pension funds, mutual funds, etc.) required to look at ESG issues when making investment decisions in your jurisdiction? a. If they are, please describe the requirements. b. If they are not, are they permitted to consider such factors? c. What other relevant factors do investors tend to consider (aside from profit motive).","Under our knowledge, investors in Slovakia are not obliged to take into account the fulfilment of ESG principles.\nOn the other hand, the growing popularity of socially responsible entrepreneurship is also reflected in the recommendations of the UN, OECD or the EU, which should guide enterprises to implement the principles of ESG into their businesses. Naturally, some investors take these principles into account, but on a voluntary basis. It is also important to mention that, on a higher level, the corporate social responsibility (“CSR”) represents the main goal of the Europe 2020 Strategy and makes a significant contribution to meeting the objectives of the Treaty on European Union, which are sustainable development and a highly competitive social market economy.\n(a) N/A\n(b) Yes, please see above.\n(c) When considering an investment in the Slovak Republic, it is advisable to consider whether an investment protection treaty is in place between the Slovak Republic and the investor’s country of residence. The Slovak Republic has taken over the rights and obligations of the former CSFR under various investment protection treaties. There are treaties in force e.g. with the United Kingdom, United States, France, and Germany. \nThe list of the applicable treaties is available at the website of the Ministry of Finance of the Slovak Republic. Moreover, factors such as political stability, inflation, (road) infrastructure, quality of workforce, strategic location, labor productivity, quality of business environment, bureaucracy burden, etc. also need to be taken into consideration (depending on investor’s aim).\n"]
["What kinds of philanthropic funding do Social Enterprises in your jurisdiction commonly receive (e.g., grants, charitable investment, traditional investment)?","In terms of respective provisions of the Act, social enterprises can receive various forms of state aid (please see Question 4 below), whereas outside the scope of the Act, there are various philanthropic funding forms possible, e.g. donations, grants, etc. The type of funding typically varies based on the Enterprise form that the social enterprise chooses.\n"]
["How prevalent, if at all, are new for-profit impact investments in your jurisdiction (e.g. traditional instruments with impact terms, new investment instruments, aggregation with philanthropic capital, community based funding, etc.)?","Under our knowledge, not very prevalent so far, since ESG is a fairly new concept in the Central Europe still ongoing its implementation into the Slovak social and legal life.\nSeveral examples of for-profit impacts investments in Slovakia have occurred in the past though, thus it may be said that for-profit impact investments are slowly increasing.\n"]
["What are the types of government funding and support available to Social Enterprises, if any, available in your jurisdiction (e.g., grants, investments, bonds, and guarantees)? a. How difficult is it for Social Enterprises to obtain government funding? b. Is any government funding limited to Enterprises incorporated using Social Enterprise forms?","Government funding and its conditions in Slovakia aimed at social enterprises are governed by the respective provisions of the Act (and other materially related acts, but for the purposes of this question, they are not strictly relevant) and can be divided into direct and indirect aid.\nDirect aid includes various means, particularly (i) investment aid, (ii) compensatory grant and (iii) placement and compensation allowance. As for the indirect means of aid, Slovak legislation recognizes (i) income tax relief (please see below), (ii) lower VAT rate, (iii) aid aimed at supporting demand and service vouchers, (iv) realization of exclusive orders within the public sector (by reserving the right for social enterprises to participate in a public procurement and by reserving the performance of a contract within the programs of sheltered employment programs, provided that in both cases, at least 30% of the employees of such social enterprises are disabled or otherwise disadvantaged persons), (v) duty of contracting authorities to take into consideration the “social factor” within at least 6% of public procurements and (vi) quota system.\n(a) Meeting the statutory conditions and thus obtaining government funding is under our opinion relatively undemanding (with probably a sole exception of non-refundable investment grant); it is however important and necessary to be officially registered as a social enterprise with the Ministry. The conditions and process of registration is covered by the Act, whereas the applying social enterprise must evidence various facts, e.g. that it is trustworthy, without a criminal record, has not breached a ban on illegal employment within last three years, has prepared a project of activities of registered social enterprise, etc. It should be noted that as of October 2020, the Ministry launched the national project called “Investing Support of Registered Social Enterprises – Non-Refundable aid”, in which more than EUR 43 mil. of financial funds will be allocated to the social enterprises.\n(b) Aid stipulated (both direct and indirect, as stated above) within the Act (and other related laws) provided directly for social enterprises is available solely to them. On the other hand, similar forms of aid are available to other subjects (i.e. which are not social enterprises - please see further below).\nAs for other forms of government aid, special act on state aid distinguishes once again direct (subsidy, grant, payment of interests or a part of the interest on the loan, repayable financial assistance provided on more favorable terms than market terms, etc.) and indirect forms (a state guarantee or a bank guarantee provided on more favorable terms than market terms, tax relief, relief from penalties, fines, penalty interest or other sanctions, etc.) of aid, provided that relevant subjects (all subjects, not only social enterprises) meet all statutory conditions (mainly purpose, for which the specific type of aid is granted).\n"]
["Are there any companies that are formed as a Social Enterprise listed on your jurisdiction’s leading securities exchange(s)?","No. There are currently no public JSCs registered as social enterprises with the Ministry. We cannot say the same for Social Enterprises (as defined in this questionnaire), which are not registered, i.e. some publicly traded companies may be actually supporting socially beneficial activities or principles of ESG.\n"]
["To what extent are publicly traded Enterprises required to disclose ESG related factors in annual reports/public filings in your jurisdiction."," Not all of the publicly traded Enterprises are automatically required to disclose ESG information. But, if a particular Enterprise can be subsumed under the legal definition of so called “subject of public interest”, certain ESG reporting duties exist, which were incorporated into the Slovak legal framework by Directive 2014/95/EU as regards disclosure of non-financial and diversity information by certain large undertakings and groups (see below). \n\n Subjects of public interest (in particular an entity which has issued securities and they have been admitted to trading on a regulated market of any Member State of the EU), whose average recalculated number of employees for the accounting period exceeded 500 employees, are also obliged to provide in the annual report non-financial information on the development, conduct, position and impact of the entity's activities on the environment, social and employment, information on respect for human rights and information on the fight against corruption and bribery, namely: \n\n \n\t brief description of the business model, \n\t a description and results of the application of the entity's CSR policy, including due diligence procedures, \n\t a description of the principal risks of the entity's effect on CSR arising from the entity's operations that could have adverse consequences and, where appropriate, a description of the business relationships, products or services that the entity provides and how the entity provides these risk management, \n\t a reference to the information on the amounts recognized in the financial statement and an explanation of these amounts in terms of the effects on CSR, if appropriate. \n \n"]
["How prevalent, if at all, are impact bonds in your jurisdiction?","Impact bonds are not prevalent in any way in Slovakia.\n"]
["In your jurisdiction, are there any restrictions on foreign investments or donations that are unique to Social Enterprises (whether incorporated as for profit entities or as Nonprofits)?","No, under our knowledge, there are no restrictions. On the other hand, the Ministry of Economy of the Slovak Republic envisages monitoring foreign direct investments, which could disrupt security and public order.\n"]
["Is “crowdfunding” legal in your jurisdiction? Are there rules under applicable securities laws that make it easier for smaller businesses or Social Enterprises to take money from investors that are not sophisticated/accredited/qualified under applicable statutes?","Yes, crowdfunding is legal in Slovakia. There are already several platforms, mostly focused on innovative and creative ideas for businesses. Some operate both in Slovakia and Czech Republic at the same time.\nAs for the second question, there are no such rules under our knowledge.\n"]
["III. Tax"]
["Are there any tax exemptions that are uniquely available for Social Enterprises? a. Please describe any tax exemptions that are available and whether they are partial or full. b. Are they dependent on the Social Enterprise utilized using a specific organizational form (e.g., for profit vs. Nonprofit form)? c. Please describe any other key requirements of the available tax exemptions (e.g., restrictions on sources or uses of funds, restrictions on commercial activities, etc.).","Please note that we are not registered tax/accounting advisors and thus our answers are of purely general nature. Any particularities should be discussed with registered tax/accounting advisors, if needed.\nYes, there is a unique possibility to reduce the VAT rate on goods and services (Section 27 of the Slovak Act on VAT) and to apply for an income tax relief (Section 30d of the Slovak Act on Income Tax). However, these benefits only apply to social enterprises that underwent the process of registration with the Ministry and were granted the official status of a registered social enterprise.\n(a) Tax exemptions in Slovakia can be considered both partial or full. In terms of income tax, the income tax relief can be applied for, when the registered social enterprise (i) is a legal person, (ii) fulfills and supports public, not community benefit, (iii) does not apply for an income tax relief designated for recipients of investment aid or stimulus, (iv) does not does not apply for a deduction of expenses and (v) is not a recipient of a share of the tax paid by taxable subjects (i.e. the so called “2% or 3%” in Slovakia). If a social enterprise successfully applied for such income tax relief, it must use the full amount of the tax relief for further achieving of the main goal. If a social enterprise decides to commit 100% of its profit to the cause they strive for, it should pay no income tax. Other criteria and conditions are set in Section 30d of the Slovak Act on Income Tax.\nIn relation to the VAT - the VAT rate base is reduced from 20% to 10%, if several statutory conditions are met by the registered social enterprise (in this case both natural and legal persons can obtain a reduced VAT rate base). Such a reduction can be obtained for goods and services supplied by a registered social enterprise which uses 100% of its profit after tax to achieve its main goal (and thus fulfills and supports both public and community benefit) to an eligible customer within the activities of a social economy, provided that this does not cause a distortion of the economic competition incompatible with the internal market, whereas the eligible customer is a person other than a taxable person if it is a natural person, a subject of social economy or a public authority.\n(b) No. As mentioned above, when it comes down to registered social enterprises, the key factor determining the income tax relief is the amount of “profit commitment” set out in the base document, not the choice of a specific organizational form. Practically speaking, if an LLC operating as a registered social enterprise decides to commit 100% of its profit, then it should pay no income tax.\n(c) Please see paragraph (a) above.\n"]
["Are individuals or other organizations able to provide tax deductible donations to for-profit Social Enterprises? If they are, please describe any restrictions applicable to tax deductible donations?","Yes, donations (to social enterprises) are generally not subject to taxation, however, certain exceptions apply. In case of a natural person, donations given to a natural person in connection with the performance of dependent work, entrepreneurship, other self-employment activity or donations given to a healthcare provider are subject to income tax.\nAs regards to legal persons, only donations given to legal person operating as a healthcare provider or by inheritance are subject to income tax.\n"]
["Are there any other tax benefits uniquely available for Social Enterprises? (e.g. deferrals, favorable tax rates, business deductions, etc.)","Under our knowledge, no. The Slovak legal framework does not stipulate any other forms of tax benefits exclusive to social enterprises, but there are other means of tax relief generally available to taxpayers, which can also be applied in case of social enterprises, such as tax relief for recipients of investment aid. However, as mentioned above, these reliefs cannot be used in parallel with the income tax relief designated for social enterprises.\nIt is also important to mention the possibility for a municipality or self-governing region to issue a general binding regulation (despite not being uniquely available for social enterprises), which would exempt social enterprises from certain local taxes, or lower the rate of such taxes, such as taxes on real estate, buildings, housing and non-residential premises etc.).\n"]
["Does your jurisdiction provide for reciprocal recognition of tax-exempt status that has been granted under the law of any other jurisdictions?","To our current knowledge, no. In such case, the taxation regime and applying for tax reliefs should be governed by international treaties on prevention of double taxation concluded between Slovakia and other countries.\n  \n"]
["IV. Governmental Infrastructure"]
["Does your jurisdiction have Regulatory Sandboxes or similar policy frameworks for Social Enterprises? If it does, please describe.","Under our current knowledge, such regulatory Sandboxes are not implemented yet in Slovakia, but the Slovak National Bank, in cooperation with the Center for Financial Innovations, has launched an initiative to create the first Regulatory Sandbox (approximately in 2021).\n"]
["What government operational support, resources, training or services, are available for small businesses or Social Enterprises?","The support of small and medium-sized Enterprises is generally within the competence of the Slovak Business Agency (co-founded by the Ministry of Economy of the Slovak Republic, which, during these days, is responsible for helping individual businesses with getting through the COVID-19 pandemic and the related economic crisis), which utilizes both financial (microloan programs, Innovation and Technology Fund, etc.) and non-financial services (counseling, mentoring, co-working etc.).Other state authorities may also provide particular supportive programmers for small and medium Enterprises.\nAs for other (more general) forms of government aid, special Act on State Aid distinguishes once again direct (subsidy, grant, payment of interests or a part of the interest on the loan, repayable financial assistance provided on more favorable terms than market terms, etc.) and indirect forms (a state guarantee or a bank guarantee provided on more favorable terms than market terms, tax relief, relief from penalties, fines, penalty interest or other sanctions, etc.) of aid, provided that relevant subjects (all subjects, not only small businesses or social enterprises) meet all statutory conditions (mainly purpose for which aid is granted).\nAs regards particularly social enterprises - in 2018, the Ministry has launched the National Project of the Institute of Social Economy. The aim of the project is to create and verify adjustment of the support for the development of the social economy in the Slovak Republic on the basis of the Act. Its implementation will enable to create and verify the accuracy of functioning of the support system for the development and adjustment of the social economy, information dissemination about possibilities provided by the Act – searching for potential applicants for establishment and registration of social enterprises, their motivation, management and support, organization of professional conferences on the national level, creation and continual updating of the website which contain comprehensive information on social economy entities support, presentation of the best practices in Slovakia and abroad. As a part of the project’s activities, there is a network of supportive Regional Social Economy Centers being established. There are well trained coordinators available in who provide detailed information in the first steps before registration of a social enterprise according to the law, e.g. what conditions is candidate obliged to fulfill, what basic documents are required, what should the documents include and where to address them. The implementation of the project should create a space for a socially oriented economy as an integral part of the public economy. During the project, designing, implementing, monitoring and verifying of models of social economy entities is being performed. The suitability of these models will be assessed in terms of institutional, organizational, financial, tax, management, labor law and personnel perspective. After the evaluation of social economy entity models, there will be proposed recommendations of the best practices of social economy entities. It will include recommendations for legislative changes in order to identify and subsequently support the successful models in Slovak conditions.\nTo sum up, there are no Regulatory Sandboxes in operation as of now (with the exception of the one mentioned above within question 1.), however, it is worth mentioning that the Slovak Business Agency has started a new program for the year 2021, which aims to operate as a virtual incubator for new businesses by providing mentorship and consultations, developing proper networking and thus allowing potential business creators to gain various resourceful contacts.\n"]
["Are there different compliance requirements for different types of Social Enterprises than for traditional Enterprises? Please provide examples if there are.","Yes, there are some differences. In case of registered social enterprises, the annual report is published within the Register of Financial Statements as well as on the webpage of the Ministry. Additionally, the material content of the annual report is different for registered social enterprises due to the higher degree of state control (in comparison with traditional Enterprises). Practically speaking, if a social enterprise is not registered with the Ministry, it is governed by the relevant legal regulations stipulating its rights and duties including those relating to the publication of annual reports.\n"]
["Is there a dedicated government agency or department that oversees Social Enterprises? If there is, please describe its mandate and effectiveness.","Yes, the Ministry is the designated government authority along with other “umbrella organizations” (so called “organizations of sector of social politics”).\nThe former conducts its statutory duties, some of which we have mentioned above, e.g. granting and abolishing the status of a registered social enterprise as well as of an umbrella organization, imposing fines, conducting control of compliance with duties under the Act, maintaining the Register of social enterprises etc.  \nThe latter is responsible for representing the interests of its members (individual social enterprises) within the sector of the social economy through participating in creation of public policies (regarding social economy), decision-making, planning the obtaining of EU funds and their use, etc.  \n"]
["Is there a different bankruptcy system available for Social Enterprises?","No.\n"]
["VI. Miscellaneous"]
["What are the average time and filing fees to form an Enterprise in your jurisdiction?","That depends on the type of organizational form one wishes to choose. For details, please see below and the response to question No. 4, part I. herein above.\nBusiness companies (LLC, JSC, general partnership, simple joint stock company and limited partnership) and cooperatives are set up by electronic registration with the respective Commercial Register, which formally takes two business days (in practice, however, it usually takes much longer, depending on various criteria, e.g. work overload of the registration court, being often understaffed, etc.- approx. three weeks or similar), while the fee is EUR 375 for the joint stock company and EUR 150 for the remainder of the above--stated. In order to duly submit an application for registration with the Commercial Register, relevant documents are also required. The fees mentioned above do not include other potential costs, e.g. notarial fees, translation costs, legal services costs, etc.\nIn addition, in order to register with the Commercial Register, other permissions, such as a trade license are required. No entity or individual may trade or perform any business activity on a regular basis with the aim to generate profits without having a trade license or a specific license required for particular business activity. Generally, a trade certificate must be obtained prior to and as a condition for entry in the Commercial Register. \nTrades are created by submitting a notification to the respective Trade Licensing Office. If all statutory conditions are met, the Trade Licensing Office will standardly issue a trade certificate within three business days since the delivery of the duly submitted notification. The fee depends on the specific type of trade applied for; it is either EUR 5 or EUR 15 per registered trade (EUR 0.00 and EUR 7.50 per trade, respectively, in case of electronic submission). \nThe remaining forms – NOs, foundations, civic associations, non-investment funds and special purpose church facilities are registered within 30 (or 15 days in case of civic associations) days since the delivery of the duly submitted application for their registration and the fee is EUR 66 (EUR 33 in case of electronic submission). The remaining conditions are stipulated within respective laws.\n"]
["What government or third-party certifications or accreditations, if any, are available for Social Enterprises that allow for access to benefits e.g. funding, beneficial tax status, etc.? Please provide examples and briefly describe them as well as the standards there are to maintain them.","Perhaps the most important certification is the abovementioned status of\n\n\na registered social enterprise, which is issued by the Ministry within a period of 30 days from the date of submission of the written application. The conditions for obtaining the status are defined in the respective Act (see above), whereas the main conditions for a successful registration include, without limitation, the obligation to commit at least 50% of its profit to achieve its (socially-oriented) main goal, as well as integrity, the absence of arrears on health insurance benefits, the Enterprise has not been declared bankrupt, etc. If the status is granted, a registered social enterprise is entitled to receive various benefits we mentioned above.\nIn order to maintain such status, a registered social enterprise has to (i) mandatorily use an abbreviation after its (business) name “r.s.p”, meaning registered social enterprise, (ii) deliver annual reports to the Ministry and have them published on the Ministry´s website and (iii) notify the Ministry about any change in the nature and type of its activity within 10 day since the change occurred.\nExcept for the above, we are currently not aware of any further government or third-party certifications.\n"]
["Please describe whether, in your opinion, startups and other entrepreneurial Enterprises generally can easily form and flourish in your jurisdiction.","In our opinion, yes.\nEnterprises generally can easily form and flourish in Slovakia. Moreover, in order to facilitate the creation of startups and other forms, a new form of business company was adopted – simple joint stock company. At the same time, startups find support in a number of programs led by private individuals, banks, but also the state, which supports startups in various forms (e.g. crowdfunding platforms, various well-known corporate/financing subjects with their own programs for new entrepreneurs, Slovak Business Agency, etc.).\nHowever, the mentioned Enterprise form (simple joint stock company) may be de-regulated in the close future, as an extensive reform on corporate legal framework in Slovakia has been announced recently by the Slovak Government. Nevertheless, the mentioned reform promises further de-bureaucratization and liberalization of the business environment in general (which should allow for even higher level of flourishment for startups and entrepreneurial Enterprises in general).\n"]
["Please describe whether, in your opinion, Social Enterprises, in particular, can easily form and flourish in your jurisdiction.","Yes, in our opinion, the establishment of social enterprises themselves is not any different from the establishment of other Enterprises/companies and it can be relatively easily reached.\nIf an established Enterprise (e.g. LLC) meets the criteria stipulated by the respective provisions of Act, it will be considered a social enterprise. Furthermore, in order to get benefits (such as income tax reliefs mentioned above), such social enterprise needs to get registered with the Ministry to obtain the official status of a registered social enterprise. For benefits arising out of registration, please see our answers above. The fulfillment of conditions of the registration process is also in our opinion not particularly difficult or lengthy.\n"]
["Please describe whether in your opinion there are any laws that are obstructive to the formation of Social Enterprises (i.e. that actively disfavor or penalize, or otherwise discourage their formation) in your jurisdiction (for example, are Social Enterprises subject to legislation prohibiting inclusion of Social Enterprises in government contract procurement)?","To our knowledge, no (please refer to our answer to the previous question).\nThe overall concept of social entrepreneurship is regarded as a positive, beneficial instrument, which aims to uplift and benefit the public benefit. Thus, it is in our opinion reasonable to say that such activity is generally supported and unobstructed.\nAs far as for the obtainment of the registration status (as the key factor granting all the benefits for a social enterprise), the statutory conditions laid down by the Act cannot be under our opinion considered as too obstructive or difficult to fulfill, as these reflect the nature of social entrepreneurship.\n"]
["In your jurisdiction, are there any major fraud concerns or defects due to corruption or fraud that should be addressed? If there are, please briefly discuss the concerns or defects.","Yes, we are aware of some major fraud/corruption concerns that occurred back in 2008, when Social Enterprises had their first start. However, ever since then, Slovakia has adopted several serious measures with the aim to combat and get rid of corruption within government affairs, such as implementation of Register of UBOs, whistleblowing legislation, extensive reform of the judiciary, higher degree of prosecution office´s activity, anti-bureaucracy legislation, etc.   \nSince 2018, when Act was adopted (which remade the concept of social enterprises), there are no known cases/concerns of fraud or corruption in the area. As of now, the concept begins to unfold its results and thus, it is too soon to give any preliminary assessment.\n"]
["What changes to the law do you think would be most beneficial to enabling Social Enterprises to flourish in your jurisdiction?","In our opinion, further tax benefits would only help the overall advancement of social enterprises in Slovakia.\n"]
["What changes to the law do you think would be most beneficial to enhancing the social and environmental responsibility of Enterprises generally (whether or not Social Enterprises)?","Despite the strong and prevalent motivation to do business in accordance with the ESG principles, which is primarily represented by some international Enterprises established also in Slovakia or also new investors, an explicit statutory obligation to integrate the principles of socially responsible business would probably be our recommendation to make these principles generally followed and respected in everyday business practice.\n"]
["Is there anything else you would like to add or guidance you would like to provide? Are there any questions we should have asked but did not?","Thank you for instructing us with this interesting and helpful questionnaire. \n"]