Company Registered Office in Slovakia
Slovakia has been incorrectly called a paradise for businessmen…
All businessmen are getting weaken …
The personnel of SLC-Europe in Bratislava are observing in the present three consultancy offices the growing quantity of inquiries related with company formation in Slovakia.
Slovakia is so close and gives us a sign in a form ofFlat Tax amounting 19% !
The highest tax rate in Austria amounts 50 per cent, in Germany 47.5 per cent and Slovakia gives us the sign not only by 19 per cent but even by more than only with tax preferences, e.g. at depreciations of a passenger car.
Relocation of the Company Registered Office
In principle, businessmen have two options how to optimalize their taxes. Either they decide to relocate the company registered office (which is not always simple) or in case that this would not work, still the formation of the Slovak Limited Partnership remains as an option (Ltd.& Co L.P.).
Many businessmen call us and think (as well as the formation agencies do) that having the office address, facsimile and e-mail in Bratislava is enough. Those periods are already away. More detailed information you can find at: Minimum requirements for recognition abroad.
Not either the company management on distance leads to savings in taxes, because according to Double Taxation Agreement the profits are taxed according to “Principle of Origin“.
Positive thereon is that the tax place relocation to Slovakia is not absolutely important for the relocation of the company registered office relocation. However, the decision-making must be realized in Slovakia.
If the complete relocation of the company registered office to Slovakia would not work, we would recommend the clean solution in a form of limited partnership, see the „Model of a parent-daughter company“!
Directive of Parent-Daughter Company
In case of many companies in Germany and Austria the relocation of the company registered office does not work so much.
In this case we would recommend to form the Slovak limited partnership, i.e. Ltd. & Co L.P. as the holding company.
The only difference, which brings the tax preference, is that according to Slovak legislative the L.P. is deemed to be a capital company and according to German or Austrian legislative it is the natural person company.
This qualification conflict can lead to considerable tax preferences, if e.g. the Slovak Ltd. & Co L.P. becomes the parent company for the Austrian or German GmbH.
The distribution of profits in the Austrian GmbH, upon the EU Directive on the parent-daughter company is tax free and the drawing of profits in the holding limited partnership by partners in principle does not specify any income tax.
Fascinating result: The legal entity income tax in force only remains (e.g. Austria with 25 per cent), when drawing the profit, you will totally avoid the tax from capital yields.
This procedure is also accepted by the tax officers, unless it is so called the “fictive company”.
(c) 2008 Herbert Eder on behalf of SLC-Europe Ltd.
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