Xolo's Guide to Starting Your Freelance Journey in Slovakia

Learn how to become a freelancer in Slovakia by using the information compiled in this helpful guide. There are many opportunities for freelance work within Slovakia. This country has a stable political climate, and it’s located in an ideal location for business in the region.

The Republic of Slovakia is a member of the European Union. This may simplify the freelancing process for citizens and permanent residents of member countries. The workforce in the country is highly skilled, and this presents many additional options for freelancers interested in expanding operations over time.

Overview of Freelancing in Slovakia

It's easy to set up a freelance business in Slovakia, but make sure you fully understand the rules of registration, licensing and taxation. Once you are working as a freelancer, you will need to manage your finances, send invoices and ensure compliance with VAT. There are many aspects of freelancing in Slovakia that may seem tedious, but there is no need to abandon your plans. Xolo products offer a range of tools that will help you to surmount the most common obstacles while you learn how to freelance in Slovakia.

Register as a Freelancer in Slovakia

To set up a freelance business in Slovakia, you must first learn how to become a freelancer in Slovakia by registering. Registration takes place at the Commercial Register’s office. The freelancer is obliged as a self-employed person to register at this location if residing outside of the countries of the EU, EEA, OECD and Switzerland. If you are a permanent resident of any of these countries, you don’t need to register. This is how to become a freelancer in Slovakia.

You will also need a temporary residency permit before going to the Commercial Register. This will enable you to apply for a trade license, which you can use the next day after completing your registration.

There are some fees that must be paid in order to freelance in Slovakia:

  • Licensing fees of 5 EUR must be paid to the appropriate trade authority in person for a free trade certificate.
  • A fee of 15 EUR must be paid for a craft or fixed trade certificate.
  • Electronic applicants pay no fee for the free trade certificate if filing at the website.
  • Electronic applicants must still pay € 7.50 for the craft and fixed trade licences when filing online.

Income Tax Rates for Freelancers in Slovakia

The income tax rate for freelancers in Slovakia is classified as an income generated through business activities. This means that the tax rate is lower than the amount paid by income earned through employment for tax residents. This comparison is helpful for freelancers who want to know about the tax benefits of conducting transactions in Slovakia.

Here is a breakdown of the tax rates for tax residents compared to freelancers in Slovakia:

  • Tax residents with an annual income of 38,553 EUR will pay a tax rate of 19 percent.
  • Tax residents with an annual income higher than 38,553 EUR will pay a tax rate of 25 percent.
  • Freelancers earning income from their business will be taxed at the reduced rate of 15 percent. This only applies for income below the threshold amount of 49,790.
  • The threshold amount is subject to change; it was 100,000 EUR in 2020.

Income Tax Returns for Freelancers in Slovakia

Freelancers might be taxed as permanent residents or as foreigners doing business in Slovakia. Tax residents pay a different rate. Foreigners earning income within Slovakia must also realize that there is a tax liability that comes with this privilege.

The countries under treaty with Slovakia will also be subjected to these tax arrangements when citizens from the treaty nations do freelance work in Slovakia. However, there are laws in place to prevent double taxation in these cases. When filing an income tax return in Slovakia, the relevant tax laws will be calculated on your return.

VAT for Freelancers in Slovakia

The VAT rate for freelancers in Slovakia is managed through the country’s tax agency, which is called Finančná správa at the local level. However, as a member of the European Union, the VAT system of Slovakia is directed by the EU.

Standard VAT rate: The 20 percent rate for freelancers applies at an income threshold of 49,790 EUR. This standard rate applies to all products and services that don’t fall under the reduced or zero-rate VAT.

Reduced VAT rate: The 10 percent rate applies on qualifying services and goods: This includes food products, medical equipment for the disabled, pharmaceuticals, hotels, physical books, etc.

Zero rate: The zero rate applies to exempt categories; however, it’s necessary to record these transactions for the purpose of completing the tax return properly.

Exemptions from VAT: Healthcare, financial, social welfare, cultural, insurance, education, real estate, lottery, sports, postal and public broadcasting.

Here are some other points about VAT for freelancers in Slovakia to keep in mind:

  • The deadline for VAT registration is determined by the month in which your earnings exceeded the threshold of 49,790 EUR; by the 20th of the following month, you must file your VAT application.
  • If your income is less than 49,790 EUR, you are not required to apply for VAT, but you may volunteer to file for other reasons.
  • The completed VAT application must be submitted to the Tax Authority Bratislava along with supporting documentation.
  • A tax ID number will be issued after you complete VAT registration at the local tax office or online.

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How to Start a Freelance Business in Slovakia

When you decide to set up a freelance business in Slovakia, you will need a plan of action. This will help you to avoid the most common hurdles faced by people freelancing in Slovakia. Learn how to become a freelancer in Slovakia by putting theory into practice. There are certain steps that you need to take to become a freelancer in Slovakia, so they are presented here in list form for clarity.

Steps to set up freelance business in Slovakia:

  1. Obtain a residence permit: Residency permits are handled through the Consular Mission of the Slovak Republic or Slovakian Embassy of the host country. These permits may extend from six months to six years, and the length is based on the reason for the residency request.
  2. Register in the Commercial Register: This only applies if your residence is outside of the EU, EEA, OECD and Switzerland block. Permanent residents of these countries are exempt.
  3. Get a Trade License: The Trade Licensing Office will accept your documents and validate them before issuing your trade certificate. Documents include proof of health insurance and the criminal background check. You may apply for a free trade license, craft trade license or fixed trade license. Inquiries on licenses and document submissions can be made online.
  4. Public insurance: Register at the Social Insurance Agency after you complete the first year of freelancing in Slovakia. The threshold for payment of social insurance goes into effect after the earnings from freelancing exceed 5,298 EUR.

Setting up a business and preparing for all kinds of procedures by yourself in Slovakia can take lots of time. Another convenient way is to leave admin hurdles to Xolo Leap. We'll help you register your Estonian private limited liability company and provide you with tools and solutions so that you can run it from anywhere with full legal compliance. 

How to Conduct your Business in Slovakia as a Freelancer

The Ministry of Finance changed the system of invoicing in Slovakia in order to implement a nationalized system for electronic invoicing. This will enable businesses and freelancers to issue e-invoices to their clients in a manner consistent with the country’s tax laws.

This invoicing structure also complies with the EU requirements for e-invoicing regarding B2G supplies. Future versions will enable e-invoicing between businesses. This new system aims to reduce fraud in the tax system and simplify tax collection activities.

Here's what you need to know about getting paid and invoicing in Slovakia:

Get paid as a freelancer in Slovakia

New systems often work out problems during the initial launch period. During this transitional time, you might wish to use the Xolo system for getting paid from clients without breaching existing laws. Xolo Go will enable you to invoice your clients cross-border and ensure your invoices are VAT-compliant. Besides invoicing, there are also a ton of other features that help you to manage your expenses and payment. Learn more about the product here. 

Conclusion for Freelancing in Slovakia

Freelancing in Slovakia is an exciting and challenging prospect. There are a few rules you must follow to set up a freelance business in Slovakia, and they are outlined here. Every solopreneur will find a unique path to earning income in Slovakia. Xolo Go can simplify this part of the process by providing easy invoice creation, bank account dashboard and expense management tools.

If you want to start your own solo business, Xolo Leap will help you set up and manage your Estonian company using e-Residency which you run from Slovakia. Ensure that your freelance operation is registered, compliant and legally operating. 

Become a freelancer or set up your dream business with Xolo.

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