Slovak Republic: Overview

RENTAL YIELDS

Last Updated: Jul 23, 2009

Bratislava almost attractive

Gross rental yields on 120 sq. m. and 190 sq. m. apartments in Stare Mesto are around 5.61%, according to our research. Gross rental yields on smaller units of 40 sq.m are higher, at 6.75%. Stare Mesto, Bratislava’s city centre, boasts some of the most expensive property in Bratislava, with average prices of €2,458 per square metre (sq. m.)

In Bratislava’s less upscale districts (Bratislava II & III) prices per square metre average €1,869, with gross rental yields of between 5.5% and 7.03%.

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TAXES AND COSTS

Last Updated: Aug 15, 2008

Rental income tax is moderate in Slovak Republic

Effective Tax Rate on Rental Income
Monthly Income	€1,500	€6,000	€12,000
Tax Rate	9.3%	13.0%	13.6%
Click here to see a worked example
Source: Disclaimer

Rental Income: Although rental income is subject to a flat 19% tax rate, this is levied upon net and not gross income. Effectively this means that a married couple declaring receipts separately would pay around 9.3% in tax on gross income of €1,500 per month.

Capital Gains: Real estate held for more than five years is exempt from capital gains tax.

Inheritance: Inheritance taxes were abolished as of 01 January 2004.

Residents: Personal allowances and certain tax bonuses are available to residents.

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BUYING GUIDE

Last Updated: Apr 03, 2007

Roundtrip buying costs are very low in Slovakia

Total roundtrip buy-sell costs are very low, between 2% and 5.5% of property value. A positive factor was the January 2005 abolition of transfer tax. Remaining cost for the buyer are the agent’s commission (2% - 5%) and miniscule registration fees (0.01% - 0.5%)

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LANDLORD AND TENANT

Last Updated: Jul 04, 2006

Slovak law is neutral between landlord & tenant

Rent: Rent control was abolished in Slovakia from 2007, and previously did not apply to individually-owned apartments.

Tenant Security: The tenant can break the contract at any time by giving three months’ notice without needing to give a reason, while the landlord needs substantial reasons to break an ongoing contract.

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ECONOMIC GROWTH

Last Updated: Oct 22, 2009

One of the fastest growing economies in Europe

Slovakia, with a population of 5.5 million, is one of the most successful transition countries in Central Europe with GDP per capita of US$13,857. Established after the nation seceded amiably from Czech Republic in 1993 (the two countries were formerly known as Czechoslovakia), its stable polity and liberal market economy belie its previous 41-year communist rule.

From 1998 to 2004, the economic performance improved dramatically, facilitating the country’s membership of the Organization for Economic Cooperation and Development (OECD) in 2000 and accession to EU and NATO in 2004. In December 2007, Slovakia has become a full member of the Schengen Zone, which allows passport-free travel across the 24-member European nations. In January 2009 Slovakia adopted the euro.

Slovakia’s GDP growth reached an impressive 10.4% in 2007, following 8.2% for 2006, and average growth of 5% from 2001 to 2005. In 2008, real GDP growth slowed down to a still impressive 6.4%, making Slovak Republic the fastest growing economy within the EU and OECD.

Despite the rapid economic growth, unemployment remained relatively high at 8.7% in Q4 2008. However, it was a significant improvement from 19% in 2001. From 2002 to 2008, real private sector wages rose by an average of 9.2% annually – an immense increase in purchasing power.

The budget deficit has been reduced from 10% of GDP in 2000, to just 1.5% of GDP in 2003. It rose to 3.8% in 2006 but declined to 1.9% in 2007. Additional spending to soften the impact of the global recession pushed the deficit up 2.2% of GDP in 2008, still much better to other countries in Europe.

The economy is expected to contract by as much as 5% in 2009. The unemployment rate has risen to 11% in Q2 2009 and is expected to reach 13.6% in 2010. Real wage growth will remain positive but will slow down to 4.2% in 2009 and 1.2% in 2010.