I&L Investment Incentives in CEE-17

In this chapter, CMS and Sorainen have provided a country-by-country guide to understanding and comparing what incentives are potentially available to Industrial & Logistics investors seeking to start operations in one or more the CEE countries covered in the report. Investment incentives are a key element of the decision-making process when investors are selecting countries and locations. Therefore, we look at some of the more frequently asked questions and provide an overview of the general conditions that were applicable at the time of preparation.

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Slovakia

Legal incentives for investments specifically in the Industrial & Logistics sector in CEE-17

The special Act No. 57/2018 coll. on regional investment aid and Government Regulation No. 195/2018 Coll., provides support for the implementation of investment plans for industrial production plants, technology centres and business services centres.

The general categories for investment aid in Slovakia include cash grants, income tax relief, contributions to new jobs and discounted transfer of real estate or discounted rent of real estate.

The minimum investment in eligible costs and job creation depend on the form of the requested aid, on the type of production and its reference to priority, and other areas.

General incentives, from which investors in the I&L sector in CEE-17 can benefit, if no specific ones are available

In Slovakia, there are several examples of industrial “strategic” parks, which were granted the status of significant investment. In general, to create a “strategic park”, the Slovak government must declare an investment a “significant investment” deemed to be of public interest and requires at least 250 hectares for industrial production or services. The preparation of the area for the strategic park, including the expropriation of land (if necessary), is usually done by an especially established entity (a special purpose vehicle), wholly owned by the state.

Available tax exemptions or preferences for investors specifically in the I&L sector in CEE-17

Income tax relief, where overall amounts of aid are subject to a maximum investment limit as a percentage of eligible costs, as follows:

In the case of eligible costs of up to EUR 50 million, the maximum amounts are:

  • in Western Slovakia:
    • 45% for small enterprises,
    • 35% for medium enterprises,
    • 25% for large enterprises; and
  • in Central and Eastern Slovakia:
    • 55% for small enterprises,
    • 45% for medium enterprises,
    • 35% for large enterprises.

In the case of eligible costs of over EUR 50 million, the maximum amounts are:

  • in Western Slovakia:
    • 12.5% for part of the eligible costs over EUR 50 million up to EUR 100 million, and
    • 8.5% for part of the eligible costs over EUR 100 million; and
  • in Central and Eastern Slovakia:
    • 17.5% for part of the eligible costs over EUR 50 million and up to EUR 100 million, and
    • 11.9% for part of the eligible costs over EUR 100 million.

In order to be eligible for the income tax relief, different criteria apply to investment amounts and job creation. The criteria vary depending on “zones” (divided on the basis of the unemployment rate) and whether it is included in the list of “priority areas” or “other areas”.

General tax exemptions or preferences for investors in CEE-17 that would apply to the I&L sector

Other notable types of support are: a patent box - a special tax regime that exempts intellectual property income acquired through science and research activities. This regime provides an exemption from corporate income tax. A super-deduction tool for R&D - a special tax regime enabling additional deductions of costs for R&D projects.