Slovakia

Slovakia’s foreign direct investment regime was introduced by Act No. 497/2022 Coll. on Screening of Foreign Direct Investments (the “FDI Act”), which took effect on 1 March 2023. The rules of the FDI Act do not apply to investments completed prior to that date. 

Critical and non-critical foreign investments

The FDI Act applies to foreign investments made by foreign investors. The FDI Act only applies to foreign investments that concern, directly or indirectly, Slovak Targets – entities which have their registered office in Slovakia.

The FDI Act distinguishes between critical and non-critical foreign investments. Critical foreign investments are defined by decree of the Slovak Government and cover areas such as manufacturing and research of defense industry products, manufacturing and research of dual-use items, production and research in healthcare biotechnology, provision of certain digital and media services, operation of content sharing platforms, operation of critical infrastructure, and others. Critical foreign investments can only be implemented with the prior approval of the Slovak Ministry of Economy ("MoE").

Non-critical foreign investments – which entail all foreign investments that are not considered critical – do not require approval prior to their implementation. If a foreign investor does not decide to notify non-critical investment voluntarily, the MoE may review the investment within two years after its closing. The MoE’s review may result in a prohibition of the investment and an imposition of an obligation to unwind.

Foreign investors

For an investment to fall under the FDI Act, it must be implemented by a foreign investor. Foreign investor is defined as anyone who implemented, or intends to implement, a foreign investment, and:

• Is not a citizen of Slovakia or any other Member State of the EU (“Member State”); or
• Does not have a registered office or place of business in Slovakia or any other Member State.

The definition of foreign investor extends also to Slovak and Member States’ entities (i) which are acting in concert with or are controlled by a non-EU entity, (ii) which are financed by a foreign state or an entity with foreign state’s shareholding, or (iii) whose ultimate beneficial owner is a non-EU entity.

Required level of control

Finally, for the FDI Act to apply, the foreign investment must enable the foreign investor to exercise relevant level of control. Specifically, the FDI Act applies only if the investment enables the foreign investor, directly or indirectly, to: 

• Acquire the business of the target;
• Exercise an effective interest in the target. An effective interest is defined as 10% of shareholding or voting rights for critical investments, and 25% of shareholding or voting rights for non-critical investments.
• Increase an effective interest in the target. For critical investments, the relevant interest increase thresholds are 20%, 33% and 50%. For non-critical investments, the threshold is 50%;
• Acquire control (within the meaning of EU Merger Regulation) over the target.

In cases of critical investments, the FDI Act additionally applies when the foreign investor acquires the target’s key assets, which are defined as assets that are indispensable for the activities based on which the foreign investment is considered critical.

Notification process

The foreign investment screening process may be initiated by an investor’s application, or ex-officio by the MoE.

The review procedure is subject to statutory time limit of 130 days (the statutory limit is applicable to both critical and non-critical investments).

If a foreign investor decides to voluntarily notify a non-critical foreign investment, there is a preliminary assessment phase with a 45-day statutory limit, which can have the two results:

• If the MoE does not identify risks, it notifies the foreign investor about its finding and the review procedure is not opened; or
• If the MoE identifies risks, it opens the review procedure (with the 130-day statutory time limit).

If the MoE requests additional information, the statutory limit is interrupted until the applicant submits the additional information. 

The notification process does not envisage a pre-notification procedure (as is customary for merger review proceedings), but the MoE is open to informal consultations.

In the review procedure, the MoE may decide to:

• Approve the investment;
• Approve the investment subject to conditions imposed by the MoE; or
• Prohibit the investment.

The decisions of the MoE are non-public.

Sanctions

Non-compliance with the FDI Act is subject to sanctions, which the MoE may impose repeatedly. Depending on the type of violation of the FDI Act, the maximum amount of the fine may range between 1–2% of the total turnover of the foreign investor.

For failure to notify a critical foreign investment, the MoE may impose a fine in an amount not exceeding the value of the foreign investment, or 2% of the total net turnover achieved by the foreign investor, the person controlled by the foreign investor and the person controlling the foreign investor for the preceding financial year, whichever is higher.