Slovakia

Buyers Guide

Introduction
The Law

Slovakia lifted all restrictions on property acquisitions in May 2004. All foreign nationals can acquire real estate or land in Slovakia directly, without having to set up a company and have a local legal signatory. The only exception is if you wish to purchase agricultural land.

The Process

Buying a property in Slovakia is very easy. We advise you to visit Slovakia, especially if you have not been there before, but it is not necessary. Many of our clients are buying without ever visiting this country. Either way, the purchase process is still the same. We will organise a reputable English-speaking solicitor to sign the property deeds and arrange everything necessary on your behalf, using the power of attorney. It doesnt matter if you decide to buy an existing property or an off plan project, the process will still be the same.

Buying an off plan apartment in Slovakia is essentially the same as buying in the UK. There is an initial contract signed by all parties, which is basically an obligation to build on behalf of the developer and an obligation to buy on behalf of the client.

This contract will set out timescales, prices and any penalties for late completion and will be drawn up by the developers solicitors. It will have been checked by the agent and the client will also have the opportunity to obtain their own legal advice before signing.

All payments will be held in an escrow account with a local bank until the construction is completed. The balance will be due upon completion of property, which has to be checked in a final approval process.

Buying Process and Acquisition Costs

After you have found your ideal property in Slovakia you must pay the reservation fee, usually 2000 GBP, to the developer so the property is taken off the market.

The developer will send the Preliminary Contract to you or to the person which has a right to act on behalf of you in this purchase. All official documents have to be written in Slovak or Czech or officialy translated into Slovak. If you wish, we can arrange it for you or you can have it translated in your home country. You will then sign the Preliminary Contract (which is like sold subject to contract) and return it to the development company. At this stage, the agreed initial instalment normally between 20%-30% of the purchase price is paid to the seller.

You should also employ a Slovak lawyer to carry out independent checks on your behalf. They will arrange all necessary communication with the construction company and institutions (Land Registry, banks, buildig office etc.)

We can recommend a lawyer, if you wish, who will do the standard checks :

* Title documents

* Licenses and permissions

* Debts on title

* Terms of contract

A further payment of around 30% will be necessary when a specified milestone has been reached in the construction process. The balance will be due upon completion. All payments are normally made in Slovak Crowns. We will notify you of the estimated payment dates.

Upon completion of the property and payment of the final instalment, the developer transfers ownership of the property to the client. By Slovakian law the transfer is completed in the Land Registry (Catastro) in the district where the property is located. Your legal representative will apply for your title deeds on your behalf and when the ownership will be transfered into your name they will post it to you. You should receive title deeds within 15 days

Additional Acquisition Costs

Legal fees and Translation

Each lawyer or law firm is free to determine its fees, subject to certain constraints. Total legal fees are estimated at GBP 350 900 including the translation of contract and power of attorney.

Land Registry Fees

Any single application to the Land Registry has to be paid separately. Each record will costs you approx. GBP 140.

Agency Fee

Agency fee is usually 3% - 5 % of total property price.

Tax

VAT - 19%

VAT is applied to all newly constructed properties in Slovakia (not older than 5 years) at the standard rate of 19%. The VAT, however as in the UK, is nearly always included in the advertised price and where it is not it will be clearly indicated. Transfer of land is also subjected to 19% VAT.

Income Tax 19% flat rate

Slovakia has a flat income tax rate of 19% and there is a personal allowance (0%) of approximately ?2000. You will also be able to minimise your tax bill by deducting expenses associated with the property from your income. Deductibles available include depreciation, loan interest, real estate taxes, repairs and maintenance etc. Or, you can deduct a flat 25% in respect of expenses.

Real Estate Tax Negligible

There is a small annual real estate tax on land and buildings. The tax liability depends on the total area of the property, the number of floors, the nature and purpose of the building and can vary from region to region. However, it should not exceed ?50 for an apartment in Bratislava.

Transfer Tax - 0%

This equivalent of stamp duty was abolished in Slovakia on January 1st 2005.

Inheritance and Gift Tax - 0%

Capital Gains Tax (CGT) 0% (if residential apartment owned for two years)

When re-selling your property, 19% income tax is payable on profits realised on the sale of real estate. The following are exempt from capital gains tax:

Sale of a residential apartment that has been held for at least 2 years

Sale of other private real estate that has been held for at least 5 years

Reserving an apartment and viewing trips

There are two ways of purchasing an apartment. These are

Reserving an apartment before visiting Slovakia

This method ensures that when you arrive in Slovakia, your apartment is reserved for you and cannot be sold to another person. The basic process is listed below;

After discussing your individual requirements with us, you state verbally that you wish to reserve an apartment.

We record that property as reserved for three days whilst we await a reservation cheque. The reservation fee is refunded when you complete on your purchase. It can be transferred to another apartment within our portfolio but, if you decide not to buy, it is not refundable.

When the cheque arrives, we send you an example contract so that you can obtain legal advice before you fly to Slovakia.

For customers purchasing a new apartment, we can pick you up at your arrival airport in Slovakia (scheduled flights go to Bratislava and Poprad). Alternatively, you can be picked up from Vienna airport in Austria.

We take you to see the available properties in the resort you are interested in. We will inform you on the current market situation and take you on an inspection tour of all the ongoing and potential developments. This will also help you familiarise yourself with the city and enable you to make an investment choice based on an informed decision.

After that it is entirely up to you if you wish to sign the preliminary contract

Visiting Slovakia then Reserving an Apartment

This method means that you dont pay a reservation fee before you arrive. However, it also means that you have to choose from the apartments that are left and this can be risky, especially if you were specifically interested in a particular property.

We will pick you up from your hotel and conduct the same viewing trip as above. You can arrange the trip either by ringing one of our office branches and making an appointment, by ringing our Slovakian office direct, or, should you happen to be in the city by calling into the Bratislava office in person.

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