The departure of entrepreneurs from Slovakia has long been more than just an emotive topic. Increasingly, it is a rational decision about asset protection, legal certainty and the ability to breathe freely in business. The LinkedIn podcast Carouselers, which invited our own Peter Varga, was more open about why many entrepreneurs today are tackling offshore structures, and why it’s often not about escape, but prevention.
One of the main motives for entrepreneurs to consider foreign solutions is not necessarily the amount of taxes, but the level of legal uncertainty. In Slovakia today, we see more and more situations where the entrepreneur does not know in advance how the state will evaluate his actions. A typical example is a tax audit, which can lead to a decision that is immediately enforceable, even before the entrepreneur goes to court. In practice, this means the risk of bank accounts being blocked, cash flow being restricted and, in extreme cases, the inability to finance one’s own legal defence.
This is where the topic of asset protection in a broader sense begins. It is not about hiding assets, but about ensuring that the entrepreneur is not existentially paralysed by a single administrative intervention. Simple geographic diversification, such as a foreign bank account or holding structure, can significantly reduce the level of state invasiveness.
The podcast also devoted a lot of space to the so-called shvarc system. This is often presented as the main enemy of the social system, but the reality of the labour market is much more complex. With low unemployment, economic dependency often shifts to the employer, not the worker. Yet the legal framework remains set in the reality of twenty years ago.
The state reacts by tightening controls and increasing the levies on sole traders, but at the same time overlooks the fact that the transition to one-person s. r. o. is administratively simple and often even more efficient. The result can be the exact opposite of the intended effect, lower levy collection and further deepening of entrepreneurs’ mistrust of the system.
Asset protection is often narrowed down to the topic of inheritance or family disputes. However, practice shows that protection against external risks is equally important: the state, creditors, political decisions towards autocratic states or unpredictable legislative changes. Slovak law knows a number of useful tools, but at higher asset values, the concentration of assets in one jurisdiction ceases to make sense.
Foreign holdings, trusts, foundations, or simply moving a certain layer of ownership to a more stable legal environment is not a sign of disloyalty. They are a sign of responsibility to one’s property, family and business.
The key question today is often not “to leave or to stay”, but “how to stay and protect ourselves at the same time”. Many businesses are naturally tied to Slovakia, whether by language, clients or infrastructure. The solution is therefore not physical exit, but legal and geographic diversification of risks.
You can listen tothe full LinkedIn Carouselers podcast with Peter Varga right here.
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If you are interested in this topic, please do not hesitate to contact us:
Peter Varga, e-mail: peter.varga@highgate.sk
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