Natural persons may conduct business activities on the territory of the Slovak Republic principally in two ways, either as trade licence holders or in association with another natural person. The most common form of doing business for natural persons is working on a trade licence, which is arranged by Act No. 455/1991 Coll. on Doing Business on a Trade Licence (the Trade Licencing Act), as amended.
According to the Act, a trade licence is understood as systematic activities operated independently, in one’s own name, at one’s own responsibility, for the purpose of achieving a profit and under conditions stipulated by this Act. The Act at the same time also contains negative definitions; in other words, it determines which professions are not trade licence professions, such as, e.g. bank activities, insurance, veterinarians, attorneys, tax consultants, authorised geodetics and cartographers and others.
Conditions of working on a trade licence
Besides a natural person, a legal entity may be the operator of a trade licence upon fulfilment of the conditions stipulated by the Act, so long as it has listed as the subject of the business such activities which are trade licence activities according to the law. A foreign person, which means a natural person with residence or a legal entity with its seat outside the territory of the Slovak Republic, may also be a trade licence operator. Foreign persons are authorised to operate a trade licence on the territory of the Slovak Republic under the same conditions and in an equal range as Slovak subject, if a special provision does not stipulate otherwise.
The general conditions for operating a trade licence determined by the Act for a natural person are being 18 years or older and qualified for legal acts and of respectable character. With a Slovak legal entity its statutory body must fulfil the stated conditions; with a business or organizational element of a business of a foreign entity the head of this business or organizational element must fulfil these conditions.
Special conditions of operating a trade licence are professional or other qualification, which the natural person (and with a legal entity its responsible representative) must fulfil according to the Trade Licencing Act or a special provision.
A natural person may begin with the conducting of business activities only after receiving authorisation to operate a trade licence, a so-called trade licence authorisation, which is demonstrated by a certification of trade licence authorisation and a statement from the trade licence register. It is possible to perform trade licence authorisation over the entire territory of the Slovak Republic.
A person who intends to operate a trade licence is obligated to first notify the trade licence office, which shall, in the case of satisfying the conditions set by the Act, issue trade licence authorisation to that person. The function of a trade licence office is fulfilled by a District Office – department of trade licensing. The local relevant office is set according to the residence of the natural person (with a legal entity according to its seat). For a foreign entity the relevant trade licence office is according to the address of the place of activities of the business or organizational element of the business of the foreign entity; in the case of several organizational elements the foreign entity may select a relevant office.
If an entrepreneur has several activities listed as the subject of the business, in the first place in the declaration he/she shall state the subject of business which is considered to be the primary one. Along with notification, a document demonstrating the facts stated in it, e.g. ownership or other right to property which is listed as the address of the place of business and a document demonstrating professional qualification is always submitted as well. A foreign entity shall also attach to the notification a statement from the criminal register for a person who is not a citizen of the Slovak Republic if that person is the head of a business or an organizational element of the business of a foreign entity, or another equivalent document issued by the authority in the country in which the person has citizenship or in which he/she has lived for a period stated by the law. A component of a trade licence notification is also payment of the correct fee. According to Act No. 145/1995 Coll. on Administrative Fees, as amended, the amount of the fee for application for a trade licence is currently set at 5 euro for each free trade licence and 15 euro for each craft and fixed trade licence. In the case of electronic submission, the fee is not assessed.
Authorisation for operating a trade licence arises to a natural person on the day of notification, thus on that day the person acquires the status of an entrepreneur.
Types of trade licences
The Trade Licensing Act differentiates 3 types of trade licence:
- free: for working on this type of trade licence no special qualification is necessary.
- crafts: the Act stipulates as a condition of working on this type of trade licence professional qualification acquired by studying in a field which is demonstrated by a vocational certificate or another document. This type of trade licence includes, for example, masonry, carpentry, locksmithery and others.
- fixed: professional qualification acquired otherwise is a condition of working on this type of trade licence. This type of trade licence includes, for example, ophthalmology, running a driving school, travel agency and the like.
From the viewpoint of the subject of a business, the Trade Licensing Act distinguishes the following types of trade licences:
- commercial: e.g. hospitality activities, retail, wholesale and others.
- production: the entrepreneur may in the scope of trade licence authorisation manufacture machines, tools and preparates intended for the production of a final product, perform assembly, the setting and maintenance of products and others.
- provision of service: under which it is necessary to understand the provision of repairs and maintenance of matters, transport of persons and goods and other activities.
The Ministry of Interior of the Slovak Republic regularly updates the list of recommended free trade licences. A list of crafts and fixed trade licences is stated directly in the Trade Licensing Act.
A person without trade licence authorisation who conducts activities which are the subject of a free trade licence shall be fined by the office an amount up to 1,659 euro, in the case of a craft or fixed trade licence up to 3,319 euro.
Trade licence register
The trade licence register contains a set of data on entrepreneurs as determined by the Trade Licensing Act. Entry, change and deletion of data are done by district offices – department of trade licence businesses through the trade licence businesses information system, the administrator of which is the Ministry of Interior of the Slovak Republic.
The trade licence register contains a public and non-public part. The public part is made up especially of personal data about the entrepreneur. Every person has the right to request from the office a statement from the public part of the register or confirmation that certain data is not located in the register, after payment of an administrative fee of 3 euro. Data in the public part of the register is also freely accessible on the Web page.
- Association of natural persons
Legal arrangements for conducting business of natural persons in the scope of an association is contained in § 829 et seq. Act No. 40/1964 Coll. Civil Code, as amended, which arranges the Contract on Association. The Act does not admit legal subjectivity to associations; in other words, associations do not qualify for rights and obligations. For this reason, an association as such may not be a participant in legal relations, may not independently stand before offices and other institutions; thus it is not an independent legal subject.
An association may be establish by minimally two persons and on the basis of a Contract of Association, with which the act does not dictate it be in written form, though from the viewpoint of legal certain, written form is more suitable. A basic appurtenance of the contract is determining the name of the association and defining the purpose for which the association is established. Participants in the association are obligated to develop activities aiming at achieving the purpose of the association. Further, it is possible in the contract to negotiate the division of association property, determine the person responsible for keeping the association’s account books, the reasons for expulsion of an association participant and other matters.
The contract may also determine the obligation of association participants to provide for an agreed purpose a defined monetary amount or other items (material, products and others). If during the performing of common activities the association acquires a certain asset, this becomes the co-ownership of all participants, and their share in it is equal.
A participant may leave the association at anytime, and for serious reasons the association may also expel a participant, so long as the contract does not stipulate otherwise. Such a participant has a claim on the returning of items which he/she brought to the association as well as a claim on paying out his/her share in the association according to the status as of the day of leaving or expulsion of the participant.
The advantage of doing business in an association include, for example, the fact that the association does not have a registration obligation in any record-keeping, participants in the association are not limited by a prohibition on competition, and they have no deposit obligation (only if so agreed in the contract) or the unlimited number of participants in the association.
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