Four in Ten Companies Would Not Choose Slovakia

Four in ten foreign companies surveyed in Slovakia in spring 2026 said they would not choose the country as an investment location today. Only 4% rated the current economic situation as good, while 61% described it as poor. Yet 28% plan to increase investment this year and one in four expects to add employees. Slovakia retains a large industrial base, but higher taxes, weak economic growth and repeated policy changes are forcing multinational groups to scrutinise new projects more closely.

Investor Confidence in Slovakia Has Deteriorated

The survey was conducted in March 2026 by the German-Slovak Chamber of Industry and Commerce together with Austrian, Italian, Swedish and Dutch business chambers. It covered 112 companies, with manufacturing accounting for 51% of respondents, services 38% and trade 11%.

Only 3% expect Slovakia's economic situation to improve in 2026, while almost three-quarters anticipate deterioration. Despite that pessimism, 28% plan to expand investment and one in four expects to increase employment. Companies forecast average labour-cost increases of 7.2%, compared with 6.5% in the previous survey.

The indicators measure different decisions. A company's answer on whether it would choose Slovakia again reflects the country's current appeal as a location for fresh investment. Spending plans among companies already operating there also reflect the high cost of moving existing factories, employees and supply chains elsewhere.

CE Interim frames the issue around capital allocation inside industrial groups. A Slovak factory may continue meeting production targets while a request for another machine or production cell is repeatedly reassessed. Over time, delayed reinvestment can influence which factory in a multinational network receives the next model or production programme. This is an analytical scenario rather than evidence that surveyed companies have already decided to close Slovak operations.

Taxes and Policy Predictability Receive Weak Scores

The three lowest-rated location factors were anti-corruption efforts, predictability of economic policy and the tax burden. On the six-point German grading scale, where one is best, they scored 4.4, 4.2 and 4.1 respectively.

Slovakia retains several highly rated advantages. EU membership scored 1.6, telecommunications infrastructure 2.3 and the quality and availability of local suppliers 2.5. The survey therefore points primarily to concerns about the business environment rather than a lack of industrial infrastructure or suppliers.

That distinction matters for manufacturers. New production capacity is typically evaluated over several years, making the predictability of taxes, labour costs and other recurring expenses an important part of projected returns.

Large Companies Face a 24% Corporate Tax Rate

Slovakia changed its corporate income tax bands from 2025. Legal entities with taxable revenues of up to €100,000 face a 10% rate. The rate is 21% between €100,000 and €5 million and 24% above €5 million.

A new minimum corporate tax band also applies to the largest businesses in 2026. Companies with taxable revenues exceeding €5 million face a minimum annual corporate tax of €11,520 even where their normal tax liability is lower. The corresponding minimum for companies between €500,000 and €5 million is €3,840.

Slovakia's standard VAT rate had already increased from 20% to 23% from January 2025 as part of an earlier fiscal consolidation package.

For industrial groups, headline corporate tax is only one component of the cost base. Labour, energy, financing and transaction costs also influence investment decisions.

The Financial Transaction Tax Remains in Force

Slovakia introduced a financial transaction tax with the first taxable period in April 2025. The basic rate on debits from a business account is 0.4%, capped at €40 for an individual transaction. Cash withdrawals are taxed at 0.8%.

The regime changed from January 2026. Individual entrepreneurs were removed from its scope, leaving legal entities as the principal taxpayers, while rules for permanent establishments and exemptions were also revised.

For companies making a large number of payments, the tax adds to the cost of financial flows regardless of the profitability of the underlying transaction. The €40 cap limits the charge on a single large transfer, while frequent supplier payments can still create a recurring cost.

The 2026 Consolidation Package Raised Labour Costs

Another fiscal consolidation package took effect in January 2026.

The employee health-insurance contribution for most workers increased from 4% to 5%, while the rate for self-employed people rose from 15% to 16%. Employers also became responsible for wage compensation during the first 14 days of an employee's sickness absence, compared with ten days previously.

Those changes arrived as surveyed companies were already expecting average labour-cost growth of 7.2% this year.

A factory can therefore face a weaker investment case even when its current order book remains healthy. Projects initially approved under lower labour costs and a different tax structure may produce longer payback periods after the assumptions are updated.

Slovakia's Economy Is Growing Below 1%

Official data confirm a weak economic backdrop. Slovakia's GDP increased 0.8% year on year in constant prices in the second quarter of 2026, the slowest pace in four quarters.

Growth was also 0.8% for the first half as a whole. Gross fixed capital formation fell 2.9%, signalling weaker investment in fixed assets. Industry accounted for 17.5% of GDP and recorded only 0.3% growth in value added during the second quarter, while motor-vehicle manufacturing contracted 0.6%.

The European Commission expects real GDP growth of 0.8% in 2026 and 1.5% in 2027. It forecasts inflation of 4.3% this year, a budget deficit of 4.6% of GDP and an increase in gross public debt from 61.4% of GDP in 2025 to 63.7% in 2026.

Other forecasts are weaker. S&P Global Ratings expects real growth of only 0.5% in 2026. On April 24, the agency downgraded Slovakia's long-term sovereign rating to A from A+, with a stable outlook, citing elevated fiscal deficits and a rising debt burden.

Industrial Output Improved in July

Recent industrial data are somewhat stronger than the first-half picture.

Industrial production increased 2.4% year on year in July, following a 2.1% rise in June. Motor-vehicle manufacturing made the largest positive contribution and grew 9.2%.

Part of that increase reflected timing. One key carmaker operated for an additional week in July 2026 compared with July 2025 because its annual plant-wide holiday fell differently.

For the first seven months, industrial production was still 0.4% lower year on year. Motor-vehicle output fell by more than 1%, computer, electronic and optical products by almost 10%, and coke and refined petroleum products by more than 12%.

July therefore represents an improvement after a weak start to the year rather than clear evidence of a sustained industrial recovery.

Slovakia Depends Heavily on Automotive Investment

Investor confidence matters particularly because of Slovakia's exposure to car manufacturing.

The country produced 993,750 passenger cars in 2024, down 7.6% from a year earlier, while remaining one of the world's most car-intensive manufacturing locations relative to population.

Investment agency SARIO estimates that the automotive sector employs about 244,000 people directly and indirectly. Automotive and machinery production together account for 49.5% of total Slovak industrial output.

Volkswagen operates in Bratislava, Kia in Žilina, Stellantis in Trnava and Jaguar Land Rover in Nitra. Volvo Cars is building what will become the country's fifth major car plant near Košice.

Volvo originally targeted 2026 for the start of operations. Current company recruitment material now states that production in Košice will commence in 2027. The plant represents an investment of about €1.2 billion and is designed for annual capacity of up to 250,000 electric cars.

Decisions at these major manufacturers affect a much wider supplier network. Winning or losing a future model allocation can change order volumes for dozens of component producers without generating an immediate headline factory closure.

FDI Rebounded After the 2023 Collapse

Foreign direct investment data also require context. CE Interim highlights the sharp decline in FDI as one reason to scrutinise Slovakia's investment case, but the latest UNCTAD series shows that the 2023 drop was followed by a substantial rebound.

Inward FDI totalled $3.46 billion in 2022, collapsed to $180 million in 2023 and recovered to $1.84 billion in 2024. The 2024 figure was more than ten times the previous year's level, although it remained well below 2022.

The figures therefore do not support a narrative of an uninterrupted foreign-capital exodus. Realised investment flows have been volatile, while business surveys point to worsening expectations that could affect future capital-allocation decisions with a lag.

Existing Companies Are Still Investing

The survey's negative headline has not translated into a general stop in investment by companies already operating in Slovakia. Almost three in ten plan to increase spending in 2026, and one in four expects to expand employment.

Existing factories benefit from trained workers, supplier networks, logistics links and already installed infrastructure. For a multinational group, continuing to invest at an established site can remain economically attractive even when the country's broader business environment has deteriorated.

The more important test comes when a company decides where to place its next incremental investment. At that point Slovakia competes directly with other production locations for a new line, model or expansion project.

As International Investment experts report, the 40% figure should not be read as evidence that four in ten foreign companies are preparing to leave Slovakia. The survey asks whether companies would choose the country as an investment location today. The longer-term risk lies in the allocation of future capital inside multinational groups: an existing plant can continue operating while gradually losing new production lines, products or expansion projects to competing sites. Current data do not show a broad investor exodus — FDI rebounded after the 2023 collapse and 28% of surveyed companies still plan to raise investment. However, weak economic growth, a decline in fixed investment and worsening assessments of tax and policy predictability are increasing the pressure on Slovakia's competitiveness as a manufacturing location.

FAQ: Slovakia's Investment Climate

How many companies would no longer choose Slovakia?

Forty percent of companies participating in the spring 2026 survey said they would not choose Slovakia as an investment location today.

How many companies were surveyed?

The survey covered 112 companies. Manufacturing represented 51% of respondents, services 38% and trade 11%.

How do investors rate the Slovak economy?

Only 4% described the current economic situation as good and 61% as poor. Just 3% expect economic conditions to improve in 2026.

Are companies cutting investment?

There is no uniform trend. Twenty-eight percent of respondents plan to increase investment in 2026.

Which business conditions received the weakest scores?

Anti-corruption efforts, predictability of economic policy and the tax burden were the three lowest-rated location factors.

What corporate tax rate applies to large companies?

Legal entities with taxable revenues above €5 million face a 24% corporate income tax rate. The rate is 21% for revenues between €100,000 and €5 million.

How fast is Slovakia's economy growing?

GDP increased 0.8% year on year in the second quarter of 2026 and by the same rate during the first half as a whole.

What is happening to industrial production?

Industrial output rose 2.4% year on year in July but remained 0.4% lower for the first seven months of 2026.

Are foreign investors leaving Slovakia?

Available data do not show a broad exodus. Inward FDI fell to $180 million in 2023 before recovering to $1.84 billion in 2024.