← All articles · July 23, 2026

Živnosť or s.r.o. in Slovakia: which to choose in 2026

Živnosť or s.r.o. is the first real decision anyone faces when starting to work for themselves in Slovakia. Early on the trade licence almost always wins; as turnover and risk grow, the company starts to make sense. Here is how the two differ on money, liability and residence, and how to tell when it is time to switch.

What the two forms actually are

Živnosť is business carried on by a natural person. You and your business are legally the same person: its income is your personal income, its debts are your personal debts.

S.r.o. (spoločnosť s ručením obmedzeným) is a separate legal person with its own money, contracts and accounts. You can be both its shareholder (spoločník) and its managing director (konateľ), but those are two different roles with different consequences.

Everything else follows from that one distinction: liability, tax, contributions, and how quickly what you earn reaches your pocket.

Liability

• Živnosť — you are liable for your obligations with everything you personally own: your flat, your car, your savings.
• S.r.o. — a shareholder’s liability is limited to the unpaid part of the contribution. The minimum registered capital is 5,000 €, and the minimum contribution of a single shareholder is 750 €. Once the contribution is paid in full, the shareholder does not answer for company debts with personal assets.

The caveat people forget: limited liability protects the shareholder as an owner of a stake, not the director as a manager. A konateľ has separate statutory duties, and breaching them is answered for personally.

In practice: for a consultant or developer with no stock, staff or loans, the difference is close to theoretical. For construction, transport or trading in goods, where debts to third parties build up fast, it is the strongest argument for a company.

Tax

For a trade licence, tax is calculated on your personal tax base. In 2026 the rate is 15 % if taxable income for the year did not exceed 100,000 €. Above that a progressive scale applies from 1 January 2026: 19, 25, 30 and 35 % on the respective parts of the base. Instead of collecting receipts you can claim flat-rate expenses of 60 % of income, capped at 20,000 € a year and only if you are not VAT registered.

A company pays a lower headline rate: 10 % on taxable income up to 100,000 €, 21 % above that, and 24 % on income over 5,000,000 €. But comparing 10 against 15 head to head is misleading, for two reasons:

• profit is taxed twice — first at company level, then at 7 % withholding when dividends are paid out to an individual shareholder (for profit from periods beginning on or after 1 January 2025);
• a company also has a minimum tax, the daňová licencia. It is tied to turnover rather than profit, and the lowest band in 2026 is 340 € a year.

One more 2026 detail: the transaction tax was abolished for sole traders from 1 January, while legal entities still pay it.

Contributions

This is where the trade licence usually loses, and it loses predictably.

A živnostník pays for himself. Health insurance in 2026 is 16 % of the assessment base, minimum 121.92 € a month; social insurance is 33.15 %, minimum 303.11 € a month. Together the floor sits around 425 € a month, whether or not the month was profitable.

Relief arrived on 1 July 2026 in the form of the mikroodvod. If annual income did not exceed 2,876.90 €, no social contributions are due at all; up to 9,144 € a reduced base applies, at 131.34 € a month; above that the ordinary minimum returns. For newcomers, compulsory social insurance now starts on the first day of the sixth calendar month after the month the trade licence was issued.

A konateľ is different: with no remuneration and no employment contract, no contributions arise at all. That sounds attractive, and it is exactly where the insurance and residence problem starts.

What it costs to set up and to run

Setting up a trade licence takes days. Free trades cost nothing filed electronically and 7 € per trade in person; craft and regulated trades cost 11 € electronically and 22 € in person.

A company is harder, and from 17 August 2026 noticeably harder. The new Commercial Register act requires the founding document to be executed as a notarial deed or authorised by an attorney — a simple signature, even a qualified electronic one, is no longer enough. Only an attorney, a notary or an employee may represent the company before the register. On top of that comes the court fee: check the current amount when you file, because published figures contradict each other.

Running costs differ too. A trade licence holder gets by with tax records (daňová evidencia) or single-entry bookkeeping, often self-kept. An s.r.o. must keep double-entry accounts and file annual statements, which makes an accountant a permanent monthly cost.

How clients actually see it

A lot of myths here, so bluntly:

• private clients and small local businesses mostly do not care which form you hold;
• corporate procurement, tenders and large clients are a different world: an s.r.o. reads as a more durable counterparty, and some procedures require a legal entity outright;
• a stake in a company can be sold or handed to a partner, and the company name is an asset in its own right; a trade licence is not transferable and trades under your own name.

What an s.r.o. will not do is improve your standing with the tax office, the insurers or the foreign police. They look at your filings and your debts, not at your legal form.

How the choice affects your residence

This part is missing from ordinary comparisons, and for a foreigner it often decides the matter.

• Health insurance. A trade licence gives access to public health insurance. A konateľ without an employment contract does not get it: without permanent residence you will have to buy commercial cover, with different limits and different exclusions.
• Residence renewal. The review mechanics changed in 2026: for trade licence holders the authorities look at income and turnover achieved, for managing directors at the amount of tax actually paid. What is expected depends on your case, so check before you file rather than after a refusal.
• Debts. The twenty-day grace period for clearing arrears after filing has been abolished. Every debt — tax office, customs, social insurance, health insurer — has to be settled before the application goes in.

If residence is the whole point of the business, choose the form together with whoever handles your business residence permit: a mistake here costs you status, not just money.

When it is time to move to a company

Do not look for a magic turnover figure. Look for these signals instead:

1. The tax arithmetic has flipped. Profit is consistently high enough that 15 % plus full contributions costs more than company tax plus 7 % on dividends. An accountant works that point out on your numbers; there is no universal figure.
2. Real risk has appeared. Staff, stock, leased equipment, contracts with penalty clauses — all reasons to separate the business from what you personally own.
3. Your clients have changed. Corporates, public bodies, tenders.
4. A partner has appeared, or an exit is on the table. A stake can be split and transferred; a trade licence cannot.
5. Profit needs to be reinvested. With a trade licence all profit is automatically yours and taxed at once; inside a company it can stay and keep working.

Arguments against switching: unstable income, working alone with no real exposure, needing public health insurance through the trade licence, and not wanting an accountant on a monthly retainer.

How the switch works in practice

1. Register the company. Founding document before a notary or authorised by an attorney, contribution paid in, filing with the Commercial Register.
2. Move the business across. Clients, contracts and assets do not migrate by themselves. The usual routes are a sale of enterprise agreement (written, with officially certified signatures) or a non-monetary contribution, which needs an expert valuation. Creditors have a limited window to challenge a sale, so clear debts first.
3. Decide what to do with the trade licence. You do not have to close it: it can be suspended for a nominal fee, cheaper electronically, and resumed later. Full termination carries no fee, and the single contact point passes the news to the tax office and both insurers.
4. Handle VAT yourself. VAT registration does not transfer to the company. If you were registered as a sole trader, you have to cancel it. The threshold itself changed during 2026, so confirm the current figure with your accountant.

Common mistakes

• comparing the 10 % and 15 % headline rates alone and forgetting the 7 % on dividends and the minimum tax;
• setting a company up for later and paying an accountant to maintain an empty shell — the minimum tax follows turnover, and a loss-making year does not by itself excuse you;
• closing the trade licence before the company is registered and trading, which opens a gap in both your insurance and your residence grounds;
• treating the company account as your wallet: money in an s.r.o. becomes yours only through salary or dividends;
• letting arrears build up with either insurer — since 2026 they block a residence renewal at the first step.

Frequently asked questions

Can I hold a trade licence and an s.r.o. at the same time. Yes, it is a common combination — just remember contributions and reporting then run on both tracks. The cap on single-member companies per individual was removed on 17 August 2026.

Which is cheaper to start. The trade licence, by a wide margin. A free trade filed electronically costs nothing, while a company needs registered capital from 5,000 €, a notary or an attorney, and a court fee.

Does an s.r.o. give access to public health insurance. Not by itself. Without permanent residence, access comes from employment or from a trade licence; a konateľ with no employment contract buys commercial cover.

Do I have to close the trade licence once the company exists. No, it can be suspended and picked up later. But if the trade licence is the basis of your residence, any restructuring has to be agreed with the foreign police in advance, not explained afterwards.

Would rather not work the numbers out alone? We will set up your živnosť end to end: activity codes, the notification, and registering you with the insurers. And if the form has to fit a residence application, see our business residence permit service.