With new AI guidelines, shifting tax rules, and ambiguity around the Svarc system, Slovakia’s legal landscape is in flux, according to Majernik & Mihalikova Partner Ivan Kormanik. Yet M&A activity remains exceptionally strong, fueled by regional investors and the booming defense sector.
“The Slovak Bar Association recently introduced new rules on the use of AI within law firms, providing much-needed clarity on what is permitted and what is not,” Kormanik notes. “This guidance is becoming increasingly important: not only are lawyers relying on AI tools, but many clients now expect, or even require, their use, especially as budgets tighten and efficiency becomes a priority.”
A second major topic in Slovakia, according to Kormanik, is taxation. “Several new rules taking effect in January have sparked debate, particularly the changes to VAT deductions for car purchases,” he points out. “Now, under the new rules, most of the businesses will be able to deduct only 50% of VAT.”
Another heavily discussed area, Kormanik says, “is the so-called ‘Svarc system,’ which concerns also self-employed individuals. For instance, he adds, “the government has announced stricter assessment and more inspections not only in sectors involving manual labor, but also in areas that have so far largely been overlooked by labor inspectorates, such as white-collar roles in the IT sector. In sectors of predominantly intellectual work, there remains a lack of established case law clarifying under what circumstances such activities may be considered dependent work. In this respect, the latest legislative changes might play an important role. Until now, specifying the exact working hours has been seen as a key sign of an employment relationship. If the parties have agreed on the ability to work anytime, it is harder to classify the relationship as employment. This requirement has now been removed – meaning a person can work whenever they choose and still be considered an employee. The shift is meant to introduce greater flexibility, but it also reflects the government's need to obtain more money for the state budget by ensuring that companies engage employees instead of self-employed individuals.”
From a market perspective, Kormanik stresses that deal activity remains strong. “A large share of transactions involves Czech industrial companies, particularly in metallurgy and areas connected to the rising demand for defense and armory production across the region,” he notes. “These sectors continue to generate steady movement even as the inflow of new Western investors, especially from the US, has unfortunately slowed.”
Finally, Kormanik points out that transactional behavior has also evolved. “Clients are far more pragmatic now,” he observes. “They want to move quickly and close deals without the hesitation we saw two years ago. As a result, processes are faster, decision-making is more direct, and the overall market feels more energetic, with significantly more activity than in the recent past.”
