The switch from a živnosť to an s.r.o. is usually judged by one number: how much you save on social insurance. For a foreigner on a business residence permit, closing the sole proprietorship also changes your health insurance, your pension record and what you use to prove your business when you renew your permit.
We covered this in detail in the Lawvia podcast with Gevorg Ayrumyan, a licensed attorney in Slovakia and a Lawvia partner attorney. The episode is below.
In short:
while you hold temporary residence, it is worth keeping your živnosť even if your main business moves to an s.r.o.
Why the switch is on the table now
Since 1 July 2026, social insurance for sole proprietors (živnosť) works differently. Whether you have to pay is assessed on your business income for the previous calendar year, as at 1 July, or as at 1 October if you extended the deadline for your tax return. If your income for 2025 did not exceed €2,876.90, no social insurance is due. Above that amount and up to €9,144 you pay a micro-contribution (mikroodvod) of €131.34 a month. Above that threshold, contributions are calculated from your business tax base, at least €303.11 a month in 2026. The lower threshold equals 10.5 times the subsistence minimum (životné minimum) and changes every year.
Until 30 June 2026, existing sole proprietors had a higher threshold, €8,580 of annual income for 2024, and below it paid no social insurance at all. For someone starting a živnosť today, compulsory social insurance begins on the first day of the sixth calendar month after the month in which the trade licence was granted, and the micro-contribution applies until the first income assessment.
Which raises the obvious question: why pay if you can work through an s.r.o.? A company indeed pays no social insurance for its owner as long as the owner draws neither a salary nor a managing director's fee (konateľ) from it. But this saving has a flip side, and a foreigner with temporary residence feels it more than a Slovak does: a Slovak, and also a foreigner with permanent or long-term residence, generally stays in public health insurance even without a živnosť, while a foreigner with temporary residence can lose it together with the živnosť.
With temporary residence, health insurance depends on the živnosť
A foreigner with temporary residence (prechodný pobyt) who is not health-insured in another EU or EEA country or in Switzerland generally enters public health insurance as an employee or as a self-employed person (samostatne zárobkovo činná osoba), such as a sole proprietor. An employee must have an agreed monthly income of at least the minimum wage.
A managing director with temporary residence who runs their own s.r.o. is not on that list. A director's fee is taxed like a salary and social insurance is paid on it, but it does not give rise to public health insurance, not even with a regular and high fee. The law explicitly excludes such a director, and the same applies to a shareholder of an s.r.o. For employees without permanent residence, the law also states explicitly that this exclusion applies.
„Verejne zdravotne poistená nie je fyzická osoba, ktorá nemá trvalý pobyt na území Slovenskej republiky, ktorá nie je zdravotne poistená v inom členskom štáte a vykonáva u zamestnávateľa, ktorý má sídlo v Slovenskej republike, činnosť konateľa spoločnosti s ručením obmedzeným, (…) alebo činnosť spoločníka s ručením obmedzeným (…)."
In translation: "A natural person is not covered by public health insurance if they have no permanent residence in the Slovak Republic, are not health-insured in another member state and, for an employer with its registered office in the Slovak Republic, act as the managing director of a limited liability company (…) or as a shareholder of a limited liability company (…)." This is § 3 ods. 9 of Act No. 580/2004 Z. z. on health insurance.
It is different for a director with long-term residence. For the term "permanent residence", the Health Insurance Act also refers to five-year permanent residence, permanent residence for an unlimited period and long-term residence (dlhodobý pobyt) under the Act on the Residence of Foreigners. A foreigner with any of these is publicly insured just like a Slovak, and the exclusion of directors does not apply to them, because it only concerns people without permanent residence. Health insurance is paid on their director's fee just as on a salary. Once you obtain long-term residence, the reason to keep a živnosť for health insurance falls away.
Without a živnosť, a foreigner with temporary residence is left with commercial health insurance. It is enough for a temporary residence permit, but its scope depends on the contract: not every doctor accepts it, and pregnancy care and children's treatment may fall outside it. Children's cover also depends on the parents: under § 3 ods. 3 písm. j) of the Health Insurance Act, a dependent child (nezaopatrené dieťa) under 18 with a residence permit is publicly insured if at least one of their legal representatives is publicly insured. If both parents have temporary residence and do business only through an s.r.o., the child needs commercial insurance.
So while you hold temporary residence, the simplest set-up is to split the business: run the main activity through the s.r.o. and keep on the živnosť one line of business that you actually carry out. The law grants public health insurance to a self-employed person with a residence permit. For employees, the law states explicitly that the exclusion of directors applies; for self-employed persons it contains no such reservation. In the interpretation of our partner attorney, a živnosť therefore keeps public health insurance for you and your children even when you are also a director. He is not aware of any court decision on this question, so before becoming a director, we recommend checking with your health insurer whether your public health insurance will continue.
A živnosť comes with its own conditions and costs. A foreigner without permanent residence who is publicly insured only through a živnosť stays insured only as long as they are not a debtor of their health insurer. If they become one, the insurance ends, except in cases set by law, such as an approved instalment plan. As a sole proprietor you pay health insurance advances of at least the minimum amount and, with an annual income above €2,876.90, the micro-contribution to the Social Insurance Agency as well.
Social insurance builds your pension record
Contributions to the Social Insurance Agency (Sociálna poisťovňa) count towards your pension insurance record. A regular old-age pension requires at least 15 years of pension insurance, and every period for which contributions were paid counts towards it, even small ones.
The rule for the minimum pension is stricter: you need 30 years of qualifying pension insurance. A year counts towards them only if your personal earnings ratio (osobný mzdový bod) for that year reached at least 0.241. The ratio compares your contribution base (vymeriavací základ) with the average wage in Slovakia (všeobecný vymeriavací základ): 0.241 means 24.1% of the average. If the calculated pension is below the minimum, it is raised to the minimum pension.
Pension insurance does not come only from a živnosť, though. A director who receives a regular monthly fee from their own s.r.o. counts as an employee for pension insurance purposes, even with temporary residence, and contributions are paid on that fee. Conversely, a živnosť with an annual income of up to €2,876.90 does not give rise to compulsory social insurance, so it does not build any compulsory pension insurance record either. If you are keeping the živnosť partly for your pension, what matters is how much it earns.
So the decision to switch is worth weighing over ten years, not one. Especially if you see your future in Slovakia: when you apply for Slovak citizenship, you will have to document that you meet your obligations in public health insurance, social insurance and taxes.
When an s.r.o. really pays off
With a real turnover of up to €20,000 a year, a živnosť usually remains the better deal. Sole proprietors can claim flat-rate expenses (paušálne výdavky): 60% of income, capped at €20,000 a year, without supporting documents, and the social and health contributions paid are deducted on top. Flat-rate expenses are available to sole proprietors who are not VAT payers or were VAT payers for only part of the year.
In an s.r.o., every expense has to be documented and linked to the company's business. Bookkeeping, the tax return and financial statements also cost more. The obligation to register for VAT depends on turnover and applies equally to a sole proprietor and to a company.
Once turnover goes beyond these limits, the picture changes. A company separates your personal assets from business risks: a shareholder is liable for the company's obligations only up to the unpaid part of their contribution, while the director is liable for damage caused by breaching their duties. Different projects can be split across different companies with different partners.
Think about the exit too. A živnosť can be suspended (pozastaviť živnosť) for up to three years and then continued without registering again. While it is suspended, no social insurance or health insurance advances are paid on the business. If your public health insurance rests only on the živnosť, check with your health insurer before suspending it whether the insurance continues during the suspension. Anyone who cancels a živnosť and obtains a new licence within 60 months is not entitled to the social insurance holiday (odvodové prázdniny). Closing an s.r.o. takes longer and costs more: liquidation requires financial statements (účtovná závierka) when the company enters liquidation and when it ends, a notice in the Commercial Journal (Obchodný vestník), and in practice takes months.
How to switch to an s.r.o. without a refused renewal
Temporary residence for the purpose of business (podnikanie) is a single purpose, but the law distinguishes two grounds for granting it: doing business as a natural person and acting on behalf of a commercial company. Anyone whose residence was granted for acting on behalf of a company may not be in an employment relationship at the same time. Each ground has different renewal conditions. Temporary residence is tied to one purpose, and anyone who wants to carry out a different activity from the one their residence was granted for must submit a new application. Whether moving from a živnosť to acting on behalf of an s.r.o. counts as such a different activity is not expressly addressed by the law. If the purpose for which the residence was granted ceases, the foreign police (cudzinecká polícia) will revoke the residence. So do not cancel your živnosť before it is clear with the police on what basis your residence will continue.
Since 15 July 2026, the renewal conditions are as follows. Proceedings started before that date are completed under the previous rules, and under the new ones only if they are more favourable for the foreigner. If you do business on a živnosť, you must show taxable revenue (zdaniteľné príjmy) from business for the previous tax period above the amount from which filing a tax return becomes compulsory. For 2025 this is €2,876.90, and the amount changes every year. What counts is revenue, not the tax base after expenses.
If you renew your residence as the director of an s.r.o., you must show that for the previous tax period the company paid tax of at least the minimum tax. The minimum tax depends on the company's taxable revenue: for 2025 it ranged from €340 to €3,840, and from 2026 it ranges from €340 to €11,520 a year. The earlier assessment of profit after tax has been replaced by the condition of tax paid.
In both cases you must have no recorded arrears with the tax office, the customs office or in social insurance, and no overdue debts to your health insurer, neither from your own business nor from any company or cooperative on whose behalf you act. This obligation applies throughout your residence, not only at renewal. If you breach it, the foreign police will revoke your residence at the request of the tax office, the customs office, the Social Insurance Agency or the health insurer. This concerns arrears arising from 15 July 2026. A company's arrears can therefore put its director's residence at risk too.
With a new company, timing needs particular care. A company does not pay the minimum tax for the tax period in which it was established, so for that period it may have no tax paid at all. We therefore recommend timing the company's set-up around your renewal date and discussing the change with the foreign police in advance.
A separate note on registration. Since 17 August 2026, a new Commercial Register Act has been in force together with an amendment to the Commercial Code (Obchodný zákonník). The founding document of an s.r.o., a contract transferring a business share and selected shareholder decisions must take the form of a notarial record (notárska zápisnica) or a document authorised by an attorney (dokument autorizovaný advokátom), that is, a document drawn up by an attorney and signed by the parties in their presence. If the company has several shareholders, for selected decisions of the general meeting (valné zhromaždenie), such as appointing and dismissing a director, the course of the general meeting must be certified by a notarial record, and authorisation by an attorney is not enough. A decision of a sole shareholder may take the form of a notarial record or a document authorised by an attorney. In registration, the applicant may be represented only by an attorney, a notary or the applicant's own employee. For these changes, the notary's or attorney's fee for drawing up the document therefore comes on top of the registration costs. With documents ready, registration in practice takes up to two weeks.
The right order of steps depends on when the company was set up, what its turnover is and when your permit is due for renewal. All of this is easier to plan before registering the s.r.o. than after a refusal. We can help you set up the company: s.r.o. registration through a partner attorney.
Watch the episode
If the video does not open, the episode is on our YouTube channel: watch the episode. It is in Russian, with English subtitles.
Should you switch from a živnosť to an s.r.o.?
If you are considering the switch, start with a transition consultation. An attorney specialising in immigration and corporate law reviews your request and gives you a written recommendation: whether and when to switch, what to do with your živnosť and how to keep your current status. The consultation costs €149 and is held in Slovak, English or Russian. If you decide to go ahead, we set up the company for you end to end and credit the cost of the consultation.
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This material is for information only and does not constitute legal advice. Every situation requires an individual assessment.
