While other European Union countries offer effective mechanisms for protecting family assets and ensuring their smooth intergenerational transfer, Slovakia still lacks legislation that would allow for the creation of trusts under domestic jurisdiction.
Unlike the Czech Republic and other European Union member states, the Slovak Republic does not yet have its own legislation governing trusts. Trusts can be understood as the purposeful transfer of assets into a separate legal entity that has no owner, only a trustee.
Through this process, the assets are separated from the settlor’s assets, and the settlor may determine the principles governing their management and operation in the future. Although trusts are commonly used abroad, Slovakia has not yet adopted legislation that would incorporate this institution into our legal system.
In the classical sense, trusts lack legal personality; that is, they are not legal entities, and the trustee acts on their behalf. This mechanism is often used by business and wealthy families seeking more effective ways to manage and protect their assets.
Trusts enable the smooth transfer of assets between generations and eliminate risks such as fragmentation or devaluation.
Lack of Legal Regulation for Trusts
A similar solution could be private foundations, or “endowment funds,” in the Czech Republic. These involve the separation of assets that have legal personality—they are legal entities with a registered office and governing bodies. In a sense, they thus represent an equivalent to trusts.
Furthermore, Slovakia does not recognize foreign trusts without legal personality, which causes complications when registering them as owners of real estate or securities. From a tax law perspective, it is not clearly defined how income from trusts should be taxed.
Slovakia is not a signatory to the 1985 Hague Convention on the Law Applicable to Trusts and Their Recognition, which could simplify the situation.
In 2023, the Ministry of Justice attempted to introduce one form of trust into Slovak legislation through an amendment to Act No. 34/2002 Coll. on Foundations. However, this proposal did not pass even the second reading.
Draft Act on Family Foundations
The proposed law was intended to introduce a new legal form—a private foundation established for private purposes. The Ministry opted for a legal entity model with a mandatory registered office, a trustee, and the option to establish additional bodies (a board of directors or supervisory board, or an auditor). Registration would take place through the register of non-governmental non-profit organizations.
The proposal was inspired by institutions in the Czech Republic, Liechtenstein, and Austria, and its objectives included:
facilitating generational succession in family businesses,
an alternative to inheritance through a will,
taxing the income of private foundations similarly to legal entities,
creating a tool for unmarried couples to effectively manage their assets.
How did it turn out?
The proposal did not advance to the second reading and was criticized by both non-governmental organizations and professional circles. Critics also argued that such a regulation would require a comprehensive recodification of private law, which had not been sufficiently prepared.
It is true that private law in the Slovak Republic would benefit from a comprehensive recodification; the Czech Republic, which carried out an extensive recodification of private law in 2014, serves as an example. However, Slovakia lacks the political stability necessary to implement such reforms.
What options are available to Slovak citizens?
While Slovak citizens can establish trusts abroad, the fact that Slovakia does not recognize foreign trusts complicates the situation.
Trusts without legal personality cannot be registered in Slovak registries (with the exception of the Commercial Register), and their income does not fall under a clear definition in tax law. Therefore, it is likely that they will fall into the category of so-called “other income,” for which a less favorable tax regime applies than, for example, for dividends.
Despite these limitations, trusts remain an attractive solution for families and entrepreneurs, as they represent a solid pillar—especially for family businesses—necessary for intergenerational succession. Therefore, the first step should be their recognition in Slovak legislation and the transparent establishment of their tax regime.
The absence of relevant legislation ultimately leads to capital flight from Slovakia. Slovakia has, in effect, given up on finding solutions to keep wealth and capital at home, which could be accumulated in trusts under Slovak jurisdiction as a pillar of stability for future generations.
