How to Pay a US Company from Slovakia: A Guide for Non-Resident Entrepreneurs

Understanding the regulatory environment

Slovak entrepreneurs looking to pay US companies must navigate a regulatory environment shaped by both national and European authorities, as well as international tax agreements. The primary bodies influencing these transactions are the National Bank of Slovakia (NBS) and the European Central Bank (ECB), alongside the bilateral tax treaty between the US and Slovakia.

National Bank of Slovakia (NBS) and European Central Bank (ECB) Regulations

As a member of the Eurozone, Slovakia operates under the broader framework of the European Central Bank (ECB) for monetary policy and payment systems. The National Bank of Slovakia (NBS) implements these regulations domestically and oversees the Slovak financial sector. For payments within the Single Euro Payments Area (SEPA), the NBS ensures compliance with EU regulations like Regulation (EU) 2021/1230 on cross-border payments. While SEPA facilitates straightforward euro transfers within Europe, payments to the US fall outside this immediate framework, requiring adherence to international transfer rules.

The ECB's retail payments strategy aims to simplify cross-border payments for European businesses and consumers. However, for transfers outside the Eurozone, particularly to the US, the process involves different mechanisms, primarily SWIFT. Both the NBS and ECB emphasize transparency and security in payment systems, which means banks in Slovakia are required to conduct due diligence and report certain international transactions to combat money laundering and terrorist financing.

US-Slovakia Tax Treaty and Withholding Tax (WHT)

The tax relationship between the United States and Slovakia is governed by the 1993 Income Tax Treaty. This treaty aims to prevent double taxation and facilitate economic exchange between the two countries. A key aspect for Slovak entrepreneurs paying US companies is the withholding tax (WHT) on certain types of income, particularly dividends.

Under the US-Slovakia tax treaty, the maximum withholding tax at source on dividends is generally 5% for dividends paid by a subsidiary to a parent corporation (where the recipient company owns at least 10% of the voting stock of the payer company). For all other dividends, the rate is typically 15%. It's crucial for Slovak businesses to understand these rates as they directly impact the net amount received by the US company. While the treaty provides these general rates, specific circumstances and the nature of the payment can influence the applicable tax. It is advisable to consult with a tax professional to ensure correct application of the treaty provisions.

Payment Mechanisms: SWIFT vs. SEPA

Understanding the difference between SEPA and SWIFT is fundamental for making international payments from Slovakia to the US.

SEPA for Eurozone Transfers

SEPA (Single Euro Payments Area) is designed to make euro transfers between countries in the Eurozone as easy and cost-effective as domestic transfers. It covers 36 countries, including Slovakia, and allows for fast, often free, transfers in EUR. However, SEPA cannot be used for direct payments to the United States because the US is not part of the SEPA zone and does not primarily use the Euro. While a Slovak bank might process a SEPA transfer to an intermediary European bank, which then forwards it via SWIFT to the US, this adds complexity and potential delays.

SWIFT for International Payments to the US

For payments from Slovakia to the United States, the SWIFT (Society for Worldwide Interbank Financial Telecommunication) network is the standard mechanism. SWIFT transfers are international wire transfers that allow banks worldwide to send and receive information about financial transactions in a secure and standardized environment. When you initiate a SWIFT transfer from a Slovak bank like Tatra banka, Slovenská sporiteľňa, or VÚB banka to a US company, your bank will send a message through the SWIFT network to the recipient's bank in the US.

SWIFT transfers typically involve correspondent banks, meaning the funds may pass through several banks before reaching the final destination. This can affect the speed and cost of the transfer. While generally reliable, SWIFT transfers can take 1 to 5 business days to complete, depending on the banks involved and any intermediary steps. Fees for SWIFT transfers are also generally higher than SEPA transfers, often involving charges from both the sending and receiving banks, and potentially intermediary banks.

Exchange Rates and Currency Conversion (EUR/USD)

Since Slovakia uses the Euro (EUR) and the US uses the US Dollar (USD), any payment will involve currency conversion. The EUR/USD exchange rate is constantly fluctuating, and this can impact the final amount received by the US company. When making a payment, your Slovak bank or payment service provider will convert your EUR into USD at their prevailing exchange rate.

Banks typically apply a markup on the interbank exchange rate, which is how they generate revenue from currency conversion. This markup can vary significantly between institutions. For example, traditional banks like Slovenská sporiteľňa or VÚB banka might offer less competitive exchange rates compared to specialized foreign exchange services or fintech platforms. It's crucial to compare exchange rates and fees from different providers to ensure you are getting a favorable rate and minimizing conversion costs. Services like Wise (formerly TransferWise) or Revolut often offer more transparent and competitive exchange rates with lower fees for EUR to USD conversions.

Practical Steps for Slovak Entrepreneurs to Pay a US Company

Making an international payment requires careful attention to detail to ensure the funds reach the US company efficiently and without issues.

Choosing a Bank or Payment Service Provider

Slovak entrepreneurs have several options for sending money to the US:

• Traditional Banks: Major Slovak banks such as Tatra banka, Slovenská sporiteľňa, and VÚB banka offer international wire transfer services via SWIFT. They provide security and established infrastructure but may have higher fees and less competitive exchange rates.
• Online Money Transfer Services: Fintech companies like Wise (formerly TransferWise), Revolut, and OFX specialize in international money transfers. They often provide more favorable exchange rates and lower, more transparent fees compared to traditional banks. They typically use a network of local bank accounts to minimize SWIFT fees and speed up transfers.

Consider the amount you are sending, the urgency, and the total cost (fees + exchange rate markup) when choosing a provider.

Required Information for Payment

To initiate a SWIFT transfer to a US company, you will typically need the following information from the recipient:

• Recipient's Full Name/Company Name: The exact legal name of the US company.
• Recipient's Address: The full physical address of the US company.
• Recipient's Bank Name: The full name of the US bank.
• Recipient's Bank Address: The full physical address of the US bank.
• SWIFT/BIC Code: The unique identifier for the recipient's bank (e.g., CHASUS33 for JP Morgan Chase Bank).
• Account Number: The recipient's US bank account number.
• ABA Routing Number: A nine-digit number used by US banks to identify financial institutions for electronic transfers.

Ensure all details are accurate to avoid delays or returned payments, which can incur additional fees.

Initiating the Transfer

Once you have all the necessary information, you can initiate the transfer:

1. Online Banking/App: Most Slovak banks and online payment services allow you to initiate international transfers through their online platforms or mobile apps. Navigate to the international transfer section.
2. Fill in Details: Carefully enter all the recipient's bank details, including the SWIFT/BIC code, account number, and routing number. Specify the amount in EUR and confirm the amount in USD after conversion.
3. Review and Confirm: Double-check all the entered information. Pay attention to the exchange rate, fees, and the estimated delivery time. Confirm the transaction.
4. Verification: Depending on your bank's security protocols, you may need to verify the transaction via SMS, a mobile app, or a security token.

Monitoring and Confirmation

After initiating the transfer, keep a record of the transaction reference number. You can typically track the status of your payment through your bank's online portal or the payment service provider's app. Inform the US company about the payment, providing them with the transaction details and estimated arrival time. Once the funds are received, request confirmation from the US company.

Keystone Bridge Global's Role

Keystone Bridge Global assists non-resident entrepreneurs in establishing and managing their US business presence. While we do not directly handle international money transfers, our services are designed to streamline the process of setting up your US entity, ensuring you have the necessary infrastructure to conduct business, including receiving payments and managing finances. We can guide you through the requirements for US business formation, registered agent services, and understanding the financial ecosystem, which indirectly facilitates smoother international transactions.

This guide is not legal, tax, or financial advice. Regulations change — verify current requirements with a licensed professional before acting.

For the broader picture on this topic, see our guide on how to pay a US company from your country.

See also

• Best Payment Processors for Non-Residents — Full Comparison