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In its judgment case no. C-354/22 dated November 23, 2023 the Court of Justice of the European Union (“CJEU“) has ruled that a winemaker may indicate his wine-growing estate in the labeling of his wine, even if the process of grape cultivation and grape pressing took place on the wine-growing estate of another winemaker.
In the case at hand, the request for a preliminary ruling was submitted to the CJEU by the German Federal Administrative Court specifically concerning the interpretation of Article 54(1) of Commission Delegated Regulation (EU) 2019/33 of 17 October 2018 supplementing Regulation (EU) No 1308/2013 of the European Parliament and of the Council as regards applications for protection of designations of origin, geographical indications and traditional terms in the wine sector, the objection procedure, restrictions of use, amendments to product specifications, cancellation of protection, and labelling and presentation (OJ 2019 L 9, p. 2), as amended by Commission Delegated Regulation (EU) 2021/1375 of 11 June 2021 (OJ 2021 L 297, p. 16) (“Delegated Regulation 2019/33“).
Respective dispute unfolded between the Land of Rhineland-Palatinate (“Land“) and a German winemaker regarding the labeling of the winemaker’s wine from the Moselle region. The winemaker cultivated grapes in his own vineyards and partially in leased vineyards, including leased vineyard located approximately 70 kilometers away from his wine-growing estate. The vines in the leased vineyard were cultivated by its owner (i.e., another winemaker), according to the terms of the lease agreement and following instructions, and oenological practices of the winemaker lessee. The lease agreement also included the lease of the wine press, which was exclusively available to the winemaker lessee for a period of 24 hours after the harvest. After the grape harvest, the pressing of the grapes took place in the leased vineyard, and the winemaker lessee afterwords transported the must to his facility, where he continued with the wine processing according to his oenological standards. When labeling such wine, the winemaker used the contested terms “Weingut” (eng. vineyard estate) and “Gutsabfüllung” (eng. bottled at the estate). The Land argued wine which was produced in the above-described manner could not be labeled with terms as “Weingut” and “Gutsabfüllung” since production of such wine was not independent. The winemaker filed a lawsuit in a German administrative court, seeking a declaration that he was entitled to use the indications such as “Weingut” and “Gutsabfüllung”. At the first instance the administrative court ruled in favor of the winemaker, however the Land appealed the decision to the higher administrative court, which overturned the judgment and rejected the winemaker’s lawsuit entirely. The winemaker then appealed to the Federal Administrative Court, which subsequently submitted a question for a preliminary ruling to the CJEU.
In connection with the described factual situation and the questions raised for preliminary ruling by German Federal Administrative Court, the CJEU has ruled that second subparagraph of Article 54(1) of Delegated Regulation 2019/33 should be interpreted in a such a manner that the production of wine is deemed to take place entirely on the wine-growing estate (by which the product is named), even if the grapes were harvested and pressed in leased vineyard, provided that such a press is for a shorter period exclusively available only to the winemaker lessee. In addition, it is essential that during the grape pressing process the winemaker lessee assumes actual management, close and continuous supervision and responsibility for such operation.
Additionally, the CJEU concluded that second subparagraph of Article 54(1) of Delegated Regulation 2019/33 should be interpreted to mean that the production of wine is considered to have taken place entirely on the wine-growing estate (by which the product is named), even if the pressing is carried out by employees of wine-growing estate of another winemaker. The condition for this is that the winemaker lessee effectively leads the pressing process, maintains constant control, and assumes responsibility for such a task.
In its judgment case no. C-354/22 dated November 23, 2023 the Court of Justice of the European Union (“CJEU“) has ruled that a winemaker may indicate his wine-growing estate in the labeling of his wine, even if the process of grape cultivation and grape pressing took place on the wine-growing estate of another winemaker.
In the case at hand, the request for a preliminary ruling was submitted to the CJEU by the German Federal Administrative Court specifically concerning the interpretation of Article 54(1) of Commission Delegated Regulation (EU) 2019/33 of 17 October 2018 supplementing Regulation (EU) No 1308/2013 of the European Parliament and of the Council as regards applications for protection of designations of origin, geographical indications and traditional terms in the wine sector, the objection procedure, restrictions of use, amendments to product specifications, cancellation of protection, and labelling and presentation (OJ 2019 L 9, p. 2), as amended by Commission Delegated Regulation (EU) 2021/1375 of 11 June 2021 (OJ 2021 L 297, p. 16) (“Delegated Regulation 2019/33“).
Respective dispute unfolded between the Land of Rhineland-Palatinate (“Land“) and a German winemaker regarding the labeling of the winemaker’s wine from the Moselle region. The winemaker cultivated grapes in his own vineyards and partially in leased vineyards, including leased vineyard located approximately 70 kilometers away from his wine-growing estate. The vines in the leased vineyard were cultivated by its owner (i.e., another winemaker), according to the terms of the lease agreement and following instructions, and oenological practices of the winemaker lessee. The lease agreement also included the lease of the wine press, which was exclusively available to the winemaker lessee for a period of 24 hours after the harvest. After the grape harvest, the pressing of the grapes took place in the leased vineyard, and the winemaker lessee afterwords transported the must to his facility, where he continued with the wine processing according to his oenological standards. When labeling such wine, the winemaker used the contested terms “Weingut” (eng. vineyard estate) and “Gutsabfüllung” (eng. bottled at the estate). The Land argued wine which was produced in the above-described manner could not be labeled with terms as “Weingut” and “Gutsabfüllung” since production of such wine was not independent. The winemaker filed a lawsuit in a German administrative court, seeking a declaration that he was entitled to use the indications such as “Weingut” and “Gutsabfüllung”. At the first instance the administrative court ruled in favor of the winemaker, however the Land appealed the decision to the higher administrative court, which overturned the judgment and rejected the winemaker’s lawsuit entirely. The winemaker then appealed to the Federal Administrative Court, which subsequently submitted a question for a preliminary ruling to the CJEU.
In connection with the described factual situation and the questions raised for preliminary ruling by German Federal Administrative Court, the CJEU has ruled that second subparagraph of Article 54(1) of Delegated Regulation 2019/33 should be interpreted in a such a manner that the production of wine is deemed to take place entirely on the wine-growing estate (by which the product is named), even if the grapes were harvested and pressed in leased vineyard, provided that such a press is for a shorter period exclusively available only to the winemaker lessee. In addition, it is essential that during the grape pressing process the winemaker lessee assumes actual management, close and continuous supervision and responsibility for such operation.
Additionally, the CJEU concluded that second subparagraph of Article 54(1) of Delegated Regulation 2019/33 should be interpreted to mean that the production of wine is considered to have taken place entirely on the wine-growing estate (by which the product is named), even if the pressing is carried out by employees of wine-growing estate of another winemaker. The condition for this is that the winemaker lessee effectively leads the pressing process, maintains constant control, and assumes responsibility for such a task.
On 7 November 2023, the National Assembly, in its extraordinary session, adopted the Act Amending the Employment Relationships Act (hereinafter: “Amendment to ZDR-1” or “the Amendment”), wherein the government of the Republic of Slovenia aims to align the Slovenian legal system particularly with (i) the Directive (EU) 2019/1152 of the European Parliament and of the Council of 20 June 2019 on transparent and predictable working conditions in the European Union (Directive 2019/1152/EU) and (ii) the Directive (EU) 2019/1158 of the European Parliament and of the Council of 20 June 2019 on work-life balance for parents and carers and repealing Council Directive 2010/18/EU (2019/1158/EU) in the part relating to the implementation of labor rights and obligations.
Key changes and novelties introduced by the Amendment to ZDR-1 include:
The Amendment to ZDR-1, except for specific provisions with longer transitional periods, will enter into force on the day following its publication in the Official Gazette of the Republic of Slovenia.
The Court of Justice of the European Union (“CJEU”) heard the case, ref no. C-238/22, of a passenger who could not check-in for a flight from Frankfurt am Main, Germany, to Madrid, Spain, which she had booked for the next day. The passenger contacted LATAM Airlines, which informed the passenger that it had transferred her to a flight operated the previous day without informing her beforehand. It also informed the passenger that her reservation for the return flight, which should have taken place more than two weeks later, had been blocked because she had not checked in for the outbound flight. The check-in procedure allows passengers to check their luggage on board and obtain a boarding pass.
The passenger brought an action for compensation for denied boarding of a flight before the Regional Court of Frankfurt am Main (“Referring Court”) pursuant to Regulation (EC) No 261/2004 of the European Parliament and of the Council of 11 February 2004 establishing common rules on compensation and assistance to passengers in the event of denied boarding and of cancellation or long delay of flights, and repealing Regulation (EEC) No 295/91 (“Regulation 261/2004”). The Referring court referred the matter to the CJEU for a preliminary ruling, asking the CJEU to clarify whether compensation for denied boarding under Regulation 261/2004 presupposes that the passenger checked in for the flight even though the airline had informed the passenger in advance that it would not be possible for the passenger to board the flight. The Referring court also asked whether an airline may be exempted from the obligation to pay compensation, as provided for in Regulation 261/2004 in respect of cancellations if it informs the passenger sufficiently in advance of the denied boarding, that is to say, at least two weeks before the scheduled departure of the flight.
The CJEU ruled in its judgment C-238/22 of 26 October 2023 that in the event of a denied boarding, compensation is due even if the passenger did not check in for the flight. If the airline had informed the passenger in advance that he would be denied boarding against his will on a flight for which he had a confirmed reservation, the requirement to check in would have been an unnecessary formality.
The CJEU has also ruled that the right to compensation applies even if the passenger was informed of the denied boarding at least two weeks before departure according to the timetable. According to the CJEU, there is no reason to apply a rule that applies only to flight cancellations, which exempts airlines from the obligation to pay compensation to passengers informed of the cancellation at least two weeks before the scheduled departure.
In its judgment C-565/22 of 5 October 2011, the Court of Justice of the European Union (“CJEU“) addressed a preliminary question from the Supreme Court of Justice of the Republic of Austria on whether Article 9(1) of Directive 2011/83 (“the Directive“) is to be interpreted as meaning that the consumer’s right of withdrawal from a distance contract is granted only once in respect of a contract relating to the provision of services and which becomes payable after an initial period free of charge, or whether the consumer has a right of withdrawal at each stage of the transformation or renewal of the contract.
Under Article 9(1) of the Directive, the consumer has 14 days to withdraw from a distance or off-premises contract without giving reasons and without incurring additional costs. Before such a contract binds the consumer, the trader shall, in accordance with Article 6 of the Directive, provide the consumer with the following information in a clear and comprehensible manner: (1) the full price of the goods or services, including taxes and any additional costs, (2) where there is a right of withdrawal, the conditions, time limit and procedures for exercising that right in accordance with Article 11 of the Directive and a standard withdrawal form and (3) the duration of the contract, where applicable, or the conditions for termination of the contract, if it is a contract of indefinite duration or a contract which is automatically renewable.
Sofatutor operates online learning platforms for primary and secondary school students. It offers its services throughout the Austrian territory and thus establishes legal relations with consumers who are resident or habitually resident in Austria. Its general terms and conditions stipulate that when a subscription is first made on these platforms, the service can be tested free of charge for 30 days from the conclusion of the contract and can be cancelled without notice at any time during this period. Those general terms and conditions also provide that the subscription shall only become payable after the expiry of those 30 days if the consumer has not cancelled it within those 30 days. In the event that the period of the paid subscription expires without either Sofatutor or the consumer having given timely notice of termination, the subscription in question is automatically renewed for a fixed period of time in accordance with the General Terms and Conditions. Sofatutor informs consumers of their right of withdrawal by virtue of the conclusion of a distance contract at the time of conclusion of the distance contract.
In the case, the Austrian Consumer Information Association argued that the consumer has the right to withdraw from the contract not only when a free trial period of 30 days is concluded, but also when the contractual relationship is extended beyond the trial period.
The CJEU has emphasised that the objective of the consumer’s right to withdraw from such a contract is fulfilled if, before the conclusion of the contract, the consumer is provided with information in a clear and comprehensible manner on the conditions, time limits and procedures for exercising the right of withdrawal and, in particular, the consumer must be provided with clear, comprehensible and explicit information on the price of the services before the conclusion of the contract. This information is, according to the the Court, of fundamental importance for the consumer and enables him to make a clear decision as to whether or not to conclude a distance contract with the trader. If a distance contract concluded by electronic means obliges the consumer to pay, the trader must inform the consumer, immediately before the consumer places the order, in a clear and conspicuous manner, of the total price of the services which are the subject of that contract.
In the light of the foregoing, the CJEU concluded that Article 9(1) of the Directive must be interpreted as meaning that the consumer’s right of withdrawal from a distance contract is granted only once in respect of a contract relating to the provision of services, which provides for an initial period free of charge for the consumer, followed (if the consumer does not terminate or withdraw from the contract within that period) by a chargeable period which is then automatically extended for a specified period if the contract has not been terminated. This only applies provided that the trader has informed the consumer in a clear, comprehensible and express manner at the time of conclusion of that contract that, after that initial free period, the provision of that service will become chargeable.
In the present case, the Supreme Court of Justice of the Republic of Austria will first have to assess whether, in accordance with the Directive, Sofatutor has clearly, comprehensibly and expressly informed consumers of the total price of the services in question. If the company has not provided this information in the required manner, consumers have a new right of withdrawal after the free trial period, but otherwise they only have such a right once.
In 2017, the EU Commission initiated an investigation into Valve Corp., an American gaming company and the owner of the popular video game platform called »Steam«. The probe was prompted by reports of geo-blocking practices employed by Valve on certain PC video games within the Steam platform, based on users’ geographical locations. By decision of 20 January 2021, the EU Commission found that the operator of the platform, Valve, and five games publishers, namely Bandai, Capcom, Focus Home, Koch Media, and ZeniMax, infringed EU competition law.
The EU Commission found that Valve and five publishers had cooperated through restrictive agreements or concerted practices to restrict cross-border sales of certain Steam-compatible PC video games by setting up territorial control features that prevented users outside a specific EU Member State from activating the video games in question. The EU Commission thus found an infringement of Article 101 of the Treaty on the Functioning of the European Union, which prohibits agreements having as their object or effect the restriction of competition, and fined all the companies involved. The EU Commission charged the video game publishers with restricting competition by object. Such restrictions are those which, by their very nature, are capable of hindering competition and do not require further analysis of their economic impact in order to be unlawful.
Valve challenged the decision by filing a lawsuit before the General Court of the European Union (the »General Court«) seeking to have the decision annulled with regard to its involvement in prohibited practices. Valve’s principal argument rested on the assertion that they, along with the other publishers involved, were simply exercising their copyright and were therefore justified in restricting the activation of video games. In its ruling, referred to as judgment No. T-172/21, issued on 27 September 2023, the General Court dismissed Valve’s action.
In its decision, the General Court upheld the EU Commission’s decision that there was an agreement or concerted practice between Valve and each of the five publishers. Users can buy video games on the Steam platform directly from the Steam Store or from third-party sellers. When purchasing from a third party, users must use a unique code or activation key to activate the game on Steam.
The geo-blocking of activation keys by Valve Corp. and other game publishers was designed to prevent video games sold at lower prices in certain countries from being purchased by distributors or users in countries where prices are significantly higher. The General Court therefore concluded that those geo-blocking measures were not intended to protect the copyright of publishers of computer video games, as claimed by the companies involved. Instead, their main purpose was to prevent the parallel importation of those video games and to protect the high royalties collected by the publishers and the profits made by Valve.
In connection with its decision, the General Court also established a significant principle regarding the relationship between EU competition law and copyright law. Specifically, it emphasized that copyright is primarily intended to protect the rights of content holders, ensuring their ability to commercially exploit and make available their protected intellectual property through licensing arrangements in exchange for remuneration. Copyright, however, does not guarantee right holders the ability to demand the highest possible remuneration or engage in practices that result in artificial price disparities among partitioned national markets. Such market partitioning and the resulting artificial price differences are incompatible with the goals of a unified EU internal market.
On 20 September 2023, the National Assembly adopted an amendment to the Financial Operations, Insolvency Proceedings, and Compulsory Dissolution Act (hereinafter: the »ZFPPIPP-H«), wherein the Government of the Republic of Slovenia aims to (i) address the inconsistencies of the legislation with the Constitution of the Republic of Slovenia, (ii) align the Slovenian legal order with the European Restructuring and Insolvency Directive (Directive (EU) 2017/1132 of the European Parliament and of the Council of 20 June 2019), and (iii) reinforce the principle of ensuring the best conditions for the payment of the creditors’ claims.
The main novelties introduced by the ZFPPIPP-H are as follows:
The ZFPPIPP-H will enter into force on the 30th day after its publication in the Official Gazette of the Republic of Slovenia.
2023 IFLR Global Rankings are in and we are excited and proud to once again be ranked as one of the leading Slovenian firms in Financial and Corporate law. In addition, two of our partners have been recognized for their work – Jan Sibinčič as a Highly Regarded Lawyer in M&A and Capital Markets, and Matic Novak as a Notable Practitioner in M&A.
We would like to thank all of our esteemed clients for your continuous trust in us and for giving us the opportunity to work on such amazing projects. Last but not least, a big thank you to our team for all your hard work and dedication.
The Court of Justice of the European Union (the “CJEU“) in its judgment dated September 14, 2023, under case number C-83/22, held that the national court has the authority, subject to specific conditions, to officially notify the traveler of his right to withdraw from the package travel agreement without incurring any expenses.
In the case in question, a request for a preliminary ruling was submitted to the CJEU by the Spanish court. This request pertained to the interpretation of Directive (EU) 2015/2302 of the European Parliament and of the Council of 25 November 2015 on package travel and linked travel arrangement (the “Directive“). The dispute arose before the Spanish court concerning a package holiday trip to Vietnam and Cambodia for two individuals which had been purchased by plaintiff from company Tuk Tuk Travel on October 10, 2019, (the “Agreement“). The departure was scheduled on March 8, 2020 from Madrid (Spain), with the arrival planned for March 24, 2020. The plaintiff made an initial prepayment of EUR 2,402 upon entering into the Agreement, whereas the total costs of the trip amounted to EUR 5,208. The general terms and conditions of the Agreement included information regarding the option to withdraw from the Agreement before the departure date for a cancellation fee, but they did not specify the possibility of withdrawing from the Agreement in the event of unavoidable and extraordinary circumstances at the travel destination or its immediate vicinity that would significantly affect the performance of the Agreement.
As a result of the escalating spread of the coronavirus in Asia, the plaintiff decided to withdraw from the Agreement on February 12, 2020, and subsequently sought a refund for the entitled amounts. Since the defendant was willing to reimburse the plaintiff only in the amount of EUR 302, the plaintiff filed a lawsuit before the Spanish court seeking reimbursement of an additional sum of 1,500 EUR. The remaining amount of EUR 601 was not
claimed by the plaintiff, as he believed that it correspond to the defendant’s administrative costs.
In relation to the described factual circumstances, the Spanish court posed two preliminary questions. The first question pertained to the validity of Article 5 of the Directive, as it was suggested that this provision does not impose an obligation on the travel organizer to specifically inform the traveler about his right to withdraw from the package travel agreement as outlined in Article 12 of the Directive. The latter provision enables withdrawal in cases of unavoidable and extraordinary circumstances significantly affecting the execution of the agreement, without the imposition of any cancellation fees, and with a full refund of all made payments. In response to the raised question, the CJEU ruled that Article 5 of the Directive must be interpreted in a manner that mandates the travel organizer to inform a traveler of his right to withdraw, as specified in the second paragraph of Article 12 of the Directive.
The second question posed by the Spanish court related to the interpretation of Articles 114 and 169 of the Treaty on the Functioning of the European Union and the interpretation of Article 15 of the Directive in connection with the application of the principle of dispositiveness and principle of the correlation between the claims put forward in the action and the rulings contained in the operative part of the judgement, when these two principles hinder the effective protection of the consumer as an plaintiff. In response to the raised question, the CJEU determined that the effective protection of the right of withdrawal that traveler has based on Article 12 of the Directive requires that the national court must have the possibility to ex-officio examine the violation of stated provision.
However, certain conditions apply to the examination of the right that the national court conducts ex-officio, namely:
one of the parties to the package travel agreement must initiate legal proceedings before the national
Furthermore, the CJEU also concluded that in a situation where a traveler does not invoke the provisions of the second paragraph of Article 12 of the Directive (i.e., the right to withdraw from the package travel agreement and demand a refund of all payments related to the travel package), even though the conditions for its application appear to be met, it cannot be ruled out that the traveler was not aware of the existence of his right of withdrawal. Therefore, this alone provides sufficient grounds for the national court to refer to stated provision ex-officio.
On 2 September 2023, the Act Determining the Intervention Measures to Remedy the Consequences of the Floods and Landslides in August 2023 (Official Gazette of the Republic of Slovenia No 95/2023 and No 89/23; ZIUOPZP, hereinafter: “the Act“), adopted by the National Assembly on 31 August 2023, entered into force. The Act introduces a number of measures to assist households, the economy and municipalities, as well as rehabilitation and preventive measures on public infrastructure, watercourses and flood defences. In our article published on 6 September 2023, we have already presented the main tax measures introduced by the Act, and below we present the measures of the Act that address the housing crisis faced by a vast number of the population as a result of the floods.
The Act provides for the exceptional allocation of non-profit housing for rent, which, irrespective of the other conditions for the allocation of non-profit housing, will be granted to persons who meet the following conditions:
– if, as a result of floods and landslides, the residential property in which were actually residing at the time of the natural disaster were permanently or seriously damaged,
– if the reconstruction or reoccupation of the housing unit would require a longer period of time, and
– if the applicant or the person with whom he/she is living in the same household does not own or have joint ownership of another property in which he/she could reside.
Renting of non-profit housing under the above conditions is possible until the consequences of floods and landslides have been remedied, but for no longer than three years from the date of conclusion of the lease agreement. The housings in question will be leased on a non-profit rental basis, with the rent for the first 12 months of the rent being covered by the government.
The Housing Fund of the Republic of Slovenia will lease non-profit housing owned by the government, while housings owned by municipalities and local public housing funds will be leased through municipalities and funds respectively.
The preparation of the public call for applications and the lists of all available and moveable housing is still ongoing, so the number of available housing units will be known in the coming days.
For individuals and families who, as a result of floods and landslides, have suffered damage to the residential property in which they actually reside, which endangers their health and causes an unsuitable living environment for their habitation, and who have rented housing on the market to solve their housing problem, the Act provides for the entitlement to a subsidy on the payment of market rent, which is regulated by the Housing Act (hereinafter referred to as “SZ-1“) and the Act on the Exercise of Rights from Public Funds Act (hereinafter referred to as “ZUPJS“). According to the SZ-1, the beneficiary is entitled to a market rent subsidy for the duration of the lease contract, up to a maximum of one year, which is paid in such a way that the calculated amount of the market rent subsidy is reduced by the landlord and reimbursed to the landlord by the competent municipal authority.
In this case, persons entitled to the market rent subsidy under this Act do not have to fulfil certain conditions that otherwise apply to beneficiaries of the market rent subsidy under the ZUPJS and SZ-1, namely that they have a registered permanent or temporary residence at that address, nor will the condition of being on the priority list in the public tender for the allocation of non-profit housing for rent or whether the person fulfils the conditions for the allocation of non-profit housing for rent under the last public tender or the law be taken into account.
If the conditions laid down in the Act are met, the application for a market rent subsidy is to be submitted to the Social Work Centre by 31 December 2023 at the latest. For applications submitted between 4 August 2023 and 31 December 2023 inclusive, damaged property will not be taken into account in the determination of the material situation.
The Act provides for financial aid to individuals or families who have rented a housing unit as a result of floods and landslides to cover the costs of the rented housing unit. The emergency financial aid may not exceed two minimum incomes per month and per calendar year in 2023.
For example, a single person will receive up to a maximum of EUR 1,405.33, a family of four (two adults and two children) up to a maximum of EUR 3,275.99 and a couple without children up to a maximum of EUR 2,177.79.
Applicants shall submit an application for the emergency financial aid to the Social Work Centre by 31 December 2023. In determining eligibility for the aid, the applicant’s financial situation shall be determined and taken into account.
It should be noted that the emergency financial aid to cover rented housing is an additional aid to the solidarity aid provided by the Act.
On September 2, 2023, the Act on Intervention Measures to Eliminate the Consequences of Floods and Landslides from August 2023 (Official Gazette of the Republic of Slovenia, No. 95/2023 and 89/23; hereinafter: “ZIUOPZP“) adopted by the National Assembly on August 31, 2023, entered into force. The law introduces measures to help households, the economy and municipalities, as well as curative and preventive measures on public infrastructure, watercourses and flood protection. In the field of taxation, the ZIUOPZP introduces new measures and also complements the measures already adopted by the Act on Amendments of the Act on Elimination of the Consequences of Natural Disasters (Official Gazette of the Republic of Slovenia, No. 88/23, hereinafter: “ZOPNN-F“) from August 9, 2023, whereby the main measures may be presented as follows:
A temporary measure of work on “solidarity Saturday” (or another day of the week, if regular work at the employer is also organized on Saturday) and contribution is being introduced. It is foreseen as one additional workday in the years 2023 and 2024, to be determined by the employers upon consultation with its trade unions, the workers’ council, the workers’ representative or the respective employees. Each employee must give written consent to work on solidarity Saturday and works overtime or above the otherwise agreed working hours. The amount of salary for the work performed on this additional day, after calculated taxes and social security contributions, represents the employee’s contribution to the Fund for the Reconstruction of Slovenia. It is foreseen that the employer matches the employee’s contribution in the same amount. Hereby it should be noted that the employer’s contribution is not considered a relief for donations or even a tax-deductible expense in accordance with the Corporate Income Tax Act (Official Gazette of the Republic of Slovenia, No. 117/06 et seq.; hereinafter: “CIT“) and Personal Income Tax Act (Official Gazette of the RS, No. 13/11 et seq.; hereinafter: “PIT“).
The employers will calculate the contribution themselves on a special form and submit it via the eDavki (eTax) portal. The form (and additional information hereto) will be available in eDavki in the beginning of October 2023. The calculation will have to be submitted in the month following the month in which the “solidarity Saturday” took place. The deadline for payment is 10 days after submission of the calculation. The contributions will be wired to a special donation account in the budget of the Republic of Slovenia, Nr: SI56011008881000030, reference 19DŠ-27006. The contributions of workers and employers from “solidarity Saturday” will be considered when determining the Obligatory Solidarity Contribution according to Pt. 2 (below).
In instances when the calculation of contribution from the “solidarity Saturday” will not be submitted in the prescribed manner, within the prescribed deadlines or will not be paid, fines from 1,600 to 60,000 euros (depending on the size of the employer) may be imposed on the employer whereas the responsible persons of employers may be fined 800 to 8,000 euros.
For the years 2023 and 2024, an Obligatory Solidarity Contribution for the reconstruction of Slovenia (hereinafter: “OSC“) is implemented. Taxpayers are both natural and legal persons, with different rules applying to each category.
a. In the case of natural persons, all tax residents of the Republic of Slovenia in a particular year are liable for OSC payment.
OSC Tax Base: The sum of gross income that is included in the annual tax base for progressive taxation (reduced by tax-deductible expenses), also including the payment for business performance, which is otherwise exempt from taxation. The tax base also includes income that is excluded in the annual tax base for progressive taxation (e.g., income from renting out property or transferring property rights, interest, dividends, capital gains) except for income from independent business activities and income that is exempt from income tax, reduced by tax-deductible expenses.
OSC Tax Rate: 0.3 %
Exemption: Exempt from OSC payment will be natural persons whose tax base for calculating OSC will not exceed 35% of the average salary in the Republic of Slovenia in the respective year. Based on 2022 data, this limit is approx. EUR 8,500 per year or EUR 700 monthly.
OSC assessment: OSC assessment will be part of the annual income tax assessment. If the taxpayer was not served with the Automatic Informative Tax Assessment, he is not obliged to file a tax return for OSP. For income that is not included in the annual tax base for progressive taxation (e.g., income from capital and rental), the assessment will be carried out by means of a Tax assessment issued by the Slovenian Tax Authority.
b. In the case of natural persons carrying out independent economic activities (e.g., sole entrepreneurs), all tax residents of the Republic of Slovenia in the respective years are liable for OSC payment.
OSC Tax Base: For each individual year, it’s the tax base for personal income tax assessment form independent economic activates before reductions for tax losses and tax exemptions.
OSC Tax Rate: 0.8 %
OSC assessment: By means of a Tax assessment issued by the Slovenian Tax Authority.
c. Legal entities obliged to pay OSC are taxpayers in accordance with CITA in each respective year (except for taxpayers established for the performance of non-profit activities).
OSC Tax Base: It’s the base according to ZDDPO-2, before reductions for tax losses and tax exemptions for the years 2023 and 2024 or for the tax periods starting in 2023 and 2024 respectively.
OSC Tax Rate: 0.8 %
OSC assessment: Legal entities calculate OSC themselves in the manner and within the time for calculating Corporate Income Tax in the respective years.
The established OSC may be reduced in each respective year by the employee’s or employer’s contribution from the “solidarity Saturday” from Pt. 1 (above), up to the amount of the OSC.
In case the OSC is not calculated in the prescribed manner and within the prescribed deadlines, a fine in the amount from EUR 2,400 to EUR 60,000 may be imposed on legal entities whereas the the responsible persons of the legal entities may be fined in the amount of EUR 800 to EUR 8,000.
In the event of flood destruction of equipment for which legal entities and natural persons performing independent economic activities have claimed the investment tax relief, the respective taxable persons are not required to increase their tax base (sixth paragraph 55.a of Article ZDDPO-2 or sixth paragraph 66.a of Article ZDoh-2).
Income in the form of free use of accommodation or in the form of accommodation with a reduced rent received by natural persons who were forced to find new or temporary accommodation due to floods and landslides in August 2023 is not subject to income tax until the end of 2024, irrespective of who this accommodation is provided by. The provider of such accommodation – a taxpayer according to ZDDPO-2 or ZDoh-2 – who determines their tax base on the basis of actual income and expenses, may claim the expenses arising in connection with such accommodation as tax deductible until the end of 2024 despite the applicable rules on tax deductibility of expenses.
With ZOPNN-F the amount of the tax-free amount for the one-time solidarity aid to an employee who suffered severe damage due to the floods in August 2023, which threatens health and causes an unsuitable living environment, was raised to 10,000 euros from the generally applicable amount of 2,000 euros. As an addition to the established rules, ZIOUPZP implements the possibility of solidarity aid in the year 2023 in several instalments. Furthermore, the possibility of retroactive corrections of withholding tax calculations regarding the solidarity aid payments is introduced, applicable to those recipients of the aid who already paid withholding tax on the excess of 2,000 euros and those who paid withholding tax for multiple payments of the Solidarity aid prior to the implementation of ZIOUPZP. The corrections of withholding tax calculations can be made no later than 30 days after the entry into force of the ZIOUPZP, i.e. until October 2, 2023.
In relation to temporary aid for the self-employed persons, self-employed persons in culture and farmers, the ZIOUPZP stipulates that aid for the self-employed in culture, who are duly registered in the appropriate list, will not be included in the income census from Article 85 of the Act on the Realization of the Public Interest in Culture (Official Gazette of the Republic of Slovenia, No. 77/07 et seq.). Regarding the applications for the payment of aid the deadline is extended until January 31, 2024. As for the decline in income, which is relevant to the assessment of whether the beneficiaries can carry out an activity or they perform it to a significantly reduced extent and are therefore entitled to aid, a decline of 25 % (and no longer 50 %) is applicable.
In addition to the above, a reduction of the tax base from cadastral income for the year 2023 to 50 % for plots with a level of damage of 50 % or more is introduced; a tax exemption for monetary and other aid that natural persons affected by floods and landslides receive in the period from August 4 to December 31, 2023 from voluntary fire brigades in the affected municipalities is implemented as well as a VAT reduction to 5% for the supply of fire engines and equipment.
The Ljubljana Arbitration Rules (“LAP”) were adopted by the Permanent Court of Arbitration of the Chamber of Commerce and Industry of Slovenia and entered into force on 1 June 2023. The new rules apply to all arbitration proceedings commenced after that date, even if the dispute arises out of a legal relationship for which an arbitration agreement was concluded before that date. The adoption of the new rules constitutes an update of the Ljubljana Arbitration Rules of 2014.
The most significant new provision is Article 25 of the LAP, which introduces the mandatory holding of a case management conference. The purpose of the conference is to increase the participation of the parties and the Arbitral Tribunal in the formulation of the timetable for the proceedings. As soon as a case is handed over to the Arbitral Tribunal, the latter must without delay start planning the proceedings and hold a management conference, which may be held in person, by videoconference, by telephone or by any other means. The guiding objective of the panel and of the parties at the conference should be to seek to establish procedural rules that increase the efficiency and speed of the proceedings. The parties shall thus have the opportunity to communicate to the panel their suggestions for the design and conduct of the proceedings. By holding a conference, the Chamber establishes personal contact with the parties, which may lead to better cooperation during the proceedings. The timetable for the proceedings may also be modified at a later stage, if necessary, after prior consultation with the parties.
The new arbitration rules also introduce the possibility of appointing an administrative secretary to the Arbitral Tribunal, subject to the consent of the parties. The provisions of Articles 16 and 18 of the LAP governing the impartiality, independence and availability of arbitrators and the confirmation and disqualification of arbitrators apply mutatis mutandis to the Registrar.
Another novelty brought by LAP is the use of means of telecommunication. Pursuant to Article 32 of the LAP, the Arbitral Tribunal may, after prior consultation with the parties and taking into account the relevant circumstances of the case, including the legitimate interests and expectations of the parties, decide that the oral hearing shall be held in person or remotely by videoconference, telephone or other appropriate means of communication. Telecommunications may also be used for the examination of witnesses and experts.
With regard to the formation of the Arbitral Tribunal, Article 13 of the LAP now provides that the parties may agree on the number of arbitrators. In the absence of agreement, the Board may decide whether the dispute shall be settled by a Arbitral Tribunal composed of a sole arbitrator or three arbitrators, taking into account the complexity of the case, the value of the subject matter in dispute, or other relevant circumstances of the case.
Article 45 of the LAP also contains a more significant amendment, which now takes into account the principle of good faith in addition to the principle of success in allocating the costs of arbitration proceedings. In deciding on the allocation of costs, the Arbitral Tribunal therefore considers the contribution of each party to the efficiency and speed of the proceedings. If a party to the arbitration has entered into an agreement with a third party for the financing of claims or defence, and if that party has an economic interest in the outcome of the proceedings, the party must now disclose the identity of that third party to the Arbitral Tribunal and to the other parties to the arbitration proceedings, in accordance with Article 16 of the LAP.
The new rules also bring an update to the expedited arbitration procedure. Unless the parties agree that the decision will be based on documentary material, the Arbitral Tribunal may now hold only one oral hearing or discussion (Article 48 LAP).
The new Ljubljana Arbitration Rules aim to make the arbitration process more functional and efficient. In doing so, they seek to bring the arbitration process closer to the parties, to keep up with recent trends in arbitration and to optimise the time and cost of the process.
Connected with the recent flooding, the Government of the Republic of Slovenia issued a Decree on temporary measures in administrative matters to prevent the consequences of floods that affected the Republic of Slovenia in August 2023 (Official Gazette of the Republic of Slovenia, no. 87/23 and 89/23; hereinafter: “Decree“), which entered into force on August 6, 2023 and is valid for 1 month (up to and including September 6, 2023).
The Decree applies to administrative procedures before administrative and other state authorities, authorities of self-governing local communities and holders of public authorisations (hereinafter: “Authorities”) and, during its validity, stipulates the following temporary measures:
As regards measures in the tax field the above especially means that taxpayers who, for reasons related to the floods, will not be able to pay their tax obligations (taxes, contributions, fines, etc…) in due time can request a deferral of payment with the Financial Administration of the Republic of Slovenia (hereinafter: “FURS“). A deferral can be requested for a maximum of 24 months. In case of an approved deferral no interest will be charged. FURS has already prepared an application form on its website which taxpayers can submit up to and including September 6, 2023.
Additionally, FURS adapted its workflow in such a way that they carry out all procedures that benefit taxpayers or are carried out on their initiative, while:
Moreover, it is also worth mentioning the tax institutes which are already contained in the current Tax Procedure Act (Official Gazette of the RS, No. 13/11 et seq.; hereinafter: “TPA“) and which can be used by taxpayers to facilitate tax compliance in the current situation:
On 9 August 2023, the National Assembly adopted the Act on Amendments and Additions to the Natural Disaster Recovery Act (the “Act”), which entered into force on 11 August 2023. The Act establishes the possibility of a rapid and effective elimination of damage resulting from natural disasters.
The main amendments introduced by the Act in the light of this year’s catastrophic floods are as follows:
As mentioned above, the above amendments apply to all disaster recovery cases in 2023, but the Act also establishes the following additional emergency intervention measures to deal with the consequences of the floods in August 2023, which relate to assistance to the economy, employees and the self-employed.
Employers are entitled to full reimbursement of wage compensation paid to workers who are unable to work during the period from 3 August 2023 to 31 December 2023 due to force majeure in the form of the consequences of the floods in August 2023, and are also entitled to partial reimbursement of wage compensation paid to workers on temporary lay-off because their employers are temporarily unable to provide them with work due to the consequences of the floods, until 31 October 2023 at the latest, with the Government being able to extend the measure until 31 December 2023.
Workers are entitled to wage compensation of 80% of their base salary during the period of their inability to work and waiting for work due to the effects of the floods in August 2023.
During the period of the aid, the employer may not terminate the employment contract for business reasons of the workers for whom the reimbursement of the wage compensation has been claimed, nor may there be any payment of profits, purchases of own shares or own shares in the business, payments of bonuses to the management for 2023 as from 3 August 2023, otherwise the employer must return the reimbursements. The employer will also not be able to claim, inter alia, reimbursement of compensation for an employee who, as a result of a natural disaster, is prevented from working during the period of notice.
As the reimbursements are considered State aid, the sum of the reimbursements must not be higher than the actual damage.
The Act entitles volunteers who carry out voluntary work in the framework of a voluntary organisation to 100% paid leave of absence from work for a maximum of 7 working days to deal with the consequences of flooding.
The one-off solidarity grant for serious damage to an employee caused by the natural disaster of the floods in August 2023, paid by employers in 2023, is not countable against the taxable amount of employment income up to EUR 10,000, according to the Act.
The Act also provides for assistance to self-employed persons who were registered to carry out an activity no later than 1 July 2023 until the entry into force of the Act and who, as a result of the consequences of the floods, are unable to carry out their activity or carry it out to a significantly reduced extent. The Act grants aid for August, September, October, November and December in the amount of EUR 1,200 per month. The aid will be exempt from all taxes and contributions.
The Act also provides for temporary measures in the area of the economy, namely: (1) liquidity measures in the area of the economy; (2) transitional regulation of the threshold value for public procurement in cases of major disaster recovery; (3) (non-)application of contractual penalty provisions in cases of major disaster recovery; (4) raising the level of the estimated value for public works procurement in cases of major disaster recovery.
Taking into account the predicted climate change and the increasing occurrence of storms causing significant damage to property, the adopted Act represents an important step towards enabling a more rapid recovery of the situation in areas affected by natural disasters.
The National Assembly, during its 43rd extraordinary session, rejected the proposal for a suspensive veto by the National Council on the Long-Term Care Act (hereinafter referred to as the “Act“). Thus, the National Assembly confirmed the Act and repealed the previous act of the same name.
The aim of the Act is to upgrade and unify the regulation of long-term care, which is crucial for ensuring a high quality of life for people in all stages of life, particularly considering current demographic trends. The Ministry of Solidarity-Based Future drafted the Act, taking into account projections that place Slovenia among the third of European countries with the highest proportion of elderly population in the coming decades. Due to these demographic changes and the consequent increase in the proportion of inactive population and decrease in the active population, the existing resources from social security and other sources (e.g., the state budget) are already insufficient to finance the necessary level of support and assistance for all those in need of long-term care. As a result, an increasing financial burden is being shifted onto direct payments by users and their families. The Act aims to partially alleviate this financial burden by providing funding from compulsory insurance for long-term care, and state budget up to EUR 190 million, with only a smaller portion to be covered by users’ own contributions.
The main novelties introduced by the Act are as follows:
The Act, which will come into effect one day after its publication in the Official Gazette, envisions a gradual implementation of the changes until December 1, 2025.
The Court of Justice of the European Union (“EU Court“) in case no. C‑106/22, concerning the freedom of establishment within the EU, considered whether the defendant, the Hungarian competition authority Innovációs és Technológiai Miniszter (“Ministry“), was justified in rejecting the notified merger of the plaintiff, the Hungarian company Xella Magyarország Építőanyagipari Kft (“Xella Magyarország”).
The Hungarian company Xella Magyarország, owned by a German company, which is ultimately owned by a company registered in Bermuda and is a manufacturer of concrete construction materials, challenged the Ministry’s decision before a Hungarian court, which prohibited its acquisition of the Hungarian company Janes és Társa, operating a gravel, sand, and clay quarry.
The Ministry took a position that Janes és Társa should be considered a “strategic company” under the national foreign investment screening mechanism, the establishment of which is required by Regulation (EU) 2019/452 of the European Parliament and of the Council of 19 March 2019 establishing a framework for the screening of foreign direct investments into the Union (“Regulation 2019/452”). According to the Ministry, the transfer of ownership of a strategic company to an indirect owner registered in a third country, namely Bermuda, would pose a long-term risk to the reliability of the supply of raw materials, such as gravel, sand, and clay, to the construction sector.
During the preliminary ruling procedure, the Hungarian court referred a question to the EU Court, asking whether the relevant national foreign investment screening mechanism, which allows the prohibition of investment in a company regarded as strategic:
is compatible with EU law.
The EU Court ruled that the question must be examined solely in the light of the freedom of establishment enjoyed by EU companies and that such foreign investment screening mechanism opposes the fundamental freedom, as set out in Article 49 TFEU, allowing individuals or legal entities to pursue economic activities, stably and continuously in one or more Member States, without impediments created by those Member States.
The EU Court found that the relevant merger does not fall within the scope of Regulation 2019/452 and, therefore, cannot be subject to review under the foreign investment screening mechanism, as this regulation exclusively applies to investments by companies from third countries into the European Union. The fact that a company registered in a third country exercises majority control over an investor with a permanent residence in the European Union does not justify the application of Regulation 2019/452. According to the EU Court, the relevant foreign investment screening mechanism clearly constitutes a limitation of the freedom of establishment. These limitations, however, cannot be justified with the goal of ensuring a reliable supply of gravel, sand, and clay for the construction sector as it does not concern a fundamental societal interest, within the meaning of the established case law of the EU Court, as is the case of ensuring the supply to the petroleum, telecommunications, and energy sectors.
On July 12, 2023, an amendment to the Industrial Property Act (ZIL-1F) was published in the Official Gazette of the Republic of Slovenia, which will enter into force on July 27, 2023 (hereinafter referred to as “ZIL-1“).
The key changes introduced by the amendment focus on simplifying and reducing the procedures related to patent registration, expediting the acquisition of information in the patent application process, streamlining the administrative procedure for revocation and invalidation of trademarks, prohibiting simultaneous protection of a European patent as a national patent, and other changes in the field of patent protection, which will be listed below. These significant changes will contribute to improving the system of industrial property in Slovenia and align national legislation with Directive (EU) 2015/2436 on the approximation of the laws of the Member States relating to trademarks, Regulation (EU) 2017/1001 on the European Union trademark, and the European Patent Convention.
a.) Faster information retrieval process
The amendment grants the Intellectual Property Office of the Republic of Slovenia (hereinafter referred to as the “Office“) a new competence to, with the consent of the applicant, transmit the applicant’s patent application to other offices for conducting searches on the state of the art and providing written opinions on the fulfillment of conditions for the claimed invention. The Office’s collaboration with other patent offices will now enable applicants to obtain more specific information about whether their invention actually meets the requirements for patent granting in a faster manner.
Additionally, certain applicants will benefit from financial advantages as some international organizations, upon concluding relevant agreements with national authorities, provide financial relief in paying fees for searches. For example, the European Patent Office (hereinafter referred to as the “EPO”) offers a 80% fee reduction for searches to natural persons, small and medium-sized enterprises, and universities. Similar reductions are also available for filing European or PCT applications for the same invention. Consequently, this change will result in a reduction of the financial burden for applicants.
b.) Administrative procedure for revocation and invalidity of trademarks
Until now, the procedures for revocation and invalidation of trademarks were conducted solely before the District Court in Ljubljana. However, in line with Directive (EU) 2015/2436, these procedures will be now carried out directly before the Office after the amendment comes into effect. In the new Chapter 8a of the ZIL-1, the amendment will regulate the content of claims and grounds for revocation or invalidation of trademarks. Requests for revocation or invalidation of trademarks will now be submitted to the Office, which will decide on these requests in administrative proceedings, thus alleviating the burden on the courts.
c.) Other patent-related novelties
Based on the European Patent Convention, the amendment also aligns exceptions to patent protection, thereby eliminating possibilities for diverse interpretations of relevant provisions. In accordance with the existing interpretation practice of Article 11 of ZIL-1, the amendment explicitly enacts exceptions to patent protection, such as aesthetic creations, games or business methods, computer programs, and presentations of information. On the other hand, the amendment introduces the possibility of patent protection for the first use of a substance or mixture in processes for the treatment of the human or animal body.
The amendment also grants the patent holder the right to prevent indirect use of the invention protected by the patent. The patent holder may now prevent a third party, who does not obtain holder’s consent, from supplying or offering supply means related to a part of the invention which is essential for its use to individuals who are not entitled to exploit the invention or patent, provided that the third party knows or should know that those means are suitable and intended for the use of the invention.
Furthermore, the amendment provides greater legal certainty in case of the declaration of nullity of a European patent at the EPO level. In such cases, the Office will, ex officio, declare the patent registered in the national register as null. Additionally, the amendment introduces a prohibition on simultaneous protection or unitary effect of a European patent and a national patent in Slovenia. Namely, if a European patent and a national patent are granted to the same person for the same invention, with the same filing date and the same claimed priority date, the national patent will be deemed without legal effect from the date when the EPO published the mention of the grant of the European patent in the European Patent Bulletin.
With a view to achieving climate neutrality and targets for the proportion of energy from renewable sources in gross final consumption in the Republic of Slovenia, the National Assembly adopted on 6 July 2023 the Act on the introduction of installations for the production of electricity from renewable energy sources (“ZUNPEOVE”), which will enter into force on the fifteenth day following its publication in the Official Journal of the Republic of Slovenia. The Republic of Slovenia is obliged to meet its renewable energy targets in accordance with the legal framework of the European Union. The Republic of Slovenia has set a target of 25% renewable energy in final energy consumption by 2020 and, with the adoption of the National Energy and Climate Plan, is committed to achieving a target of at least 27% by 2030, with these targets to be further increased with the updating of the Directive on the promotion of the use of energy from RES1 in the framework of the “Ready for 55” package. The transition to renewable energy is not only important from an environmental perspective, but also in view of the growing need for electricity self-sufficiency in the EU countries.
In accordance with the new ZUNPEOVE, the Government of the Republic of Slovenia will adopt an action plan for the implementation of the Spatial Development Strategy of Slovenia, which will identify priority areas for the placement of installations for the production of electricity from solar and wind energy. Nevertheless, the priority areas for the placement of photovoltaic installations will be the roofs of buildings, paved areas of car parks, road land and road structures, railway areas, the area of electricity production facilities, areas of closed landfills, areas of abandoned mineral mines and areas of inactive waste dumps. To this end, ZUNPEOVE will also intervene in the areas of other laws, e.g. the Water Act and the Road Act. It will also be possible to generate electricity from photovoltaic installations and wind power generation installations in areas of agricultural and forest land, provided that this does not hinder the land from serving its primary purpose.
An important novelty introduced by ZUNPEOVE is the regulatory sandboxes, which will be designed to test new and advanced technologies, products or approaches in the field of electricity generation from renewable energy sources and storage, or to re-purpose existing ones. Regulatory sandboxes will be approved by the Government of the Republic of Slovenia and will also be granted exemptions from specific provisions of regulations in the fields of energy, spatial planning, construction, mining, etc. for their use. The Government will grant approval if the proposed project will significantly contribute to the development of electricity generation from renewable energy sources, if this benefit outweighs the severity of the interference with the provisions of specific regulations in the aforementioned fields, and if the approval of the sandbox does not contravene EU regulations.
Furthermore, the ZUNPEOVE foresees the granting of geothermal concessions for the implementation of projects for the exploration of geothermal energy potential and the exploratory phase of electricity production using geothermal energy. A legal or natural person wishing to obtain a geothermal concession will have to submit an initiative to initiate the procedure to the Ministry in charge of energy.
In addition, ZUNPEOVE will reduce the proportion of consents required for the installation of a photovoltaic installation on a co-owned property or on the common parts of a commonhold building. It will now be necessary to obtain the consent of co-owners holding more than three quarters of the ideal shares or of commonhold building owners holding more than three quarters of the co-ownership shares in the common parts of the building. The same will apply if an easement or a building right has to be created in order to carry out the photovoltaic installation. Under certain conditions, ZUNPEOVE also provides for the establishment of an easement or building right for the installation, maintenance and operation of a photovoltaic installation on a building owned by the State or a self-governing local authority free of charge. Special mention should also be made of the introduction of the possibility to pay a one-time compensation to the municipality in which a new wind generation installation is installed, which may be determined by the Government of the Republic of Slovenia.
The adoption of the ZUNPEOV represents an important step towards increasing the proportion of energy from renewable energy sources, which is key to ensuring sustainable energy, a higher level of self-sufficiency in electricity production and greater reliability of energy supply.
The Ministry of Finance published a proposal of the Minimum Tax Act (hereinafter: “ZMD“) on 23 June 2023. With the ZMD, the Council Directive (EU) 2022/2523 on ensuring a global minimum level of taxation for multinational enterprise groups and large-scale domestic groups in the Union of December 14, 2022 (hereinafter: “Directive“) is implemented into the Slovenian legal system. Its aim is to establish a common framework for a global minimum tax rate in the EU based on a common approach from the OECD model rules in such a way that the revenues of multinational enterprise groups and large-scale domestic groups with a total revenue of EUR 750 million and more (hereinafter: “Groups“) will be taxed with a tax rate of at least 15 %. This will be achieved by the so-called top-up tax. The introduction of the top-up tax liability is foreseen in the Directive as an option of the Member States. Slovenia will have to officially notify the Commission of its choice, which will provide adequate certainty to the tax authorities of other Member States, third country jurisdictions and Groups. Constituent entities of Groups located in Slovenia will therefore have to pay top-up tax to Slovenia.
The main goals of the ZMD are the establishment of a system against tax base erosion, fair, transparent and stable corporate taxation, the elimination of excessive tax competition and the prevention of aggressive tax planning as well as consistency in determining and administering rules against base erosion (predictability, without double or excessive taxation).
Main solutions of the ZMD:
As follows from the accompanying text to the ZMD proposal, higher annual tax revenues of around EUR 220 billion on global level are foreseen as a result of the implementation of the minimum taxation rules. As far as Slovenia is concerned, a total of 412 Groups with parent companies in Slovenia or abroad and subsidiaries in Slovenia were identified on the basis of Country-by-country reporting data in 2019. From these, 144 Groups in Slovenia had DDS below 15 % in 2019. Their average unweighted DDS was 8.72 %. According to estimates, the ZMD should affect a total of 184 Groups. The total annual tax liability of the companies that are part of these Groups and are residents in Slovenia amounts to around EUR 27 million.
According to the deadline of the Directive, ZMD should be adopted by the end of December 2023 at the latest. It should enter into force for business years starting on 31 December 2023 or later. Comments on the proposal are collected until July 16, 2023.
In March of this year, the European Court of Human Rights (“ECtHR”) informed Slovenia that three complaints by Slovenian fishermen against Croatia concerning alleged violations of the European Convention on Human Rights (“ECHR”) had been submitted to Croatia. This means that the ECtHR has found the complaints of the Slovenian fishermen admissible and will decide on its merits.
According to Article 36(1) of the European Convention on Human Rights, in all cases before a Chamber or the Grand Chamber, a High Contracting Party one of whose nationals is an applicant shall have the right to submit written comments and to take part in hearings. In its letter of 5 June 2023, Slovenia informed the ECHR of its intention to intervene in this case and thus provide assistance and support in protecting the legal interests of Slovenian fishermen who have been harmed by Croatia’s non-recognition of the arbitral award. At this stage, Slovenia is only announcing its intervention and does not state its positions on the proceedings.
The background to these complaints is the Arbitration Agreement between Croatia and Slovenia, which was signed on 4 November 2009 (“the Arbitration Agreement”) with the aim of resolving a border dispute between the two countries arising after the independence of the former Yugoslavia. Specifically, the dispute concerned the delimitation of the boundaries in the Bay of Piran and on land.
The Arbitration Agreement established the Arbitral Tribunal, which on 29 June 2017 delivered its Final Award in the arbitration between Slovenia and Croatia, thus determining the course of the maritime and land boundary between the two countries. In the Final Award the Arbitral Tribunal determined (i) the entire land border between Slovenia and Croatia, (ii) the maritime boundary between the two countries, which had never been delimited before, and (iii) Slovenia’s junction to the high seas.
Despite the Arbitral Tribunal’s ruling, Croatia has not recognized the validity of the Agreement and is not implementing its obligations in the way it was ordered to do by the Arbitral Tribunal’s Final Award. In the present case, the Croatian authorities are charging fines to Slovenian fishermen for fishing in an area of the Bay of Piran which, according to the arbitration ruling, otherwise belonged to Slovenia. Since the Slovenian fishermen have exhausted all legal remedies in Croatia, including at the Croatian Constitutional Court, they have initiated proceedings before the ECtHR, in which, as stated above, Slovenia will also intervene. Croatia has the possibility to take a position on Slovenia’s intervention later in the process.
The National Assembly, at its session of 25 May 2023, adopted the Act on Infrastructure for Alternative Fuels and the Promotion of the Transition to Alternative Fuels in Transport (ZIAG, hereinafter the “Act“), which implements Directive 2014/94/EU of the European Parliament and of the Council of 22 October 2014 on the establishment of an infrastructure for alternative fuels into the Slovenian legal order. The objective of the Act is to establish a dense publicly accessible network of refuelling and supply infrastructure for alternative fuels in transport and to increase the share of alternative fuel vehicles.
The Act provides for three levels of infrastructure development for alternative fuels.
whereby the Act focuses on the planning of a network of electric charging infrastructure for road transport. A coordinated planning approach will take into account the long-term impacts of the integration of transport into the electricity system on the protection and stability of the grid, which will lead to the establishment of a public utility service (GJS) for the identification of sites, establishment and management of charging parks with a capacity of 300 kW and above. The way in which the sites to be used for the electric charging structure will be planned will be based on the efficient use of the existing supporting infrastructure, such as transport, energy, communication and other complementary infrastructure.
The Act also lays down technical rules for the installation, operation and maintenance of charging and supply infrastructure.
In order to adequately plan and financially support actions that will target areas where there are gaps in publicly available alternative fuels infrastructure, the Act introduces mandatory registration of charging and refuelling infrastructure and the provision of information on location, capacity, price, etc. to a national access point. The data from the national access point will also be transmitted to the digital platform for investment promotion, where it will be merged with data on unoccupied planned sites (connection capacity, parking space availability) from electricity operators’ plans and local plans.
Transparency of the existing charging infrastructure will benefit users, owners and investors, by increasing the utilisation of existing infrastructure and directing investors to sites that are not yet occupied.
In the Case no. T-2/21 concerning the trade mark protection in the EU, the General Court of the EU (the “General Court“)assessed whether the defendant, the European Union Intellectual Property Office (the ”EUIPO“), was justified in refusing the application of the claimant, Emmentaler Switzerland, for registration of the trade mark “emmentaler” as a cheese with a protected designation of origin.
A protected designation of origin is a quality scheme protected at EU level covering agricultural products and foodstuffs originating in a particular region, place or country. The names of those products most closely linked to the geographical area in which they are produced are protected as protected designations of origin, as the geographical area influences their characteristics. All production and processing operations must take place in the defined geographical area and the raw materials used must originate from that area. A protected designation of origin represents a high level of protection that severely limits the possibility of producing or growing a crop or food under the name of protected trademark.
The EUIPO refused the application for registration on the basis of Article 7(1)(c) of Regulation (EU) 2017/1001 of the European Parliament and of the Council of 14 June 2017 on the European Union trade mark (the “Regulation“), which prohibits the registration of trade marks consisting exclusively of signs or indications which may serve, in trade, to designate the kind, quality, quantity, intended purpose, value, geographical origin or the time of production of the goods or of rendering of the service, or other characteristics of the goods or service. Such signs are descriptive, which is closely related to generic signs. In both cases, such signs have no distinctive character and are considered incapable of performing the essential function of a trade mark, namely to identify the commercial origin of the product or service.
In its judgment of 24 May 2023, the General Court upheld the decision of the EUIPO on the descriptiveness of the trade mark applied for, that the sign »emmentaler« is widely and commonly understood by the relevant German public as designating a type of cheese. As regards the examination of the presence of descriptive signs, the EUIPO focused only on the German market, which is, however, sufficient to refuse registration of the sign. The General Court held that the EUIPO was correct in finding that the mark applied for is descriptive in a part of the EU, namely in one EU Member State.
Furthermore, the General Court noted, with regard to the protection of the trade mark applied for as a collective mark, that Article 74(2) of the Regulation provides that, by way of derogation from Article 7(1)(c) of the Regulation, signs and indications which may serve, in trade, to designate the geographical origin of the goods or services in question may constitute EU collective marks. However, according to the General Court, that derogation must be interpreted narrowly and, therefore, collective marks cannot include signs which are regarded as indicating the type, quality, quantity, purpose, value, time of manufacture or other characteristics of the products in question, but only signs which are to be regarded as indicating the geographical origin of those products. Since the mark applied for is descriptive of a type of cheese for the relevant German public and is not perceived as an indication of the geographical origin of that cheese, the General Court concludes that it is not entitled to protection as a collective mark.
On April 13, 2023, a group of members of Slovenian Parliament submitted a proposal for amendments of the Animal Protection Act (hereinafter: “Proposed Amendment“). Proposed Amendment is currently in the second reading within the Parliament.
The key goal of the Proposed Amendment, which was received rather negatively by the Veterinary Chamber of Slovenia, the Faculty of Veterinary Medicine and Slovenian farmers, is to strengthen the responsible ownership of animals as sentient beings, to reduce the number of abandoned and mistreated animals, and to deepen the awareness of the values of the animal welfare.
The Proposed Amendment is addressing implementation of the following legislative solutions:
Views with respect to the Proposed Amendment were addressed also by the Government at its 96th correspondence meeting. Slovenian Government generally supports the proposal and encourages general discussion of Proposed Amendment within the Parliament. However, it expressed that some of the proposed legislative solutions are underregulated and should be addressed more comprehensively. Government also emphasized that general discussion should include experts, professional institutions and associations and therefore enable a comprehensive confrontation of all arguments.
In June, Amendment C to the Administrative Dispute Act (“ZUS-1“), published in the Official Journal of the Republic of Slovenia No 49/2023 of 28 April 2023, will enter into force.
The amendment introduces several important novelties, the most significant of which is undoubtedly the change in the composition of the court under Article 13 of the ZUS-1. The primary form of adjudication in administrative disputes has been changed from a single judge to a three-judge panel. Nevertheless, a single judge may submit a proposal to the President of the Court that a case be heard by a three-judge panel if it is a complex case on questions of law or fact or if the determination of the action may be expected to resolve an important question of law, in particular if it is a question of law on which there is no case-law or the case-law is inconsistent. The single judge may make such a submission up to the date of the preparatory hearing and the first date of the main hearing or the date of submission of the case to the sitting. The President of the Court shall rule on his or her motion by special decision against which there is no appeal. The composition of the Supreme Court of the Republic of Slovenia when it decides on the appeal depends on whether it was a single judge or a panel of judges that decided the case at first instance. If the decision at first instance was taken by a single judge, the Supreme Court of the Republic of Slovenia will also rule according to a single judge. If the appeal was decided at first instance by a panel of judges, the Supreme Court will also decide the appeal in a panel of three judges. The same applies to the proceedings on the application for a retrial.
The amendment of the provisions on the preparation of the material will also be important to improve the efficiency of the administrative dispute procedure. The court will be able to limit the size and number of pleadings to be filed by the parties and to set a time limit within which each party must prepare a written summary of its pleadings. The time limit should not be less than 15 days. If a party fails to submit a summary of the pleading within the time limit, the pleading will not be taken into consideration. The court must, of course, specifically warn the party of this consequence.
Above all, the fact that the court will now be able to decide without a hearing if the factual situation on which the administrative act is based is not disputed between the parties will contribute to the efficiency and speed of administrative litigation. However, if the factual situation is disputed, the court will still be able to rule without a hearing in certain cases, provided that:
Now, in the event of annulment of a contested administrative act, the court may also determine in the judgment the manner in which its decision will be enforced (Article 64(3) of the ZUS-1). In such a case, the competent authority must issue a new administrative act within 30 days of receipt of the judgment or within a time limit set by the court. In doing so, in accordance with Article 64(5) ZUS-1, it is bound by:
At its session on 21 April 2023, the National Assembly adopted an amendment to the Labour and Social Security Registers Act (ZEPDSV), which introduces certain changes to registers of working time, the recording of additional information on working time and the introduction of mandatory electronic registers for violators of these rules. It should be noted that the daily obligation to keep records of working time already exists and that the changes only specify the maintenance of the register. The aim is to pursue the interests of both parties, employees and employers, and to ensure the authenticity of the registers.
In practice, there has been confusion for which employees records of working time should be kept. The amendment to Article 2 of the ZEPDSV clarifies the definition of a worker – it extends to not only persons working on the basis of an employment contract, but also to those working on other legal bases (including student and author work, contract for work, etc.).
The amendment also provides a more detailed obligation of the employer to provide information from the register of employees referred to in Article 15 of the ZEPDSV. Employers must provide employees’ information to the Health Insurance Institute of Slovenia, on the day of commencement of work under the employment contract, and no later than by the time they start working. If the employee does not start work on that day for justifiable reasons, the employer shall provide the information no later than the day agreed in the employment contract as the day of commencement of work. The employer shall communicate the information at the time of registration for insurance on the prescribed forms.
The biggest change concerns the register of working time, where the following information that the employer must enter in the register on a daily basis is added to Article 18 of the ZEPDSV, namely:
The records may be kept electronically or manually, however it is important to note that the new Articles 19a and 19b of the ZEPDSV provide for the obligation of electronic record-keeping in the case of breaches of the provisions of ZEPDSV, when the employer has been fined and has complied with the trade union’s proposal for electronic record-keeping.
A new obligation is also imposed on employers, namely to provide their workers with access to the register of working time regarding information relating to them. Employers must inform them on the information in writing or digitally for the previous month by the end of the payday. Also, employers must keep the register of working time and documentation on the basis of which the information is entered into the register, at the employee’s registered office or place of work.
Fines for offences are now determined in a range, the persons who can be also be sanctioned are responsible persons of employers of legal persons, individual entrepreneurs or self-employed individuals, responsible persons in state bodies or local authorities, and responsible persons in state bodies or other organisations with public authority. A fine higher than the minimum fine may also be imposed under the fast-track procedure.
On 28 March 2023, following an urgent procedure, the National Assembly adopted the Act Amending the Foreigners Act (hereinafter: “Amendment“), which entered into force on 27 April 2023, the day after its publication in the Official Gazette of the Republic of Slovenia.
The Foreigners Act (hereinafter: “ZTuj-2“) defines the conditions and means of entry, exit and stay of foreigners in the Republic of Slovenia, whereby the main solutions brought by the Amendment of ZTuj-2 are the following:
The Amendment emphasizes the principle of economy of the procedure and pursues the goal of eliminating unnecessary administrative obstacles, thereby providing a basis for faster resolution of administrative cases under ZTuj-2 within the jurisdiction of administrative units, which will significantly contribute to reducing backlogs in this area.
On 20 April 2023, the European Parliament adopted the Markets in Crypto-assets Regulation (hereinafter: MiCA Regulation) by a great majority.
It is a comprehensive regulation of the field of cryptocurrencies at the EU level, currently unique in the world. The goals, which the MiCA Regulation aims to achieve are transparency of crypto-asset transfers, control over crypto-asset service providers, consumer protection, prevention of market manipulation and prevention of money laundering, while still maintaining investment and development potential of the industry in the EU. It is part of the larger digital finance package, which, in addition to the MiCA proposal, also contains a digital finance strategy, a Digital Operational Resilience Act (DORA) – that will cover crypto-asset service providers as well – and a proposal on distributed ledger technology (DLT) pilot regime for wholesale uses.
Main solutions of the MiCA Regulation may be briefly presented as follows:
The regulation does not duplicate the updated legislation on anti-money laundering (hereinafter: AML). However, among other, it establishes enhanced checks in line with the EU AML framework for crypto-asset service providers, whose parent company is located in countries listed on the EU list of third countries considered at high risk for anti-money laundering activities, as well as on the EU list of non-cooperative jurisdictions for tax purposes. Same may apply for shareholders and management of crypto-asset service providers.
Non-fungible tokens (NFTs), i.e. digital assets representing real objects like art, music and videos, fall out of scope of MiCA, except if they fall under existing crypto-asset categories (separate regulation is foreseen for this part in the future).
The MiCA Regulation must additionally be approved by the Council of the EU, followed by publication in the Official Journal of the EU. Implementation is envisaged gradually over a period of two years, starting in July 2024.
On 22 March 2023, the National Assembly adopted the new Transnational Provision of Services Act, which entered into force on 18 April 2023 (hereinafter: “the Act”).
The new Act transposes Directive (EU) 2020/1057 into the Slovenian legal order and newly implements three Regulations: Regulation (EC) No 1072/2009, Regulation (EC) No 1073/2009 and Commission Regulation (EU) 2016/403 supplementing Regulation (EC) No 1071/2009.
The Act applies to legal and natural persons (registered for business) established in Slovenia and providing services in another EU country, and vice versa. These persons may provide services in another country on a temporary or regular basis, but must obtain an A1 certificate for their worker before providing services.
The Act does not apply to the cross-border provision of services by seafarers in merchant navy companies, air crew and cabin crew, civil servants and contract workers, and Chapter III of the Act does not apply to foreign self-employed persons or foreign employers providing bilateral and transit transport services on the territory of the Republic of Slovenia.
Under Article 4 of the Act, an employer can provide cross-border services if it meets the following conditions:
– it carries out an activity in the Republic of Slovenia,
– does not violate the most important provisions of labour law relating to the rights of the worker,
– the service is provided in the context of an activity for which the employer is registered in Slovenia, except in the case of the secondment of a worker to a related economic undertaking; and
– the service is provided on the employer’s own account and under the employer’s own direction on the basis of a contract concluded with the client of the service, a deed of secondment to a related economic undertaking or in the context of the activity of providing workers to the user.
The same conditions apply mutatis mutandis to self-employed persons.
Under the Act, employers or self-employed persons are obliged to submit an application for an A1 certificate before the commencement of the service or at the latest on the day of the service provision. A new provision is that both are now obliged to inform the Health Insurance Institution of the Republic of Slovenia (ZZZS) of any changes on an ongoing basis, within 5 days of such changes occurring.
The Act now allows applicants to notify the ZZZS within 6 months of obtaining the A1 certificate that the start of the posting was later than the start of the validity of the A1 certificate issued, or that the posting was terminated prematurely or did not take place at all, on the basis of which the ZZZS will then amend the validity of the A1 certificate accordingly.
The application for the issue of an A1 certificate shall be submitted through the national SPOT portal, through which other notifications provided for by the Act are also submitted.
According to the new provisions, the exhaustion of a worker’s right to rest, leave or a short period of absence due to sickness shall not be considered as an interruption of the cross-border provision of services or an interruption of the posting of the worker.
Third-country nationals (posted workers or self-employed persons) may now provide services in the EU on the basis of a valid uniform residence and work permit or a temporary residence permit not issued for employment, self-employment or work, provided that the foreigner has the relevant consent of the Employment Service of the Republic of Slovenia or, on the basis of the Employment, Self-employment and Work of Foreigners Act, they have the right to free access to the labour market.
The Act does not introduce any new conditions for the issue of an A1 certificate for the purpose of cross-border provision of services in one EU Member State, but in line with European legislation, the Act introduces new conditions for the issue of an A1 certificate for the purpose of cross-border provision of services in at least two EU Member States. These apply to employers as well as to self-employed persons. In addition to the national conditions, the applicant for an A1 certificate must also submit a declaration under criminal and material liability that the person for whom the A1 certificate is issued is expected to habitually carry out the work or the employment activity itself in at least two EU Member States.
The applicant (or the person for whom the A1 certificate is obtained) may carry out work or self-employment on the basis of the A1 certificate for a maximum of the following 12 calendar months, and the Act also provides for the possibility of extending this to 18 months.
The Labour Inspectorate will supervise employers and the Financial Administration will supervise self-employed persons.
The Act also regulates the cross-border provision of services by foreign employers and foreign self-employed persons in the Republic of Slovenia. In this part, the legislator has also provided for some changes in the obligations of the foreign employer and the posted worker or driver in the cross-border provision of services, namely that the foreign employer must register with the Employment Service of the Republic of Slovenia before the provision of the service begins. In addition to the information already required, information on the address or GPS-coordinates of the location where the service will be provided is now also required in case the address is not available.
The Act also introduces important changes in the level of fines, which are now significantly lower.
The Act entered into force on 18 April 2023 and the provisions of Article 1(6), Chapter II, Chapter V, Article 26(2), (4), (7), (10) and Article 34 enter into force on 1 January 2024.
We are pleased to announce that Law Firm Sibinčič Križanec Novak has once again been ranked as Tier 2 Law Firm by Legal 500, with our Managing Partner Jan Sibinčič being recognized as a Leading Individual in his field. We would like to thank you, our dear clients, for your continuous loyalty and for giving us the opportunity to do what we love and do best, and to our amazing team for all your hard work and dedication to each and every case and to the firm.
The European Union (“EU“) has adopted a set of directives modernizing the field of European company law with the aim to digitally transform the functioning of the internal market. In particular the EU adopted the Directive 2019/1151 amending Directive (EU) 2017/1132 as regards the use of digital tools and procedures in the field of company law (the “Digitalization Directive“) and Directive (EU) 2019/2121 amending Directive (EU) 2017/1132 as regards cross-border transformations, mergers and divisions (the “Mobility Directive“).
The Slovenian legislator will transpose these Directives into the national legal order by proposing an amendment to the Companies Act (the “Amendment to ZGD-1” or the “Amendment”), with the fundamental objective of facilitating the use of digital tools in the process of incorporation and operation of a company, supplementing the regulation of cross-border mergers and redefining the procedure for cross-border transformations and divisions of companies. The main novelties introduced by the Amendment are as follows:
The novelties set out in the Amendment undoubtedly constitute an important step towards the transition to the digital age and will thus provide an important means of adapting company law to a rapidly changing and evolving market.
On 14 February 2023, an amendment to the Rules of Procedure of the General Court of the EU (»the Rules of Procedure«) was published in the Official Journal of the EU to promote a modern and efficient General Court. The amendments to the Rules of Procedure entered into force on 1 April 2023 and the most notable changes include the possibility of videoconferencing at hearings, the promotion of proactive case management, and the rules on the protection of personal data of parties as natural persons. The solutions for the amendments to the Rules of Procedure are set out in more detail in the amendment to the Practical Provisions for the Implementation of the Rules of Procedure of the General Court, published on 10 March 2023.
Videoconferencing
The General Court is introducing the possibility of using videoconferencing at hearings by adopting a legal and technical framework for this area. Videoconferencing has proved to be an essential tool in ensuring the continuity of judicial activity during the health crisis. A request for participation by videoconference by a representative who is physically unable to attend the hearing must be justified on medical, security or other serious grounds and must be made as soon as the reason for the detention is known.
Electronic signature
The General Court launched the electronic signature of its judgments and orders in March 2022. The Practical Provisions for the Implementation of the Rules of Procedure lay down detailed rules on the qualified electronic signature of its decisions and the permanent and secure storage of the electronic originals of these documents.
Proactive and efficient case management
The amendments to the Rules of Procedure encourage the General Court to manage its cases proactively. For example, following the amendments introduced, the Registrar does not need to be requested by a Judge, the Advocate General or a party to proceedings to translate procedural documents into the language of the case and, where necessary, into another language, but can do so himself. The Registrar shall also ensure that what is said at the hearing is interpreted.
A lawyer representing or assisting a party does not need to produce a certificate of entitlement to represent before the courts of a Member State if such document has already been submitted when opening an account on the e-Curia portal of the CJEU.
Pilot cases and joint hearing
The Rules of Procedure has set out the concept of »Pilot case«. Where, in the course of a number of cases pending before the General Court in which the same question of law is raised and it is in the interests of the efficient exercise of judicial power to avoid parallel proceedings in those cases, one of them – the one most appropriate for the examination of that question – may be designated as a Pilot case and the proceedings in the other cases shall be suspended until the Pilot case has been disposed of. It will be dealt with as a matter of priority, and the parties to the interrupted proceedings will be heard when the proceedings in their cases resume. In view of the large number of cases, the Judgment in the Pilot case will help to decongest and shorten the duration of proceedings before the General Court.
Similarly, the Rules of Procedure will now allow the General Court to hold joint hearings in several cases where there are similarities between them, irrespective of whether the conditions for joinder are met.
Data protection
The General Court’s amendments to the Rules of Procedure also take account of developments in EU legislation on the protection of the personal data of natural persons. The Rules of Procedure now make a clear distinction between the processing of personal data of natural persons and the processing of non-personal data. During proceedings, the General Court may decide, of its own motion or at the request of a party using a separate application, to omit the names and surnames of natural persons, whether parties or third parties, and any other personal data of those natural persons contained in documents and information relating to the case which is accessible to the public. Similarly, in the course of proceedings, it may, of its own motion or motion by a party using a separate application, decide that information other than personal data of natural persons contained in documents and information which are accessible to the public shall be omitted, provided that there are legitimate reasons justifying the non-disclosure of that information.
The Court of Justice of the European Union (“CJEU”) has issued a preliminary ruling in case C- 449/21, Towercast SA SU v. Autorité de la concurrence dated 16 March 2023 (“Towercast case«”).
In 2017, Towercast, a company active on the French terrestrial television broadcasting market, filed a complaint with the French Competition Authority (“FCA”). The complaint was directed against the acquisition of control over Itas by TDF, the dominant operator on the market and – following the takeover – the only remaining competitor of Towercast. The acquisition was not notified to the FCA and the European Commission, as neither the French nor the European merger control turnover thresholds were met. Consequently, no ex ante concentration assessment has been carried out.
Towercast argued that the acquisition was a killer acquisition, i.e., that TDF acquired Itas solely to eliminate a competitor with particularly aggressive pricing tactics from the market. It thus alleged that the acquisition constituted – in itself – an abuse of a dominant position. The FCA rejected the application and Towercast brought an action against the FCA’s decision before the competent national court.
The French court referred a preliminary question to the CJEU in the context of its ruling on the case, namely:
whether it is possible for a national competition authority to carry out, in view of the prohibition of abuse of a dominant position laid down by EU law, an ex post control of a concentration operation performed by an undertaking in a dominant position, where that concentration remains below the relevant turnover thresholds laid down by the Merger Regulation[1] and by the national law on concentrations and has thus not been subject to an ex ante control in that regard.
In its judgment, the Court ruleed that a concentration operation with a non-EU dimension may be subject to an ex post control by the national competition authorities and by the national courts, on the basis of the direct effect of the prohibition of abuse of a dominant position laid down by EU law, having recourse to their own procedural rules for that purpose. When carrying out such a subsequent control in the light of the prohibition of abuse of a dominant position, the national competition authority must verify whether a purchaser who is in a dominant position on a given market and who has acquired control of another undertaking on that market has, by that conduct, substantially impeded competition on that market. The Merger Regulation thus does not exclude an ex post assessment of concentrations below the turnover threshold.
In practice, the CJEU’s decision therefore means that certain concentrations may be subject to ex post market behaviour review, even though they are not otherwise subject to ex ante concentration assessment under national law and the Merger Regulation.
[1] Council Regulation (EC) No 139/2004 of 20 January 2004 on the control of concentrations between undertakings (the Merger Regulation).
On 5 January 2023 the Corporate Sustainability Reporting Directive (»CSRD«)[1] entered into force. CSRD amends the current Non-Financial Reporting Directive (NFRD)[2] in a way that modernises and strengthens the rules about the social and environmental information that companies have to report.
The CSRD supports the European Green Deal, a set of proposals to make the EU’s climate, energy, transport and taxation policies fit for reducing net greenhouse gas emissions by at least 55% by 2030, compared to 1990 levels.
The European Green Deal is Europe’s growth strategy that aims to improve the well-being and health of citizens, make Europe climate-neutral by 2050 and protect, conserve and enhance the EU’s natural capital and biodiversity. As part of that effort, companies need a comprehensive sustainability framework to change their business models accordingly. To ensure the transition in finance, prevent greenwashing and channel private investment behind the transition to a climate-neutral economy, the European Commission adopted several regulations within the Sustainable Finance and EU Taxonomy package, which is comprised of (i) the CSRD, (ii) the EU Taxonomy Climate Delegated Act, and (iii) six amending Delegated Acts on fiduciary duties, investment and insurance advice.
Scope of the CSRD
The scope of the directive is considerably extended to a broader set of large companies, as well as listed SMEs, which will now be required to report on sustainability – approximately 50 000 companies in total.
The Directive applies to the three groups of companies:
Reporting under the CSRD will first have to be implemented by companies already subject to the NFRD. These companies will have to apply the new rules for the first time in the financial year 2024, for reports published in 2025.
The new rules will ensure that investors and other stakeholders have access to the information they need to assess investment risks arising from climate change and other sustainability issues. According to the directive, sustainability reporting should be “comparable, reliable and easy for users to find and make use of with digital technologies”. They will also create a culture of transparency about the impact of companies on people and the environment. Finally, reporting costs will be reduced for companies over the medium to long term by harmonising the information to be provided. The CSRD also makes it mandatory for companies to have an audit of the sustainability information that they report. In addition, it provides for the digitalisation of sustainability information.
The EU Member States are expected to transpose the new directive into national law 18 months after its entry into force.
[1] Directive (EU) 2022/2464 of the European Parliament and of the Council of 14 December 2022 amending Regulation (EU) No 537/2014, Directive 2004/109/EC, Directive 2006/43/EC and Directive 2013/34/EU, as regards corporate sustainability reporting (Text with EEA relevance).
[2] DIRECTIVE 2014/95/EU OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 22 October 2014 amending Directive 2013/34/EU as regards disclosure of non-financial and diversity information by certain large undertakings and groups.
By decision No U-I-4/20-66 of 16 February 2023, in proceedings initiated at the request of the Bank of Slovenia, the Constitutional Court annulled in its entirety the Act on Judicial Protection Procedure for Former Holders of Eligible Liabilites of Banks (ZPSVIKOB). The petitioner had submitted a request for constitutional review of a number of articles of the ZPSVIKOB and of Article 350a of the Banking Act (ZBan-1). This provision of the ZBan-1 regulated the liability of the Bank of Slovenia to compensate former holders of eligible liabilities of banks for damages to which the holders are entitled if they prove that the damage resulting from the effects of an extraordinary measure to terminate the eligible liabilities of a bank is greater than it would have been if the extraordinary measure had not been imposed. The ZPSVIKOB regulated the procedure for claiming these damages under the above provision of the ZBan-1 and the mechanism for financing the damages.
The petitioner complained in particular that the contested law was incompatible with Article 152(1) of the Constitution of the Republic of Slovenia, which states that the central bank is independent in its functioning and is directly accountable to the National Assembly. The Constitutional Court emphasised that the autonomy or independence of the central bank must be interpreted in close harmony with EU legislation, and therefore suspended the proceedings in 2021 and referred the case to the Court of Justice of the European Union (CJEU) for a preliminary ruling. In the light of the CJEU’s replies, the Constitutional Court considers it essential that the national rules governing the liability of national central banks for damage caused in the performance of their functions cannot place national central banks in a position which would in any way jeopardise their ability to perform independently the tasks falling within the scope of the European System of Central Banks, i.e., in particular, to ensure price stability. The Constitutional Court has consequently emphasised the importance of the independence of national central banks on the basis of Article 130 of the Treaty on the Functioning of the European Union (TFEU) and Article 7 of Protocol No 4. The purpose of these provisions is to ensure that the European System of Central Banks, of which the Bank of Slovenia is an integral part, is protected against all political pressures, in order to enable it to pursue its objectives effectively.
The Constitutional Court identified the question whether the compensation financing mechanism set out in Article 40 of the ZPSVIKOB may interfere with the financial independence of the Bank of Slovenia as crucial. Article 40 of the ZPSVIKOB provided that all profits made from 1 January 2019 until the finalisation of court decisions on the payment of compensation were to be used to create designated reserves intended exclusively for the payment of the flat-rate compensation referred to in Article 4 of the ZPSVIKOB and compensation to former holders. In the event that the designated reserves were insufficient, the general reserves established before 1 January 2019 were to be used to finance compensation up to half their amount. If even this is not sufficient to pay the final amount of compensation, the remainder was to be financed by the Republic of Slovenia through a loan. The repayment of the loan was to be made from the profits that the Bank of Slovenia subsequently earns and which, as a result, cannot be used to build up general reserves while the loan is still outstanding.
With regard to the mechanism for financing compensation, the Constitutional Court emphasised the importance of general reserves of the central bank. Central banks take decisions in the course of their activities which involve a risk of loss for them, which is why general reserves exist. The adequate level of those reserves indicates that the central bank has anticipated the effects of the measures taken and has them under control. In view of the above, the Constitutional Court concluded that the compensation mechanism under the ZPSVIKOB may have an impact on the ability of the Bank of Slovenia to effectively fulfil its tasks within the European System of Central Banks and prevent it from building up reserves independently. The legal obligation to borrow from the Republic of Slovenia also prevents it from building up general reserves until the loan is repaid. According to the Constitutional Court, the above places the Bank of Slovenia in a position of dependence on political authorities, namely the Government and the National Assembly, where it is potentially exposed to political pressure, which, in the view of the CJEU, is incompatible with the independence of national central banks guaranteed by Article 130 TFEU and Article 7 of Protocol No 4. In light of the foregoing, the Constitutional Court held that Article 40 of the ZPSVIKOB is incompatible with Article 152(1) of the Constitution of the Republic of Slovenia.
Furthermore, the Constitutional Court also assessed the compatibility of Articles 4 to 7 of the ZPSVIKOB with the prohibition of monetary financing. Articles 4 to 7 of the ZPSVIKOB stated the possibility of a flat-rate compensation exclusively for certain small investors of a credit institution whose financial instruments had been terminated. Investors whose annual gross income in 2013 did not exceed a certain amount could claim a flat-rate compensation of 80 percent of the purchase value of the financial instruments at the time of purchase, without having to prove that the conditions for liability for damages under Article 350.a(1) of the Banking Act-1 were fulfilled. The payment of compensation would have been made without establishing whether the Bank of Slovenia had fully complied with the rules applicable to it in relation to the determination of the conditions for termination, or even whether it had acted with due diligence. The Constitutional Court concluded that the provisions of Articles 4 to 7 of the ZPSVIKOB are also unconstitutional, since the flat-rate compensation in those provisions was also to be financed in the same way as the compensation described above. In addition, according to the Constitutional Court, the provisions of Articles 4 to 7 of the ZPSVIKOB are also incompatible with the prohibition on monetary financing laid down in Article 123(1) TFEU and Article 21.1 of Protocol No 4. The purpose of the aforementioned prohibition on monetary financing is to ensure the independence of the national central banks, as it allows for the control of the amount of money in circulation. According to the Constitutional Court, Article 152(1) of the Constitution of the Republic of Slovenia, which provides that the central bank shall be independent in its operations, must be interpreted in such a way that it also contains a prohibition on monetary financing.
The petitioner also requested an assessment of the compatibility of the provisions on the publication of documents and on the virtual data room in Articles 10 to 23 of the ZPSVIKOB with the constitutional right to free economic initiative and the human right to the protection of personal data, but it was not able to demonstrate such incompatibility.
Nevertheless, the Constitutional Court annulled the entire ZPSVIKOB in its decision, identifying the provision of Article 40 of the ZPSVIKOB as the central provision of the ZPSVIKOB, which is crucial for the existence of the entire law. It also explained that the annulment of this article alone does not eliminate the constitutional risks posed by a regime which interferes with the general reserves of the Bank of Slovenia for the purpose of making payments in respect of liability for damages for the performance of a function which is not one of its core tasks and which places the Bank of Slovenia in a position of dependence on political authorities or pressures. Since the Court of Justice has annulled Article 40 of the ZPSVIKOB, the existence of the entire law is consequently no longer of any meaning.
As a result of the annulment of the entire law, an unconstitutional legal vacuum has been created, which the legislator, in accordance with the warning of the Constitutional Court, must fill as soon as possible. In this regard, the Court recalled that the National Assembly has not yet eliminated the unconstitutionality established by the Constitutional Court’s decision No U-I-295/13 of 19 October 2016 and that this has also resulted in the European Court of Human Rights (ECHR) decision in the case of Pintar and Others v. Slovenia. The ECHR pointed out that the Republic of Slovenia had violated the human right to private property of the former holders of the terminated liabilities under the European Convention on Human Rights, and it specifically emphasised that the Republic of Slovenia was responsible for ensuring the rights of the former holders of the terminated liabilities. In light of the above, the Constitutional Court remarked that a legal regulation which would impose the economic burden of errors in the termination of eligible liabilities on any entity other than the Republic of Slovenia as the guardian of the public interest for which the termination was carried out in the first place, would hardly be compatible with the Constitution of the Republic of Slovenia.
With the judgement case no. C-555/21 the Court of Justice of the European Union (“CJEU”) answered a preliminary question addressed to it by the Austrian Supreme Court regarding the interpretation of Directive 2014/17 on credit agreements for consumers relating to residential immovable property.
The Austrian Supreme Court addressed the request for the preliminary ruling in relation to ongoing court proceedings in which the local association for the protection of the interests of consumers (Ger. Verein für Konsumenteninformation) challenged the general condition used by UniCredit Bank Austria in its credit agreements secured by mortgages. With the disputed general term, the bank, in the case of early repayment of a credit agreement, proportionally reduces only the interest and costs of the credit which are linked to the duration of the credit and does not take into account the proportional reduction for those costs that do not depend on the duration of the agreement (e.g. credit processing costs).
With respect to the addressed question whether Directive 2014/17 precludes the national legislation, which grants a consumer with a right to reduce the total cost of credit in the event of early repayment, namely reduction of interests and costs which depend on the duration of the agreement, the CJEU answered that the directive does not preclude such legislation. In case of early repayment, the consumer can therefore only request a reduction of interest and costs which depend on the duration of the agreement.
The CJEU emphasized that the purpose of the right to reduce the total costs of the credit is to adjust the credit agreement according to the circumstances of an early repayment. This right, therefore, does not include the right to reduce the costs (i) that the consumer bears regardless of the duration of the agreement and (ii) of services that have already been completed at the time of the early repayment. Furthermore, the CJEU also emphasized that national courts must ensure that the costs borne by the consumer in the event of early repayment do not objectively represent a remuneration of the creditor for temporary use of the capital or payment for services which have not yet been performed.
On 22 February 2023, the Whistleblower Protection Act (“ZZPri”) entered into force, implementing Directive (EU) 2019/1937 of the European Parliament and of the Council of 23 October 2019 on the protection of whistleblowers in the legal order of the Republic of Slovenia.
Whistleblowers are natural persons who report or publicly disclose information about an infringement obtained in their working environment. This does not only include persons who work for employers on the basis of an employment contract, but also all natural persons in similar relationships on another legal basis (e.g. a sub-contract) are entitled to protection under the provisions of the ZZPri. Whistleblowers are entitled to protection under the provisions of the ZZPri if they have reasonable grounds to believe that the information declared at the time of the report was true and if they make the report in a timely manner, i.e. before the expiry of two years from the cessation of the infringement, and in a manner consistent with the provisions of the ZZPri.
The purpose of the ZZPri is to protect whistleblowers from retaliation. At the same time, ZZPri also sets out the procedures and modalities for whistleblowing, the obligations of the persons liable to establish internal systems for whistleblowing, and the powers of the Commission for the Prevention of Corruption and other bodies to protect and support whistleblowers and to monitor the implementation of ZZPri.
In addition to whistleblowers, intermediaries and related persons (e.g. co-workers, relatives of the whistleblower and legal entities owned by the whistleblower) are also entitled to protection if they are likely to be or may be subject to retaliation as a result of their association with the whistleblower.
Any retaliatory measures are prohibited against persons protected by the ZZPri, in particular e.g. termination of employment, downgrading, transfer of work tasks, change of workplace, change of working hours, workplace mobbing, etc. In the event of retaliation, the whistleblower may seek legal protection before a competent court, without having to pay court fees, and is entitled to free legal aid, regardless of his/her financial situation.
At the same time, psychological support and, in certain cases, unemployment benefits are available to whistleblowers under the so-called support measures. The ZZPri also provides for the exclusion of the applicant’s liability to disclose information in the context of the report, which is not absolute. For example, the exclusion of the applicant’s liability does not apply to the disclosure of professional secrets of attorneys and health professionals.
In addition to the provisions on whistleblower protection and support, the ZZPri also introduces a mechanism for reporting perceived infringements. In this context, obliged entities are required to establish appropriate reporting channels, appoint a confidant to investigate and deal with reported infringements, and adopt a specific internal act defining the procedure for reporting, investigating, correcting infringements and informing the management of the procedure.
The ZZPri classifies as persons liable (i) public and private sector entities with 50 or more employees, (ii) entities with at least 10 employees if they carry out their main registered activity in the fields of health, wastewater management and other fields specifically provided for in the ZZPri, and (iii) certain state authorities and self-governing local authorities.
Private sector obliged entities employing more than 250 employees and all public sector obliged entities must establish and regulate an internal registration procedure within 90 days of the entry into force of the ZZPri, i.e. by 23 May 2023 at the latest. Private sector obliged entities employing less than 250 employees have until 17 December 2023 to do so.
The ZZPri divides offences committed by persons liable into systemic, minor and serious offences. The Commission for the Prevention of Corruption is responsible for conducting and adjudicating proceedings concerning offences. The implementation of retaliatory measures against a whistleblower constitutes a serious offence for which a legal entity may be fined between EUR 5,000 and EUR 20,000, or between EUR 10,000 and EUR 60,000 in the case of a medium-sized or large company. Responsible persons can also be held liable for the offence and, in the case of serious offences, are liable to a fine of between EUR 500 and EUR 2,500. A minor offence, which carries a slightly lower fine, is, for example, a threat or an attempt to retaliate.
The offence of a whistleblower who intentionally declares or publicly discloses false information is ncluded as a specific offence. For such cases, the ZZPri provides for a fine of between EUR 400 and EUR 1 200.
End of February marks the expiry of deadline for filing various personal income and income tax returns for 2022, namely:
The above tax returns can be filed electronically via eDavki web portal or on a pre-determined form, which can be filed in person or by registered post at the competent financial office on 28 February 2023 at the latest. Detailed instructions on filing of the above tax returns are included in the Public call of the Slovenian Tax Authority (available in Slovenian language).
Income from capital gains is taxed at a 25% rate, which decreases after every five years of holding period, equalling to 20% after the first five years, 15% after 10 years and 0% for a holding period greater than 15 years. Interest paid in banks and savings banks in Slovenia or the EU is taxed only above EUR 1,000, whereby the interest paid by a bank or savings bank outside of EU is taxed regardless of the amount.
All taxpayers who leased movable or immovable property to natural persons in 2022 must file a tax return for assessment of personal income tax on rental of property. Income from rental of property in 2022 is taxed at a 15% rate from rents, which can be reduced by claiming standardized costs in the amount of 10%. Instead of claiming standardized costs, taxpayers can claim actual costs incurred for the purpose of maintaining the useful value of the property. Resident taxpayers must declare all income from rental of property originating from Slovenia or outside the country, while non-residents must only declare the income from rental of property originating from Slovenia.
In relation to the assessment of personal income tax on rental of property, the Slovenian Tax Authority recently announced the tightening of supervision in the field.
In relation to derivative financial instruments, the disposal after less than 12 months of holding period is taxed at a 40% rate, after which the disposal rate drops to 27.5% rate and decreases over the years so that after 20 years of holding period the disposal of derivative financial instruments is not subject to taxation.
In addition to the deadline for the above tax returns, the deadline for filing corporate income tax statement and tax statement on advance payment of personal income tax and personal income from business activities for 2022 is approaching. Both statements must be submitted electronically via eDavki web portal by 31 March 2023 at the latest.
The new Personal Data Protection Act (hereinafter: “ZVOP-2”) was adopted by the National Assembly on 15 December 2022, published in the Official Gazette of the Republic of Slovenia on 27 December 2022 and entered into force on 26 January 2023. Slovenia is thus the last EU Member State to adopt national legislation on personal data protection, thereby regulating some of the matters that the General Data Protection Regulation (the “GDPR”) left to the Member States.
The ZVOP-2 introduces some important new provisions, the most significant of which is that the Information Commissioner will be able to impose fines that are prescribed in Article 83 in the GDPR. At the same time, ZVOP-2 also made it possible to impose fines on responsible persons at the companies and individuals, which is not provided for in the GDPR. It is also important to note that ZVOP-2 provides in transitional provisions that minor offence proceedings initiated before the Information Commissioner or the courts prior to ZVOP-2 entering into force shall be concluded in accordance with the provisions of ZVOP-1, unless the provisions of ZVOP-2 are more lenient for the perpetrator. Inspection proceedings initiated under ZVOP-1 shall continue in accordance with ZVOP-2.
ZVOP-2 also regulates areas that are not covered by the GDPR or not covered in sufficient detail. ZVOP-2 thus introduces the following new features:
ZVOP-2 also introduces other changes, including in the areas of biometrics, linking filing systems, public registers and research purposes.
At this point, it is important to stress that the provisions of GDPR are still applicable and used directly, and ZVOP-2 can be considered as an amendment to the GDPR, as it introduces additional requirements for compliance when processing personal data. Companies that have already been following the provisions under the GDPR and the guidance of the Information Commissioner will be able to adapt their business operations quite quickly and swiftly.
On Tuesday, 31st January 2023, the Act Amending the Family Code (hereinafter: “the Act”) entered into force. It provides for a change in the definition of marriage and cohabitation for same-sex and same-sex partners. Marriage is now defined as a living union of two persons and no longer as a living union of husband and wife. The same definition applies to cohabitation, as a long-term living union between two persons.
The amendments to the Family Code (hereinafter: “DZ”) are the result of a decision of the Constitutional Court of the Republic of Slovenia, No U-I-486/20, of 16 June 2022, by which the Constitutional Court ruled that the legal regime in the part of the DZ and the previously applicable Marriage and Family Relations Act (hereinafter: “ZZZDR”), which provides that marriage is the union of a husband and a wife, is incompatible with the Constitution. It also ruled that the regulation of the possibility of joint adoption of a child, which was only possible for spouses under the ZZZDR and for spouses or cohabiting partners under the DZ, was incompatible with the Constitution.
Until the Act entered into force, the regime adopted by the Constitutional Court was already in force, according to which marriage was considered to be a union of two persons. Joint adoption by same-sex partners living in a civil partnership was subject to the same rules as those applicable to joint adoption by spouses under the legal regime in force at the time. Thus, same-sex partners were already able to marry and jointly adopt a child on the basis of the Constitutional Court’s decision.
With the amendments to the DZ, same-sex partners in a marriage or cohabitation are now fully equal to same-sex partners in all legal consequences under the DZ, as well as in other areas of law. This also applies to the adoption of children.
Since the Act defines both forms of civil partnership in the same way for opposite-sex and same-sex partners, the special regulation of both forms of civil partnership for same-sex partners only in the Civil Union Act (hereinafter: “ZPZ”) is no longer necessary, and the Act also provides for the expiry of the ZPZ and an interim period of its application.
The Act also provides for the way in which existing partnerships can be transformed into marriages. In its transitional and final provisions, the Law provides as follows:
On 29 September 2022, the National Assembly of the Republic of Slovenia adopted a new Consumer Protection Act (“ZVPot-1” and the “Act“), which implemented three European directives in the field of consumer protection into the national legislation.
In addition to the implementation of the directives, the ZVPot-1 incorporates the content of the previously applicable Consumer Protection Act (“ZVPot“) and the Consumer Protection against Unfair Commercial Practices Act (“ZVPNPP”), which shall cease to be in force upon the entry into force of the ZVPot-1.
The Act entered into force on 26 January 2023, and in this article, we present some of the main changes and novelties introduced by the Act.
A company must not impose contract terms that are unfair to the consumer. Such terms are prohibited and cannot be relied on by the seller.
The ZVPot-1 maintains the definition of unfair contract terms, whereby contract terms are considered unfair if, to the detriment of the consumer, they result in a significant imbalance in the contractual rights and obligations of the parties, or if the performance of the contract is unreasonably prejudicial to the consumer, or if the performance is substantially different from what the consumer reasonably expected, or if they are contrary to the principle of fairness and good faith.
The assessment of the unfairness (unconscionability) of a contractual term in relation to the main subject matter of the contract has so far only been carried out if it was written in an unclear and incomprehensible manner. Otherwise, it would be considered to be an excessive interference with the autonomy of the contracting parties.
The ZVPot-1 now explicitly provides that the unfairness of contractual terms, even if they are written in clear and comprehensible manner, may also be assessed in relation to the definition of the main subject-matter of the contract and the adequacy between the price and the payment for the service, goods or digital content exchanged.
Under the ZVPot-1, the seller is responsible for any defect of the goods which exists at the time of delivery of the goods and which becomes apparent within the warranty period, i.e. two years from delivery of the goods, with the presumption that the defect already existed at the time of delivery being extended from six months to one year from the date of delivery of the goods. This means that if a defect in the goods becomes apparent within one year of delivery, the seller bears the burden of proving that it did not exist at the time of delivery.
Consumers may exercise their rights resulting from a material defect on the condition that they notify the seller of the defect within two months of the discovery of the defect.
An important novelty introduced by the ZVPot-1 is the order of consumer warranty claims. In the event of non-conformity of the goods, the consumer is entitled to make warranty claims in a certain order, namely he can first claim from the seller to restore the conformity of the goods free of charge, either by repairing them or by replacing them with new goods. The seller must remedy the defect within a reasonable period of time, which may not exceed 30 days from the date of notification of the defect. However, if the goods are not brought into conformity in this way, the consumer has the right to request a reduction in the purchase price in proportion to the lack of conformity or to withdraw from the contract of sale and request a refund of the amount paid.
The new Act also introduces a right of rejection, which means that, despite the hierarchy of claims, the consumer has the right to withdraw from the contract if defect of the goods occurs within 30 days of delivery of the goods, without first having to request repair or replacement of the goods.
The seller’s right of recourse has also been newly set out in the ZVPot-1. A seller who will meet a consumer’s warranty claim due to non-compliance resulting from an act or omission, including a failure to provide updates for goods with digital elements, by an upstream undertaking, is entitled to recourse against the upstream undertaking, which means that it can recover the value of the consumer’s asserted warranty claim.
The ZVPot-1 introduces a change regarding the warranty period on the conformity of used goods, whereby the warranty period will be subject to a contractual agreement. The seller and the consumer will be able to agree on a warranty period of less than two years, but not less than one year. In the absence of an express agreement, used goods will also be subject to a two-year warranty period instead of the one-year warranty period provided for in the ZVPot.
An important amendment introduced by the Act is that the consumer will only be able to claim a guarantee from the manufacturer (the guarantor) and no longer also from the seller, as was the case under the ZVPot.
The Act maintains the provision that the guarantee of perfect working order must be given for a minimum period of one year, while the one-month guarantee for used goods is no longer required.
The time limit for remedying defects in the case of a guarantee is also reduced from the current 45 days to 30 days from the date on which the manufacturer or the consumer’s authorised repairer receives the request to repair the defect, with the possibility of an extension of an additional 15 days.
The Act introduces new rules for a contract for the supply of digital content or a digital service, whereby a company undertakes to supply digital content or a digital service to a consumer and the consumer undertakes to pay the company a purchase price.
In addition to that contract, the chapter on the contract for the supply of digital content or a digital service also applies to cases where the digital content or digital service is supplied in such a way that the consumer does not pay the purchase price but provides personal data to the company. An example of such a contract is where the consumer creates a social media account and provides a name and an email address, which are used for purposes other than the supply of the digital content or digital service or to comply with legal requirements.
A company that supplies digital content or a digital service to a consumer after the conclusion of a contract for the supply of digital content or a digital service now warrants the compliance of the digital content to consumers, and the Act also provides for an obligation for the company to provide the consumer with necessary updates to the digital content or service.
The consumer thus has a range of warranty claims for non-compliance of the digital content or service with the contract, namely restoration of compliance, a proportionate reduction of the purchase price or withdrawal from the contract and a full refund of the purchase price.
There is also a right of recourse for the seller when he fulfils a consumer’s warranty claim for non-compliance resulting from an act or omission of the upstream undertaking. In such a case, the undertaking will be entitled to pursue its right of recourse against the upstream undertaking in the contractual chain.
The Act also introduces new obligations for online marketplace providers. This is a service using software, including a website, part of a website or an application, operated by or on behalf of a business, which enables consumers to conclude distance contracts with other companies or consumers.
Before a consumer undertakes a distance contract or any other similar offer on an online marketplace, the online marketplace provider is now required to provide the consumer, in a clear and comprehensible manner and in a manner adapted to the means of distance communication, with information on the main parameters determining the ranking of the offers presented to the consumer as a result of a search query, on the relative importance of those parameters in relation to other parameters and an indication of whether or not the third party with which the consumer concludes the contract is a company. If the counterparty to the contractual relationship is not a company, the consumer does not benefit from the protection of the ZVPot-1. The consumer must also be given prior notice of this fact.
As part of misleading commercial practices, the ZVPot-1 also now defines and prohibits any marketing of goods in one Member State as identical to goods marketed in other Member States, where those goods have substantially different composition or characteristics, unless justified by legitimate and objective factors, i.e. the so-called prohibition of dual quality of goods.
Where a company provides access to product reviews given by consumers, it must now ensure that the published reviews are given by consumers who have actually used or purchased the product. The Act now prohibits the providing of a false consumer review or recommendation, the solicitation of such a review or recommendation from other entities, as well as the misrepresentation of such a review or recommendation for the purpose of product promotion.
Company can adapt prices in distance and off-premises contracts to specific consumers or categories of consumers on the basis of automated decision-making and consumer behaviour profiling, which allows sellers to assess consumers’ purchasing power. The new Act imposes an obligation on companies to provide information to the consumer that the price has been adjusted on the basis of automated decision-making.
Since the ZVPot-1 did not enter into force until 26 January 2023, it is worth recalling that the provisions of the previous ZVPot will apply to all sales contracts concluded by consumers before 26 January 2023, even after that date.
The Court of Justice of the European Union (»CJEU«) has delivered its judgment in a case concerning the abuse of a dominant position in the EU market under Article 102 of the Treaty on the Functioning of the EU (»TFEU«), Case C-680/20 of 19 January 2023, in which it assessed the relationship between a manufacturer and its distributors as regards to the liability for abuse of a dominant position on the market. It also answered the question whether there is a duty on the competition authorities to take a view on the arguments put forward by the dominant undertaking in proceedings against it to the effect that there has been no abuse.
In 2017, the Italian competition authority AGCM imposed a fine on Unilever for allegedly abusing its dominant position in the market for individually packaged ice creams, contrary to Article 102 TFEU. Article 102 TFEU prohibits any abuse by one or more undertakings of a dominant position in the internal market or a substantial part of it, in so far as it may affect trade between Member States. According to AGCM, Unilever’s strategy on the market was exclusionary and could hinder the growth of its competitors, as the company’s distributors had set exclusivity clauses for the operators of the outlets, obliging them to source exclusively from Unilever for all their requirements of individually packaged ice cream. In return, these operators were granted discounts and commissions, the granting of which was conditional on the turnover or marketing of a certain type of Unilever products. Those discounts and commissions were intended to encourage the operators to continue to source exclusively from that undertaking and to discourage them from terminating their contract.
Unilever appealed against the dismissal of its action before the Court of First Instance and the Court of Appeal referred two questions to the CJEU for a preliminary ruling.
First, the referring court asked whether the actions of Unilever’s distributors including exclusivity clauses could be attributed to the company itself as a manufacturer. In the judgment at issue, the CJEU held that Article 102 TFEU must be interpreted as meaning that the conduct of distributors who are part of the distribution network of products or services of a manufacturer with a dominant position can be attributed to the manufacturer if it is established that those distributors did not decide independently to engage in that conduct, but that it forms part of a policy unilaterally decided by that manufacturer and is implemented through those distributors. This is particularly the case where such conduct is the result of the conclusion of standard contracts drawn up entirely by the manufacturer with a dominant position and containing exclusivity clauses in favour of its products, which must be made available for signature by the territorial distributors of that manufacturer to the operators of the points of sale without their being able to modify them.
Second, the referring court asked whether, in the presence of exclusivity clauses in distribution contracts, the competent competition authority is required, in order to find an abuse of a dominant position, to establish that those clauses have the effect of excluding from the market competitors that are as efficient as the dominant undertaking and whether, in any event, where there are a number of contested practices, that authority is required to examine in detail the economic analyses produced, where applicable, by the undertaking concerned, in particular where they are based on an »as efficient competitor« test. The CJEU ruled that Article 102 TFEU must be interpreted as meaning that, in principle, where distribution agreements contain exclusivity clauses, the competition authority must take into account all the relevant circumstances and, in particular, economic analyses, in order to establish an abuse of a dominant position, which the dominant undertaking may submit concerning the lack of ability of the practices at issue to exclude from the market competitors which are equally efficient as that undertaking, to demonstrate that those clauses are capable of restricting competition. The use of an »as efficient competitor test« is optional. However, if the results of such a test are submitted by the undertaking concerned during the administrative procedure, the competition authority is required to assess the probative value of those results.
Case law has established the rule that Article 102 TFEU protects in principle only against acts of a dominant undertaking which exclude equally efficient competitors, but not less efficient competitors. In its reasoning, the CJEU explains that, although exclusivity clauses by their very nature give raise to legitimate competition concerns, their ability to exclude competitors is not automatic and it is for the competition authority to convince itself of that ability.
Growing stronger!
We could not be more excited to announce, that we have started out the New Year strong – welcoming two new partners to our partners’ team. Matic Novak joining as our new Senior and Name Partner and Dinar Rahmatullin joining as our new Junior Partner. Law Firm Sibinčič Križanec Novak is more than ready for yet another great business year.
Congratulations Matic and Dinar! We are proud and privileged to have you both as a part of our partners’ team!
Pursuant to Article 2 (4) of the Act on Interest Rate for Late Payment (“ZPOMZO-1“), the Minister of Finance published the prescribed interest rate for late payment in the Official Gazette of the Republic of Slovenia, No. 2/2023 dated 6 January 2023.
The prescribed interest rate for late payments applies for six – month period starting on 1 January 2023, and now amounts to 10.5%.
The prescribed interest rate for late payments, which has remained at 8.0% since 2016, therefore ceased to apply on 31 December 2022.
According to the provisions of ZPOMZO-1, the prescribed interest rate for late payments is the leading interest rate of European Central Bank increased by 8 percentage points. The leading interest rate is the interest rate used by European Central Bank for main refinancing operations carried out before the first calendar day of the respective six-month period.
The prescribed interest rate for late payments is the annual interest rate at which interest is paid on monetary obligations from the date of the debtor’s default until the date of payment. It does not apply if the creditor and the debtor so agree. The creditor and the debtor may therefore agree on an interest rate, which differs from the prescribed interest rate for the late payment. In this case, the creditor and the debtor are limited by the provision of Article 337 of the Obligation’s Code providing for the presumption of usurious interest. Pursuant to the aforementioned provision, an agreement, under which the interest rate for late payments and for contractual interest is more than 50% of the prescribed interest rate for late payments, is deemed to be a usurious contract, unless the creditor proves certain circumstances referred to Article 337 of the Obligation’s code. The presumption of usurious interest does not apply to commercial contracts.
The increase of the prescribed interest rate for late payment therefore resulted in the increase of the threshold for usurious interest, which is now 16% or above.
The European Union has set ambitious targets for the development of renewable energy sources, aiming to reach 32% of total energy consumption by 2030. Furthermore, energy from from renewable sources can reduce the EU’s demand for fossil fuels and thanks to their low operational costs, more renewables in the EU’s energy system can lower energy prices. To achieve this goal, a significant increase in the deployment of renewable energy projects is necessary. However, the permit-granting process for these projects can be lengthy and complex, often involving multiple agencies and levels of government.
To address this issue, the European Council has adopted a regulation establishing a temporary framework to accelerate the permit-granting process for renewable energy projects. The regulation applies to all EU member states and covers a wide range of renewable energy technologies, including solar, wind, geothermal, and hydropower.
Maximum deadlines
Under the temporary framework established by the Council Regulation, member states are required to ensure that the permit granting process for renewable energy projects is completed within certain time limits. These maximum time limits are as follows:
Presumption of overriding public interest
The planning, construction and operation of plants and installations for the production of energy from renewable sources, and their connection to the grid, the related grid itself and storage assets is presumed to be in the overriding public interest and serving public health and safety when balancing legal interests in the individual case.
Projects which are recognised as being of overriding public interest are given priority when balancing legal interests in the individual case during the planning and permit-granting process, the construction and operation of plants and installations for the production of energy from renewable sources and the related grid infrastructure development are given priority when balancing legal interests in the individual case.
The regulation is valid for a period of 18 months from its entry into force.
Overall, the regulation represent a positive step towards meeting the EU’s renewable energy targets and supporting the transition to a low-carbon economy. It will help to remove barriers to the development of renewable energy projects, encourage the growth of this important sector and hopfully soone have an impact on the market energy prices.
In December this year, the Supreme Court of the Republic of Slovenia adopted a decision on the appeals of nine workers who had requested a declaration of the existence of an employment relationship and the recognition of their rights under the employment relationship at Luka Koper d.d. (Port of Koper).
The workers were employed by “port service providers” (IPS), companies whose only business partner was Luka Koper. They were in a contractual relationship with the company on the basis of contracts for the provision of stevedoring and other services, which outwardly constituted a subcontract under the law of subcontracting. In reality, the contracts were only fictitious, since the port service providers never provided any services to or for the Port of Koper, but merely provided it with workforce.
The workers were in fact working for the Port of Koper, under its full supervision, in its working process, in its premises and with its equipment. The work was carried out in this way over a long period of time, continuously, with minimum wages and long shifts. The average number of workers working in similar circumstances at the Port of Koper each day was between 640 and 700. In 2019, port service providers terminated the employment contracts of workers for business reasons due to the reduction in traffic with the Port of Koper.
The Supreme Court found that this business model is illegal. The port service providers did not comply with the conditions for the placement of workers under the Employment Relationships Act (ZDR-1) and the Labour Market Regulation Act (ZUTD), and therefore should not have placed workers with, and the Port of Koper should not have accepted them. It is also disputed that Luka Koper only cooperated with companies which did not fulfil the legal conditions for providing workers. Furthermore, the work of the workers at the Port of Koper was also of a long-term and continuous nature, but, in accordance with Article 163(3) of ZUTD and Article 61(1) of the ZDR-1, the work of a dispatched worker is only of a temporary nature. According to the legislation, the workers should receive at least the same salary and work under at least the same conditions as the workers formally employed by the Port of Koper. The port service providers and the Port of Koper abused the workers in this way, as they worked on a call-out basis, whereby they were told one day in advance where they were to report the following day and how many hours they would be working. They worked irregular hours, without respecting the rules on rest in labour law and, unlike the workers officially employed by the Port of Koper, they were paid minimum wage for their work. In this way, Luka Koper increased its profits by reducing labour costs.
The Supreme Court held that during the relevant period, the workers had a clandestine employment relationship with the Port of Koper, which externally transferred the employment relationship to other employers, but retained a decisive influence on their activities and employment, and in fact acted as the employer in the relationship with the workers.
In the light of all the foregoing, the Supreme Court of the Republic of Slovenia held that the workers were entitled to establish the existence of an employment relationship with the Port of Koper from the date of termination of their employment contracts with the port service providers. However, for the duration of the employment contract, the Supreme Court of the RS ruled that the Port of Koper was liable to pay the workers the difference in remuneration which they should have received under the relevant legislation.
The decisions of the Supreme Court of the Republic of Slovenia represent an important step in the story of the IPS workers, which has been in the media for a long time due to violations of their labour rights. At the same time, the decisions are crucial for the decisions in all the remaining IPS workers’ court cases that are still pending.
The Government has responded to the unusual increase in electricity and natural gas prices, which is the result of many factors, including the economic recovery from the pandemic and the Russian invasion of Ukraine, by taking a number of measures to mitigate the negative social and economic impact of the energy price increase, and will continue to do so in the future.
In the field of electricity supply, on 14 July 2022 the Government of the Republic of Slovenia (hereinafter: “the Government”) adopted Decree on the determination of electricity prices and on 21 July 2022 a Decree amending the Decree on the determination of electricity prices (hereinafter: “the Decree on the determination of electricity prices”), on the basis of which it set the maximum retail electricity price for household customers, for small business customers, for consumption in common areas of multi-apartment buildings and for common areas in mixed multi-apartment and commercial buildings.
The definition of small business customers includes customers whose total connection capacity of metering points is equal to or less than 86 kW and for whom a connection approval has been granted up to and including 21 July 2022.
The maximum electricity price allowed for customers with a connection capacity equal to or less than 43 kW who are not household customers will be:
The maximum retail selling price for electricity for household customers and for consumption in common areas of multi-apartment buildings and common areas in mixed multi-apartment buildings will be:
On 21 July 2022 the Government adopted a Decree on setting gas prices from the system and on 28 October 2022 it adopted a Decree amending the Decree on setting natural gas prices from the system (hereinafter: the “Gas Price Setting Decree”), under which it limited the maximum permitted retail prices for natural gas for the period from 1 September 2022 to 31 August 2023. The Gas Price Setting Decree sets a maximum retail price for natural gas which:
The regulated retail prices for electricity and natural gas will remain in force until 31 August 2023.
As a follow-up to the measures to regulate the prices of electricity and natural gas, on 23 August 2022 the National Assembly of the Republic of Slovenia (hereinafter: “the National Assembly”) adopted the Determining Intervention Measure in the Field of Value Added Tax for Mitigating of Rising the Energy Prices (VAT) to mitigate the increase in energy prices, reducing the VAT rate to 9.5% for all consumers of electricity, natural gas, district heating and purchasers of wood for the period from 1 September 2022 to 31 May 2023.
The lower tax rate applies to both households and businesses
2.1. State aid in the form of co-financing of high energy costs for businesses
In response to the difficult economic situation, on 24 March 2022 the European Commission adopted the Temporary Crisis Framework for state Aid measures to support the economy following the aggression against Ukraine by Russia and in basis of second amendment of Temporary Crisis Framework on 9 November 2022 European Commission adopted a new Temporary Framework. On the basis abovementioned Crisis Framework, the National Assembly adopted two acts setting out state aid schemes in the form of co-financing for electricity and natural gas costs arising in 2022 and for costs arising in 2023. The act setting out the state aid scheme for 2023 will be presented in detail in the third point of this article.
On 31 August 2022, the National Assembly adopted the Act Determining the Aid to the Economy Due to High Electricity and Natural Gas Prices due to high increases in the prices of electricity and natural gas (ZPGVCEP) which provides state aid in the form of subsidies for the costs of consumption of electricity and natural gas in 2022 to business entities.
According to the Act, the state will subsidise 30 % of the cost of electricity and natural gas in 2022 above twice their price increase in 2021, for which it will allocate 80 million EUR. The Act provides three types of aid: (1) simple aid for the economy of up to 500,000 EUR and up to 30 % of eligible costs; (2) special aid for the economy of up to 2,000,000 EUR and up to 30 % of eligible costs, with a cap on the calculation of costs at up to 70 % of consumption in 2021; and (3) aid for energy-intensive businesses of up to 2,000,000 EUR and up to 50 % or, in some cases, up to 70 % of eligible costs.
Applicants could submit their applications for state aid in the electronic application of the Public Agency SPIRIT Slovenia until 15 November 2022.
2.2. Electricity pricing mechanism for large business customers
On 29 November 2022 the Government adopted the Regulation on the determination of the electricity pricing mechanism for business customers and on 6 December 2022 it adopted the Regulation amending the Regulation on establishing the electricity pricing mechanism for business customers, (hereinafter referred to as the ‘Regulation’), by which it established the electricity pricing mechanism for large business customers, which include those economic operators not eligible for measures under the Decree on the determination of electricity prices.
Business customers are defined by the Electricity Supply Act (“ESPA”) as natural or legal persons who purchase electricity not intended for their own household use, and include producers, industrial customers, small and medium-sized enterprises, business entities and wholesalers.
The Regulation establishes the electricity pricing mechanism for the supply of electricity to business customers for the year 2023, for electricity supply contracts and all transactions concluded on the basis of existing supply contracts, whereby the parties to the contract agree on the total or partial quantities to be supplied in 2023, all concluded in the period from 30. 11. 2022 to 31. 12. 2022.
The electricity supplier is thus obliged to offer fixed prices for the higher and lower daily tariff rates for the maximum amount of electricity consumption of the customer. The way in which these prices are set depends on the calculation of a specific formula, which is specified in the Regulation. It consists of the annual price of the forward product of banded electricity on the German power exchange, the price of the annual forward product of trapezoidal electricity on the German power exchange and the upward capped cost of the supplier.
Suppliers that were supplying electricity to large business customers on 29. 11. 2022 may not cease to supply them during the period of validity of the Regulation and are obliged to provide business customers, upon their request, with offers complying with the terms and conditions of the Regulation. This provision is necessary to ensure that suppliers do not evade the obligation by not issuing offers and not concluding supply contracts or by ceasing to carry out their activities
In 2023, the Government will continue to co-finance businesses to pay the high cost of energy. The state aid scheme is laid down in the Act on aid to the economy to mitigate the effects of the energy crisis, adopted by the National Assembly in the second half of December 2022, where two new types of aid are added in addition to the three types of aid set out in the Aid to the Economy Due to High Electricity and Natural Gas Prices due to high increases in the prices of electricity and natural gas.
The state aids defined by the Act are set out below.
3.1. Act on economic aid to mitigate the effects of the energy crisis
On 16 December 2022, the National Assembly adopted the Act on aid to the economy to mitigate the effects of the energy crisis (hereinafter »ZPGOPEK« or »the Act«), which entered into force on 28 December 2022, nevertheless the state aid scheme set out in the Act is still subject to approval by the European Commission. The economic state aid includes (1) subsidies for high prices of electricity, natural gas and process steam, (2) subsidies to preserve jobs, and (3) measures to ensure the liquidity of companies. The subsidies for high prices of energy products will be described in more detail below.
3.1.1. Subsidising energy prices
The Government will subsidise the costs of energy prices for companies in the period between 1 January 2023 and 31 December 2023. The Act adds two new aids to the existing three types of aid, and sets a relaxed entry condition for eligibility. The estimated financial value of the aid measures to subsidise high energy prices for 2023 is estimated at 850 EUR million, which is ten times higher than in 2022.
3.1.2. Beneficiaries
The beneficiaries of the aid will be companies, sole traders, economic interest associations and cooperatives, private institutions and associations, chambers of commerce and trade unions, provided that the beneficiaries are registered in the Republic of Slovenia to carry out an economic activity up to and including 30 November 2021.
The following will not be eligible for aid:
3.1.3. State aid
Beneficiaries will be able to apply for aid of between 40 % and 80 % of eligible costs above 1.5 times the price increase for electricity, natural gas and process steam in 2023. The price comparison will be calculated by reference to the average price in 2021.
The eligible period is from 1 January 2023 to 31 December 2023.
The eligible cost is charged according to a formula by deducting 1.5 times the average price for 2021 from the price in a given month in 2023, except where the actual average unit price of the beneficiary in 2021 is lower than the regulatory price.
For simple aid, the average price for electricity and natural gas is set by law (62,26 EUR for electricity, 26,49 EUR for natural gas), unless the actual price was lower than the set price, in which case the latter is taken into account. For process steam, the average price of the beneficiary in 2023 shall be taken into account.
For all types of specific aid, the average unit price per beneficiary in 2021 is taken into account.
The resulting difference is multiplied by the quantity consumed in a given month in 2023 to get the eligible cost.
The amount of state aid is calculated by multiplying the eligible cost in a given month in 2023 by the proportion of eligible costs laid down by law for each type of aid.
The beneficiary will be able to choose between five types of aid: (1) simple aid up to 50 % of eligible costs and up to a maximum of 2 million EUR in total aid, (2) basic special aid up to 50 % of eligible costs and up to a maximum of 4 million EUR in total aid, (3) special aid for reduced economic performance up to 40 % of eligible costs and up to a maximum of 100 million EUR, (4) special aid for energy-intensive enterprises up to 65 % of eligible costs and up to a maximum of 50 million EUR, (5) special aid in specific sectors up to 80 % of eligible costs and up to a maximum of 150 million EUR.
3.1.3.1. Simple aid
The beneficiary is eligible for simple aid to the economy of 50 % of eligible costs up to a maximum total of 2 million EUR if, in 2023, the price of energy prices increases by at least 1.5 times of the reference price for 2021, whereas the reference price per unit for year 2021
3.1.3.2. Basic special aid
The beneficiary is entitled to basic special economic aid of 50 % of eligible costs up to a maximum total of 4 million EUR, if the energy price of the beneficiary’s energy use increases in 2023 by at least 1.5 times the average price in 2021.
3.1.3.3. Specific aid for reduced economic viability
The beneficiary is eligible for special aid for reduced economic performance of 40 % of eligible costs up to a total maximum of 100 million EUR if: (1) its energy price increases in 2023 by at least 1.5 times the beneficiary’s average price in 2021 and (2) its EBITDA without aid decreases by at least 10 % in the eligible period compared to 2021.
EBITDA is the total operating result plus depreciation, amortisation and interest expenses. It is calculated as the difference between the sum of all income and the sum of all expenditure, excluding depreciation, amortisation and interest expense.
3.1.3.4. Specific aid for energy-intensive businesses
The beneficiary is entitled to special aid for energy-intensive enterprises of 65 % of eligible costs up to a maximum total of 100 million EUR if: (1) it is an undertaking which is exempt from excise duty or has been eligible for a refund of excise duty paid for energy-intensive undertakings in accordance with the provisions of the law governing excise duties (‘energy-intensive undertaking’), (2) in 2023 the price of energy products increases by at least 1.5 times the beneficiary’s average price in 2021, (3) its EBITDA without aid during the eligible period decreases by at least 40 % compared to 2021 or is negative.
3.1.3.5. Specific aid for energy-intensive enterprises in specific sectors
The beneficiary is eligible for special aid for energy-intensive enterprises in specific sectors of 65 % of the eligible costs up to a maximum total amount of 150 million EUR, provided that: (1) it is an undertaking which is exempt from excise duty or has been eligible for a refund of excise duty paid for energy-intensive undertakings in accordance with the provisions of the law governing excise duties (‘energy-intensive undertaking’), (2) it experiences an increase in the price of energy products in 2023 of at least 1.5 times the beneficiary’s average price in 2021, (3) its EBITDA excluding aid has decreased by at least 40 % in the eligible period compared to 2021 or is negative, (4) it is active in one of the NACE special sectors (coal mining, crude oil extraction, production of oils and fats, production of sugar, production of fibres, production of cement, production of plastics in primary form, production of pharmaceutical raw materials,…).
3.1.4. Application for and payment of state aid
The beneficiary shall claim the state aid by submitting an application to the Public Agency of the Republic of Slovenia for the Promotion of Entrepreneurship, Internationalisation, Foreign Investment and Technology (hereinafter referred to as “the Agency”) by 28 February 2023. The application shall be submitted electronically via an application to be set up by the Agency.
Payments will be made at a rate of 80 % of the aid per payment for each month of the eligible period, up to one-twelfth of the estimated aid amount for the entire eligible period. The first payment will be made up to and including 31 March 2023 for the period from January 2023 to March 2023, and subsequent payments for the period from April 2023 to December 2023 will be made monthly up to and including the 30th of the month for the current month.
By 28 February 2024, the withheld funds will be paid to the beneficiaries at a rate of 20 % of the aid amount.
On 28 December 2022, amendments to the Government of the Republic of Slovenia Act, Radiotelevizija Slovenija Act and Long Term Care Act, entered into force. Mentioned amendments were approved by the voters in a triple referendum which took place on 27 November 2022.
Amendment to the Government of the Republic of Slovenia Act
The enacted amendments to the Government of the Republic of Slovenia Act stipulate the reorganization of the government and the establishment of a new Ministry of the Environment, Climate and Energy, the Ministry of Solidary Future, the Ministry of Higher Education, Science and Innovation, the Ministry of Digital Transformation and the Ministry of Cohesion and Regional Development. The government will now have 19 line ministers (i.e. ministers designated for a particular field of operation) and one non-designated minister.
Amendment to the Radiotelevizija Slovenija Act
Act amending Radiotelevizija Slovenija Act abolishes the Program Council of RTV Slovenia, the Supervisory Board of RTV Slovenia and the position of the General Director.
Instead of the existing 29-members of Program Council, the amendment introduces a new Council with 17 members. 6 of the Council members will be appointed by employees of RTV Slovenia. The rest of the members will be appointed by the public, i.e. one member (each) will be appointed by Italian and Hungarian national community and one member by the President of the Republic of Slovenia in cooperation with religious communities. In addition, one member (each) will be appointed by the Slovenian Academy of Sciences and Arts, the National Council for Culture, the Olympic Committee of Slovenia, the Information Commissioner, the Council for Sustainable Development and Environmental Protection, the umbrella organization of disability organizations and the Ombudsman. Two members of the Council will be appointed by the National Council for Culture.
Responsibilities previously exercised by the General Director of RTV Slovenia will now be exercised by the Board which will have four members. Instead of existing Supervisory Board of RTV Slovenia, the amendment establishes a new body, namely the Financial Committee which will have 5 members. Financial Committee members will be appointed by the Board on the proposal of the ministry responsible for finance, the ministry responsible for the media, the Council of Workers of the RTV Slovenia, the Association of Supervisors Slovenia and the Association of Accountants, Finance officers and Auditors of Slovenia. The responsibilities of the Finance Committee will now be limited to giving preliminary consents (to the draft statute, financial plan and annual report) and making proposals for approval by the Council (to the prices of services, the level of tariffs, etc.).
The amendment also introduces a completely new body, namely the Viewers and listeners ombudsman, who will deal with the comments and suggestions of viewers and listeners of RTV Slovenia’s programs.
Amendments to the Long Term Care Act
The enacted amendments to the Act on long-term care postponed the commencement date of implementation of stated act to 1 January 2024. This change enables the government to adequately prepare the necessary changes for the implementation of the act, accompanying activities, and above all, it enables to adequately ensure and regulate funding for long-term care services.
On 17 November 2022, the Constitutional Court of the Republic of Slovenia issued a decision in which, in the constitutionality review proceedings started at the initiative of nine banks, it decided to annul the Act on the Limitation and Allocation of Currency Risk between Creditors and Borrowers of Swiss Franc Loans (“ZOPVTKK“). The implementation of the ZOPVTKK was otherwise suspended by order of the Constitutional Court as from March 2022.
In the short period of time since its adoption on 2 February 2022, the ZOPVTKK regulated the renewal of contractual relationships under credit agreements denominated in Swiss francs concluded in the period from 28 June 2004 to 31 December 2010, by means of the conclusion of a new contract as if the credit agreements had been concluded in euro, with the application of a currency cap. The intention was to shift some of the burden of the increases in the cost of lending that followed the Swiss central bank’s intervention in 2015 and the suspension of the link between the Swiss franc and the euro from the borrowers to the lending banks.
According to the provisions of the ZOPVTKK, the creditor had to prepare a new amortisation plan, a calculation of the remaining debt and a proposal for an amortisation agreement within 60 days of the entry into force of the Law and deliver it within 75 days. In the latter, the creditor had to consider a specific methodology for the conversion of the obligations under the credit agreement in Swiss francs, based on a currency cap triggered in the event of a 10 % increase in the outstanding amount of the credit or an increase in the annuity in relation to the outstanding amount of the credit or the annuity calculated on the date of the drawdown. When the currency cap was triggered, the value of each annuity and other payments was calculated at the value at which the currency cap was triggered. Based on this calculation, if the creditor found that the credit had already been repaid according to the new calculation, it had to reimburse any overpayment to the borrower within 30 days of receipt of the signed agreement on the regularisation of mutual relations. If the credit had not yet been repaid after the new calculation, the ZOPVTKK provided that the contractual relationship would continue in accordance with the amortisation agreement and the new amortisation plan.
The central question considered by the Constitutional Court in the context of the review of the constitutionality and legality of the ZOPVTKK is whether the ZOPVTKK is incompatible with the constitutional prohibition of retroactive effect of legal acts under Article 155 of the Constitution of the Republic of Slovenia (“Constitution“), which provides that laws, regulations, and general acts cannot have retroactive effect. Since such a prohibition is not absolute, the Constitutional Court also assessed whether such an effect is required by the public interest and whether, in such a case, it does not interfere with rights already acquired.
In the specific case, the Constitutional Court held that the provision of the ZOPVTKK, which regulates the methodology for calculating the currency cap and temporalizes it to the moment of drawdown of the credit, i.e., the moment that occurred before the entry into force of the law, has a retroactive effect. At the same time, the Constitutional Court found that the specific provision allows for the retroactive effect of the other provisions of the ZOPVTKK, which otherwise have retroactive effect.
In connection with the above finding, the Constitutional Court emphasised that it was not the case that the entire legal regulation would have only a retroactive effect, but that the disputed provision on the methodology for calculating the currency cap, by virtue of its retroactive effect, would lead to the retroactive effect of the law as a whole. In the Constitutional Court’s view, the annulment of the specific provision governing the methodology for calculating the currency cap and of all the provisions of the law referring to it would leave only the content of the disputed law, which would have no meaning in itself, i.e., without the annulled provisions. For this reason, the Constitutional Court concluded that the law as a whole had retroactive effect, and not only the retroactive effect of its individual provisions.
During its assessment, the Constitutional Court also considered the possible existence of a special public interest which would exceptionally justify the retroactive effect of a statutory provision and found that no such public interest existed. Since the failure to meet one of the criteria set out in the Constitution is sufficient to establish that a law has an impermissible retroactive effect, the Constitutional Court did not deal with the criterion of the existence of an interference with acquired rights.
The Constitutional Court adopted its decision by seven votes to one.
On July 22, 2021, the Act on Corporate Due Diligence in Supply Chains (Supply Chain Due Diligence Act) was published in the German Federal Law Gazette. The act will enter into force on January 1, 2023 (hereinafter: the »Act«). The Act’s objective is to safeguard human rights and the environment in the global economy more effectively.
The Act will apply to companies that have their central administration, principal place of business, administrative headquarters, registered seat, or branch office in Germany and have 3,000 or more employees in Germany. Starting January 1, 2024, the number of employees requirement will be reduced to 1,000.
The Act will apply to the protection of human rights and the environment, in particular in the areas of:
According to Article 3 of the Act, companies will be obliged to observe human rights and environmental protection due diligence obligations in their supply chain in an appropriate manner. This is to ensure that companies fulfil their responsibility to protect human rights.
Accordingly, companies will need to put in place a range of complementary and interlinked measures, including:
The Act will require companies to conduct a risk analysis with regard to their own activities and business relationships within the supply chain. Companies will further have to ensure to define a person within the company who is responsible for monitoring risk management by appointing a human rights representative. The identification of risks serves as the basis for the subsequent definition of preventive and remedial measures with the aim of identifying, preventing, ending or at least minimising human rights risks and violations of rights along the supply chains.
One of the objectives of the Act is to stop human rights violations in the supply chain. If this is not possible, companies must develop a plan to reduce negative impacts. First, companies should work with each other to find a common solution with their suppliers, which may require the signing of a remedial action plan. As a last resort, termination of business relations may be required, while suspension of business relations may be considered as a less severe remedy.
The Act sets out a framework of obligations that will have to be implemented, while creating a uniform standard for all German companies.
Slovenian companies will also be affected by the provisions of the Act if they are suppliers of services and/or products to larger German companies. Slovenian companies can expect more checks or the establishment of new bilateral contracts by their German partners in the areas of labour law, environmental management and waste management.
An EU Directive is also being prepared which will cover similar matters and will apply to all EU Member States.
The Slovenian Government recently prepared a bundle of proposed amendments related to tax legislation, including amendments to the Tax Procedure Act, the Financial Administration Act and the Personal Income Tax Act.
The proposed amendment to the Tax Procedure Act will implement the Council Directive (EU) 2021/514 of 22 March 2021, which introduces a mandatory reporting obligation on all digital platform operators who provide their interface to sellers, whereby the mandatory reporting will relate to the information on business activity of persons who offer goods and services via their platforms. The reporting obligation will apply to the rental of real estate, various modes of transport, personal services and the sale of goods, given that these activities expanded during the Covid-19 epidemic. In relation to goods and services offered on the EU territory, the reporting obligation will apply to all digital platform operators, including those who are not based within the EU.
The above-mentioned directive aims to establish a more effective administrative cooperation by introducing new instruments and adapting the existing instruments. These include measures on joint tax supervision, time-limits, group requests and the omission of a qualified digital certificate as a requirement for accessing documents from the web portal e-Davki (e-Tax).
Amendments are also anticipated on the field of financial administration. The proposed amendment to the Financial Administration Act represents a departure from the systemic arrangements adopted in the first half of this year and aims to increase the efficiency of financial administration. Primarily, the proposed amendments are related to the appointment of directors of financial offices, collegial decision-making and the disciplinary withdrawal of powers from inspectors, as well as the introduction of the possibility of using technical devices to detect illegal production of excise duties, when milder measures are not possible.
While the National Assembly is yet to decide on the above amendments, the amendment to the Personal Income Tax Act was already adopted, however, the National Council elected a suspensive veto on Monday, 5 December 2022. The concerned amendment to the Personal Income Tax Act, inter alia, enacts changes to the amount of general tax relief, which as per 1 January 2023 will be increased to EUR 5,000, instead of EUR 5,500, as enacted in the beginning of this year. Further gradual increase of general tax relief up to EUR 7,500 is being abolished. The veto petitioners disagreed with the aforementioned changes, stating that the amendment is premature and hasty. In their opinion the amendment needs to be reconsidered, while the main focus should be in ensuring higher net salaries. The veto petitioners also opposed to other proposed amendments related to the tightening of business income taxation, the increase of rental income tax and changes to the taxation of agricultural income.
The Ministry of Finance believes that it is imperative for the amendment to the Personal Income Tax Act to be adopted as soon as possible, as it contains amendments that require thorough preparation prior to their implementation. In case of delays with the adoption, the functioning of the tax system could be disrupted and its predictability disabled.
Due to the suspensive veto, the National Assembly will have to re-decide on the adoption of the proposed amendment to the Personal Income Tax Act, whereby a majority vote of all Members of the National Assembly (i.e. at least 46 votes) will be required in order to adopt the amendment.
On 1 November 2022, Regulation (EU) 2022/1925 of the European Parliament and of the Council of 14 September 2022 on competitive and fair markets in the digital sector and amending Directives (EU) 2019/1937 and (EU) 2020/1828, also known as the Digital Markets Act (the “Act“), entered into force in the European Union. Its purpose is to ensure a level playing field for all digital businesses, regardless of their size, and to eliminate unfair business practices by companies providing so-called core platform services.
The Act will only apply to large global companies that are designated as ‘gatekeepers’ in accordance with the criteria set out in the Act. These are digital platforms that provide an important intermediate link between users and providers.
To qualify as a gatekeeper under the Act, a company must provide at least one of the following core platform services:
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· Online intermediary services, · online search engines, · online social networking services, · video-sharing platform services, · number-independent interpersonal communication services,
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· operating systems, · web browsers, · virtual assistants, · cloud computing services, · online advertising services.
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Such an undertaking shall be designated as a gatekeeper if it has a significant impact on the internal market, provides a core platform service that is an important entry point through which business users reach end-users, and has an established and lasting position in the conduct of its activities or is expected to have such a position in the foreseeable future. The above will be assessed based on three main quantitative criteria, namely:
The Act introduces a number of obligations and prohibitions that companies identified as gatekeepers will have to comply with in their day-to-day operations, specifically, they will have to proactively implement certain practices to make markets more open and competitive, while at the same time refraining from unfair practices. For example, they should no longer prevent business users from offering the same products or services to end-users through third-party online intermediary services or through their own direct online sales channel at prices or on terms different from those offered through the gatekeeper’s online intermediary services, nor should they treat services and products offered by themselves more favourably than those offered by a third party in comparison to similar services or products offered by a third party in the ranking and indexing process.
With its entry into force, the Act has entered the implementation phase and will apply after six months, from 2 May 2023. Potential gatekeepers will have two months to notify their underlying platform services to the EU Commission if they meet the thresholds set by the Act. Once the Commission has received a complete notification, it will have 45 working days to assess whether the company in question meets the thresholds and, to the extent that it does, to designate it as a gatekeeper. Once appointed, gatekeepers will have six months to comply with the requirements of the Act.
The implementation of the obligations under the Act will be monitored by the EU Commission, which may impose a fine of up to 10%, or up to 20% in the case of repeated infringements, of the company’s total worldwide turnover in the preceding financial year. In the case of systematic infringements, the Commission may also impose on the infringer any behavioural or structural measures necessary to ensure the effectiveness of the obligation, including a prohibition on further concentrations in relation to core platform services or other services provided in the digital sector, or in relation to services enabling the collection of data affected by the systematic non-compliance.
On 1 November 2022, Regulation (EU) 2022/1925 of the European Parliament and of the Council of 14 September 2022 on competitive and fair markets in the digital sector and amending Directives (EU) 2019/1937 and (EU) 2020/1828, also known as the Digital Markets Act (the “Act“), entered into force in the European Union. Its purpose is to ensure a level playing field for all digital businesses, regardless of their size, and to eliminate unfair business practices by companies providing so-called core platform services.
The Act will only apply to large global companies that are designated as ‘gatekeepers’ in accordance with the criteria set out in the Act. These are digital platforms that provide an important intermediate link between users and providers.
To qualify as a gatekeeper under the Act, a company must provide at least one of the following core platform services:
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· Online intermediary services, · online search engines, · online social networking services, · video-sharing platform services, · number-independent interpersonal communication services,
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· operating systems, · web browsers, · virtual assistants, · cloud computing services, · online advertising services.
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Such an undertaking shall be designated as a gatekeeper if it has a significant impact on the internal market, provides a core platform service that is an important entry point through which business users reach end-users, and has an established and lasting position in the conduct of its activities or is expected to have such a position in the foreseeable future. The above will be assessed based on three main quantitative criteria, namely:
The Act introduces a number of obligations and prohibitions that companies identified as gatekeepers will have to comply with in their day-to-day operations, specifically, they will have to proactively implement certain practices to make markets more open and competitive, while at the same time refraining from unfair practices. For example, they should no longer prevent business users from offering the same products or services to end-users through third-party online intermediary services or through their own direct online sales channel at prices or on terms different from those offered through the gatekeeper’s online intermediary services, nor should they treat services and products offered by themselves more favourably than those offered by a third party in comparison to similar services or products offered by a third party in the ranking and indexing process.
With its entry into force, the Act has entered the implementation phase and will apply after six months, from 2 May 2023. Potential gatekeepers will have two months to notify their underlying platform services to the EU Commission if they meet the thresholds set by the Act. Once the Commission has received a complete notification, it will have 45 working days to assess whether the company in question meets the thresholds and, to the extent that it does, to designate it as a gatekeeper. Once appointed, gatekeepers will have six months to comply with the requirements of the Act.
The implementation of the obligations under the Act will be monitored by the EU Commission, which may impose a fine of up to 10%, or up to 20% in the case of repeated infringements, of the company’s total worldwide turnover in the preceding financial year. In the case of systematic infringements, the Commission may also impose on the infringer any behavioural or structural measures necessary to ensure the effectiveness of the obligation, including a prohibition on further concentrations in relation to core platform services or other services provided in the digital sector, or in relation to services enabling the collection of data affected by the systematic non-compliance.
On 29 September 2022, the Constitutional Court, in its judgment No U-I-26/20, found that Article 27(5) of the Income Tax Act (ZDoh-2) was incompatible with the Constitution of the Republic of Slovenia and ordered the National Assembly of the Republic of Slovenia to remedy the incompatibility within one year of the publication of the decision.
Article 27(5) of ZDoh-2 provides that compensation for damage resulting from personal injury, illness or death is exempt from income tax. However, the exemption does not explicitly include compensation for non-pecuniary damage resulting from the violation of personality rights, which, according to the petitioner, is not in line with the principle of tax justice and the principle of equal distribution of the tax burden, which, in the tax area, constitute an expression of the general principle of equality laid down in Article 14(2) of the Constitution of the Republic of Slovenia.
The Constitutional Court first examined whether it is true that compensation for non-pecuniary damage resulting from the violation of personality rights is not covered by Article 27 ZDoh-2, which lists the cases in which no income tax is payable on the compensation. In this respect, the Court considers that if the legislator chooses an exhaustive norm as the method of norming, all the cases which the legislator wished to regulate are deemed to be regulated. Consequently, the possibility of using analogy as a method of interpreting legal rules is excluded. Because of that, the case of compensation for non-pecuniary damage as a consequence of a violation of personality rights is excluded from the exemption from taxation.
Therefore, if the non-pecuniary damage is the result of personal injury, illness or death, the injured party is exempt from income tax on such compensation. However, if the damage was caused by some other circumstance (e.g. publication of an article), the injured party is liable to pay income tax on such compensation. ZDoh-2 therefore takes into account the cause of the damage as a criterion for (non-)taxability. The Constitutional Court found that such a distinction between the taxation of compensation on the basis of the cause of the damage is incompatible with the principle of equality laid down in Article 14(2) of the Constitution of the Republic of Slovenia.
The principle of equality does not mean that the legislator may not regulate identical situations differently, but it does require the legislator to have a reasonable and factually justified reason for doing so, having regard to the subject matter of the regulation and the objectives it seeks to achieve. In assessing whether there is a reasonable and factually justified ground for such a distinction in the particular case, the Constitutional Court primarily took into account the function of monetary compensation for non-pecuniary damage, which is to satisfy the injured party. It found that the effect of the payment of compensation on the economic situation of the injured party is the same irrespective of the source of the damage. In the light of the foregoing, the Constitutional Court concluded that in the present case there was no reasonable and factually justified reason why certain compensation payments should nevertheless be taxed, even though their purpose was the same. In so doing, the Constitutional Court rejected the Government’s submissions that such a distinction was justified, since personal injury, illness or death were objectively verifiable causes of the damage, which enabled the tax authority to control the tax exemptions and reduced the possibility of abuse. It explained that, where damages are awarded by a judicial decision, the court must, despite the principle of dispositive or discretionary nature of claims, take care not to recognise dispositions of the parties which are contrary to mandatory rules or moral rules. Consequently, it must also take care that the parties do not seek to achieve objectives contrary to the tax rules, thereby preventing possible abuses. However, in cases where compensation is paid on the basis of an out-of-court settlement, although the possibility of such control is indeed reduced and the possibility of abuse is consequently increased, this does not, in the opinion of the Constitutional Court, constitute such a compelling reason as to justify different treatment from the other forms of compensation. The tax authority has various mechanisms at its disposal to detect and prevent possible abuses. Specifically, on the question of the taxability of the compensation, the tax authority can and must verify that the out-of-court settlement was not concluded with abusive intent.
The National Assembly of the Republic of Slovenia has to remedy the inconsistency within one year after the publication of the decision. Until the inconsistency is remedied, the same rules apply to the taxation of compensation payments for all legally recognised forms of non-pecuniary damage as apply to the taxation of compensation payments as defined in Article 27(5) ZDoh-2.
On Thursday, 17 November 2022, the Government of the Republic of Slovenia discussed the starting points for the final phase of measures to address the energy price tag for businesses and certain public institutions. In this respect, the Government set out three measures, namely:
This legislation will fully transpose the European Regulation adopted at the end of October this year, allowing Slovenia to provide the economy with all the forms of aid allowed under European law.
The scheme will promote energy saving. Specifically, the state will subsidize the price of electricity up to 70% of last year’s consumption, above which consumers will have to pay the market price. This means that anyone saving 30% or more will only pay the subsidized price.
By subsidizing part-time work and temporary homeworking, the Government aims to help companies affected by the energy crisis. Both measures will be aimed in particular at preserving jobs. In this context, the Ministry of Labour, Family, Social Affairs and Equal Opportunities announced that it would launch an intervention scheme to subsidize part-time work and to reimburse wage compensation to workers on temporary homeworking.
The Government is planning to establish these subsidy schemes in a single intervention law for the 2023 heating season, during which time the protection of workers’ rights would also be preserved in the process of employers deciding whether to apply the measure, along the lines of the epidemic intervention measures.
According to the starting points for the preparation of the part-time subsidy measure, a decision by the Employment Service of the Republic of Slovenia is foreseen on the basis of an application from the employer. However, the aid is to be conditional on the entry conditions under the temporary framework of the European Commission and on the inability of the workers to secure work.
Also, according to the starting points for the preparation of the measure for the reimbursement of wage compensation to workers on temporary waiting lists, the Employment Service is to make a decision on the basis of an application from the employer, and the entry conditions are to be linked to a prohibition on the exercise of the activity by the State or to other objective, legally defined and determinable conditions. An alternative entry condition would be to benefit from the measure with a commitment to subsequently invest in the beneficiary’s green passage.
The Government is expected to take further action on gas price increases in the coming week, using the same method as for electricity. The laws governing these measures will enter into force on 1 January 2023.
On Thursday, 17 November 2022, the Government of the Republic of Slovenia discussed the starting points for the final phase of measures to address the energy price tag for businesses and certain public institutions. In this respect, the Government set out three measures, namely:
This legislation will fully transpose the European Regulation adopted at the end of October this year, allowing Slovenia to provide the economy with all the forms of aid allowed under European law.
The scheme will promote energy saving. Specifically, the state will subsidize the price of electricity up to 70% of last year’s consumption, above which consumers will have to pay the market price. This means that anyone saving 30% or more will only pay the subsidized price.
By subsidizing part-time work and temporary homeworking, the Government aims to help companies affected by the energy crisis. Both measures will be aimed in particular at preserving jobs. In this context, the Ministry of Labour, Family, Social Affairs and Equal Opportunities announced that it would launch an intervention scheme to subsidize part-time work and to reimburse wage compensation to workers on temporary homeworking.
The Government is planning to establish these subsidy schemes in a single intervention law for the 2023 heating season, during which time the protection of workers’ rights would also be preserved in the process of employers deciding whether to apply the measure, along the lines of the epidemic intervention measures.
According to the starting points for the preparation of the part-time subsidy measure, a decision by the Employment Service of the Republic of Slovenia is foreseen on the basis of an application from the employer. However, the aid is to be conditional on the entry conditions under the temporary framework of the European Commission and on the inability of the workers to secure work.
Also, according to the starting points for the preparation of the measure for the reimbursement of wage compensation to workers on temporary waiting lists, the Employment Service is to make a decision on the basis of an application from the employer, and the entry conditions are to be linked to a prohibition on the exercise of the activity by the State or to other objective, legally defined and determinable conditions. An alternative entry condition would be to benefit from the measure with a commitment to subsequently invest in the beneficiary’s green passage.
The Government is expected to take further action on gas price increases in the coming week, using the same method as for electricity. The laws governing these measures will enter into force on 1 January 2023.
On 28 September 2022, the National Assembly adopted the Electronic Communications Act (ZEKom-2), which entered into force on 10 November 2022 (the “Act“). The new Act incorporates into the Slovenian legal order the Directive (EU) 2018/1982 on the European Electronic Communications Code, which sets out a series of updated rules on the regulation of telecommunications networks and services.
The Electronic Communications Act is the basis for future projects in the field of promoting the digitisation process and introduces a number of novelties, among other:
The Act allows subscribers to withdraw from the subscription contract without additional costs (e.g. termination costs or other administrative costs, contractual penalties, amounts of benefits received or other agreed compensation). This means that the subscriber will not be charged direct costs for the telephone number portability from one operator to another.
In accordance with the Act the Agency for Communications Networks and Services of the Republic of Slovenia (hereinafter: the “Agency“) will be able to issue on the basis of collected data on retail prices a decision requiring service providers to offer low-income consumers or consumers with special needs price options or packages which differ in price from those otherwise provided under normal commercial conditions, in order for disadvantaged groups of people to also be able to access and use appropriate telecommunication services and broadband internet access.
The Agency will require the latter where, on the basis of the data collected, it finds that retail prices are too high in relation to the average monthly wage in the Republic of Slovenia, as published by the Statistical Office of the Republic of Slovenia, and where they are rising more than five percentage points faster than the cost-of-living index for the previous year.
Within one year at the latest a public notification and alert system for end-users will also be set up via the public mobile network, enabling people located in affected area to be informed and alerted quickly in the event of natural and other disasters.
The Act encourages further expansion and increased deployment of high-capacity networks throughout the country. This will be facilitated through the provisions on the collection of data on operators’ market interest in building networks providing speeds of at least 100 Mb/s and the provisions on the foreseen continued use of public funds for the construction of high-capacity networks in areas where operators do not have a market interest.
In order to encourage investment in the fifth generation 5G mobile networks, the Act will provide operators with regulatory predictability and certainty for their investments, as radio frequencies for wireless broadband electronic communications services will be granted for a period of 20 years instead of the current 15 years.
On 29 September 2022, the National Assembly of the Republic of Slovenia adopted the new Prevention of Restriction of Competition Act (“ZPOmK-2“), which transposes EU Directive 2019/1 into the Slovenian legal system. ZPOmK-2 entered into force on 26 October 2022, and will become fully applicable on 26 January 2023. The authority responsible for the protection of competition on the Slovenian market is the Agency of the Republic of Slovenia for the Protection of Competition (“Agency“). The following is a description of the main changes in relation to previous Competition Act (ZPOmK-1).
In a single administrative procedure, the Agency will be able to simultaneously determine a violation of competition rules by an undertaking and impose an administrative sanction in the form of a one-off or periodic fine. The Institute of Administrative Sanctions is a novelty in Slovenian competition legislation, as the determination of violations of competition rules and the imposition of sanctions were conducted in two separate procedures until the adoption of ZPOmK-2.
ZPOmK-2 regulates in more detail the permissibility of the use of information derived from leniency program. Such information may be used in proceedings before a court reviewing a decision of the Agency only where necessary for the exercise of the rights of defense in the proceedings before the court and only for the purposes of assessing the apportionment of an administrative sanction for which the cartel participants are jointly and severally liable, or for the purposes of assessing a decision by which the Agency has found an infringement of the competition rules or an offence under ZPOmK-2.
The new law harmonizes the conditions for issuing an order to search premises and documents, including electronic devices. It introduces the possibility for the Agency to appeal against a court decision should the court disagree with the Agency’s proposal to order an investigation. The Agency may, before issuing a decision to initiate proceedings, collect information from undertakings, any representative or person employed by un undertaking or any natural person who may have information relevant to the object or purpose of the supervision.
Current and former responsible persons and other employees of an undertaking who have submitted a leniency statement in relation to their participation in a cartel may not be subject to criminal sanctions if the legal conditions for this are met and if the application for remission of the administrative sanction was submitted before the Agency’s responsible person was informed of the competition law infringement proceedings. The public prosecutor is not obliged to initiate a criminal prosecution or may waive a prosecution even if the contribution of a person to the detection and investigation of a cartel outweighs the interest in prosecution or sanction.
Under ZPOmK-2, service of procedural documents to an undertaking having its registered office or assets in another EU Member State is conducted through a foreign competition authority or other public authority competent to enforce acts under national law in another Member State. For the enforcement of a final decision imposing an administrative sanction or a periodic administrative sanction on an undertaking which does not have sufficient funds in the Republic of Slovenia to pay the administrative sanction imposed, the Agency may request the assistance of the competition authority of another Member State or another public authority competent for the enforcement of acts under national law in another Member State. Furthermore, ZPOmK-2 also regulates the content of the requests, whereby no instruments of recognition, amendment or replacement are required for service or enforcement.
ZPOmK-2 introduces a simplified concentration notification procedure. The institute allows the Agency to assess the compliance of a notified concentration with the competition rules under a simplified procedure. The Agency may apply this institute if the notified concentration does not appreciably impede competition on the market or if it is a concentration that is normally approved in practice.
The Agency may assess a concentration under the simplified procedure if one of the following conditions is met:
In September 2022, the new Gas Supply Act came into force.
The adoption of the new law is a consequence of the changed operating conditions of the gas industry, the increased risks in the gas supply chain, and the new European Gas Regulation on gas storage (Regulation (EU) 2022/1032 of the European parliament and of the Council of 29 June 2022 amending Regulations (EU) 2017/1938 and (EC) No 715/2009 with regard to gas storage).
The amended law supplements the definitions of specific terms and introduces new ones.
Since the household consumers are entitled to special treatment from suppliers and special protection rights, the term »household consumer« has been amended and the limit of expected annual gas consumption (100,000 kWh) is now more clearly defined. This is to eliminate the various interpretations of the old definition.
With the new terms “basic supply customer” and “common household customer” added, basic supply rights are further excluded from commercial systems, such as district heating systems with gas as the primary energy source.
»Basic supply customer« is a household customer, a small business customer, a joint household customer and a protected customer as referred to in Article 117 of the Act, who is connected to the distribution system.
»Common household customer«, meanwhile, means the final household customer who purchases gas for heat supply to households through individual and common parts of multi-apartment buildings via a common heating installation owned or co-owned by those households (gas heaters in multi-dwelling buildings). For the purposes of this provision, the final customer shall not be deemed as a district heating provider.
Furthermore, the Act introduces the new term “substitute gas supply“. Substitute gas supply is intended to replace a supplier if a customer of the basic supply is unexpectedly left without a supplier due to the supplier’s insolvency or illiquidity, or because the supplier no longer fulfills the conditions for membership of the balancing scheme. For such situations, the law provides for an automatic transfer of the customer on the distribution system from the existing supplier to the supplier of the alternative supply.
The customer must conclude a supply contract with the new supplier no later than two months after the start of the substitute supply. The gas price for the substitute supply may be higher than the market price for the gas supply to a comparable customer. Still, it may not exceed the marginal purchase price for gas on the balancing market published by the transmission system operator, plus 25 %. The Slovenian Energy Agency has a statutory obligation to appoint one replacement supplier from among all suppliers to final customers.
The Act further provides that basic gas supply is the entitlement of all customers and must therefore be provided by all suppliers to all basic gas supply customers who do not have or cannot obtain a supplier. The price of gas for basic supply is determined by the supplier based on the characteristics of consumption by consumers of basic supply and the billing period, whereby the price of gas for basic supply may not exceed the threshold or, depending on the billing period, the average marginal purchase price of gas on the balancing market, published by the transmission system operator.
New Consumer Protection Act (ZVPot-1), which was adopted by Slovenian parliament at the end of September, is the result of implementation of three EU directives and, in addition to novelties in the field of digital content, it also includes rules previously regulated by Consumer Protection against Unfair Commercial Practices Act. The latter will cease to apply once new Consumer Protection Act enters into force.
Like its predecessor, new Consumer Protection Act pursues fundamental principles aimed to protect a consumer who is generally seen as the weaker party and consumer’s right to administrative and judicial protection. In addition, new Consumer Protection Act also facilitates the principle of legal certainty, since it provides clearer rules and hierarchy of consumers’ rights.
In addition to numerous novelties in the field of digital content, the novelties introduced by the new legal framework include the following:
New Consumer Protection Act now also regulates the contents of contract for supply of digital content and provision of digital services, as well as the mandatory warranty for conformity of digital content or digital services. It should be pointed out that some of the rules which apply to the aforementioned contracts also apply in those cases where a consumer undertakes to provide a company with its personal data in exchange for supply of digital content or digital services.
On 29 September 2022, the Court of Justice of the European Union (CJEU) issued its judgment in Case C-597/20, ruling that Member States may authorise the national authorities responsible for implementing Regulation (EC) No 261/2004 of the European Parliament and of the Council of 11 February 2004 establishing common rules on compensation and assistance to passengers in the event of denied boarding and of cancellation or long delay of flights, and repealing Regulation (EEC) No 295/91 (“Regulation”), to compel an air carrier to pay compensation on the basis of an individual complaint made by a passenger.
The judgment was issued based on a request for preliminary ruling, referred by the Budapest Regional Court, concerning the interpretation of the Regulation, namely whether Article 16(1) and (2) must be interpreted as meaning that the national authority responsible for the implementation of that Regulation, with which a passenger has lodged an individual complaint, cannot compel the airline in question to pay the compensation due to the passenger under that Regulation.
The aforementioned court ruled in a dispute between an air carrier LOT, and air passengers over a flight delay of more than three hours from New York (USA) to Budapest. The latter appealed to the Consumer Protection Department, which found a breach of the Regulation and ordered LOT to pay compensation of €600 to each of the passengers. LOT subsequently challenged the Authority’s decision, arguing that the Authority did not have the power to order the air carrier to pay compensation, only the national courts do.
In its decision, the CJEU noted that Member States may confer the power to take coercive measures on the national authority responsible for the implementation of the Regulation (e.g. payment of compensation) when an individual complaint has been lodged with it by a passenger, under the condition that both the passenger and the air carrier have the possibility of seeking remedy before a national court. While the Regulation does not impose an obligation to take coercive measures in such proceedings, it allows Member States the discretion to determine jurisdiction in the light of the protection of passengers’ rights.
The Court of Justice also addressed the question of fixed compensation provided for in the Regulation, which is designed to ensure a high level of protection for passengers and to strengthen their rights by reducing the inconveniences and hardships caused by long flight delays and cancellations. It is therefore an immediate and standardised remedy for the damages suffered, which is the same for all passengers and allows them to avoid bringing individual actions for damages before national courts. However, it is important to stress that in such cases, passengers and airlines must have the possibility of bringing an action against the decision of the body before national courts.
The Slovenian authority responsible for implementing the Regulation is the Civil Aviation Agency (CAA), which points out on its website that in the event of inconveniences, passengers should first contact the airline, and only then the CAA.
On September 1, 2022, the new Regulations on the Reporting of Accidents and Injuries at Work (Official Gazette RS, no. 78/2022 and no. 90/2022) entered into force. The Regulations introduced the electronic application for accidents and injuries at work via the SPOT portal (the so-called »eReporting NPS«), which replaces the previous reporting form “Reporting of Accidents – Injuries at Work (ER-8)”.
The new electronic form consists of:
As of September 1, 2022, all employers who are registered in the Business register of Slovenia (hereinafter: »PRS«) are obliged to report accidents and injuries electronically. Employer who is not registered in the PRS reports an accident or injury at work by completing the general part of the form in paper form and by submitting it to the ZZZS, which enters the data on behalf of the employer into the SPOT portal.
The new electronic application of accidents and injuries at work aims to simplify and digitalize the reporting process, and thus, relieving the burden on both employers and the injured person. Moreover, the electronic application enables the doctor of choice to be kept up-to-date with accident and injury notifications, and it enables IRSD to have faster access to applications for the needs of effective control and preventive action (Summarised from the website: https://zavezanec.zzzs.si/wps/portal/portali/azap/e-poslovanje/prijave-nezgod-in-poskodb-pri-delu/!ut/p/z1/04_Sj9CPykssy0xPLMnMz0vMAfIjo8zivf19DAz9DQwNA1zM3QzM3H28zUK8gowNPI31C7IdFQFDW6pB/).
Employers and the self-employed are still obliged to report immediately to IRSD and ZZZS any fatal or incapacitating accident at work, collective accident and any injury at work resulting in at least one day of absence from work. The notification gives the injured person the basis for exercising the rights to which he or she is entitled under the legislation.
With the adoption of the Act on Judicial Protection Procedure for Former Holders of Eligible Liabilities of Banks (Act on Judicial Protection Procedure for Former Holders of Eligible Liabilities of Banks (Official Gazette of the Republic of Slovenia, no. 72/19); hereinafter referred to as the “Act”) the Slovenian legislator legalized the procedure for judicial protection of former holders of eligible liabilities of banks. The Act was adopted following the decision of the Slovenian Constitutional Court, which in case no. U-I-295/13, inter alia, decided that the Banking Act in force at the time did not provide effective judicial protection of holders of cancelled eligible liabilities of banks.
The Act was challenged with two requests for review of constitutionality, filed by the Bank of Slovenia and the National Council respectively, and several petitions for the initiation of procedure for review of constitutionality.
Within the procedure for review of constitutionality initiated based on the request filed by the Bank of Slovenia, the Slovenian Constitutional Court temporarily suspended the implementation of the Act in March 2020. In January 2021, the Slovenian Constitutional Court suspended the procedure for review of constitutionality and submitted several questions to the Court of Justice of the European Union (hereinafter “Court of Justice”) for preliminary ruling.
A few days ago, the Court of Justice announced the adoption of a judgment, in which it ruled on the questions raised by the Slovenian Constitutional Court.
With its judgment in case no. C-45/21 dated 13 September 2022, the Court of Justice ruled that the Bank of Slovenia can only be held liable for damage incurred by the holders of cancelled financial instruments if it has been proven that the central bank in question seriously violated its duty to exercise due care and if the cancellation was not necessary to ensure the stability of the financial system, or, in case the former holders of financial instruments have suffered greater loss as a result of said cancellation than they would have suffered in the event of bankruptcy of the relevant financial institution.
Furthermore, it was decided that the Bank of Slovenia cannot be held liable to cover the damage incurred by the former holders of financial instruments simply because of their low income and waiver of other legal remedies, as currently stipulated by the Act. In relation to the funds allocated for compensation of damage, the Court of Justice ruled that the central bank cannot interfere with its profits and more than half of its reserves in order to pay compensations due to the cancellation of financial instruments.
While the decision of the Slovenian Constitutional Court regarding the constitutionality of the Act is awaited, the Bank of Slovenia welcomes the judgment of the Court of Justice by explaining that the judgment confirms their position, namely that the Act is controversial from the view of monetary financing and financial independence of the central bank. The Bank of Slovenia also concluded that it is necessary to prepare a legislative solution that will comprehensively regulate the area in question and will be consistent with the European legal order and constitutional regulation of the Republic of Slovenia.
The Ministry of Finance of the Republic of Slovenia also responded to the judgement by announcing that they are aware of the necessity to ensure a more efficient judicial protection procedure as soon as possible and that they have already begun to finalize procedural solutions with this objective in mind.
The Directive (EU) 2019/1158 on work-life balance for parents and carers came into effect in August of this year. It introduces a series of legislative measures to update the existing EU legal and policy frameworks aimed at:
The main measures under the Directive include the following:
The Directive is also accompanied by a series of policy measures to help Member States achieve the objectives of a better work-life balance and a more equal distribution of caring responsibilities. These measures include:
Through these measures, the Directive aims to improve work-life balance and contribute to greater female employment and economic stability for families.
In view of the above, the Government of the Republic of Slovenia is preparing a comprehensive amendment of the parental leave regime and some minor adjustments to family benefits in order to implement the Directive, and will further propose an amendment to the Parental Protection and Family Benefits Act (ZSDP-1).
In Case No III Ips 38/2021, the Supreme Court of the Republic of Slovenia has mitigated its jurisprudence on the publicity principle of the Land Registry in relation to the subjective limitation period for a claim for damages.
The publicity principle is one of the main principles of land registration law. It is regulated in Article 6 of the Land Register Act and it constitutes an irrebuttable presumption that the entry in the Land Register is known to everyone. Consequently, no one can plead ignorance of the information entered in the Land Register. The information is deemed to be known to everyone as from the beginning of the next working day following the day on which the land registry court records the receipt of an application for registration of a right or a legal fact.
In the present case, the plaintiff purchased a property from the debtor at a public auction in enforcement proceedings and registered as its owner in the Land Register. Prior to the sale of the property, the previous owner of the property had concluded a land consolidation agreement under which they were to receive a smaller plot of land in lieu of their own for a remuneration. As a result of the land consolidation procedure, after the plaintiff’s ownership of the property had been registered in the Land Register, the plot was deleted and another, smaller plot was registered in its place. This occurred despite the fact that the plaintiff was already registered in the Land Register as the owner of the property. The plaintiff, as the owner of the property, was not informed of the deletion procedure and the court order for deletion of the property was not served to the plaintiff because of an error on the part of the Land Registry Court. Since the plaintiff was not given the opportunity to participate in the procedure for the deletion of the plot and was deprived of their property arbitrarily and without compensation, they filed a claim for damages.
The Supreme Court of the Republic of Slovenia ruled in the case that the land registration procedure in relation to the contractual land consolidation was conducted in clear contravention of the explicit requirements of the Land Registry Act, which regulate the manner in which constitutional procedural guarantees are implemented and protect the property interests of the already registered owners of property. Article 22 of the Constitution of the Republic of Slovenia provides for a constitutional procedural guarantee of equal protection of rights, from which, inter alia, the right to a statement is derived, and Article 33 guarantees the right to private property. These two rights are protected in land registration proceedings by the guarantee of the right to be heard and by legal remedies before the publicity effect of the registration. The Court justified the mitigation of the publicity principle by emphasising that the publicity principle is not intended to regulate the communication of information outside the provisions of the Land Registration Act, which protect the aforementioned constitutional procedural guarantees and the right to private property.
The Court further emphasised the importance of the principle of equality under Article 14 of the Constitution of the Republic of Slovenia, which imposes on all branches of government the obligation to justify a reasonable ground, substantially related to the subject matter of the regulation, when substantially different situations are regulated in the same way. In the present case, the Court noted that a distinction must be drawn between the position of an individual acting in a legal transaction in respect of which information from the land register is relevant and that of an injured party alleging an impermissible interference with his right in land registration proceedings in which, as a result of a breach of that duty, he has not had the opportunity to participate. There was no reason to treat those two situations in the same way in the present case. While it is true that Article 6 of the Land Register Act establishes an irrebuttable presumption that the entry in the land register is known to everyone, the Court considers that it is unreasonable to expect the owner of immovable property, who is protected by the constitutional procedural guarantees and the constitutional right to private property, to check the land registration status of his immovable property on a daily basis. In cases where the person concerned is not a person acting in a legal capacity, the principle of publicity must therefore be mitigated in order to avoid infringements of the constitutional procedural guarantee of equal protection of rights and the constitutional right to private property.
According to Article 352(1) of the Civil Code, a claim for damages for is time-limited within three years of the injured party becoming aware of the damages and of the person who caused them, which is referred to as the subjective limitation period. In its decision, the Court justified its decision by pointing out that absolutizing the meaning of the publicity effect could mean that the subjective limitation period for the claim for damages would start to run even before the time limit for filing objections and appeals against the decision to allow registration under the Land Register Act had even started to run. According to such an interpretation, the subjective limitation period would run from the moment of registration in the Land Register (Article 6 of the Land Registration Act), and the period for objections and appeals against registration would only start to run from the moment of service of the decision authorising registration, which logically takes place after registration itself. According to such a view, the injured party would be deemed to have knowledge of the harmful registered rights of others and of the responsible party, in accordance with the principle of publicity laid down in Article 6 of the Land Register Act, irrespective of whether the injured party has actual knowledge of this fact or could have had such knowledge.
In light of all the foregoing, the Supreme Court of the Republic of Slovenia has concluded that, where the claim for damages is based on an allegation of a breach of the Land Registry Court’s duty to ensure the right to be heard to the injured party, as an adverse party in the land registration proceedings, it is inconsistent with the Constitution of the Republic of Slovenia to interpret the publicity effect of the registration as also starting the running of the subjective limitation period for the claim for damages. Such a strict interpretation of the principle of publicity would violate the constitutional right to compensation for damages, which is provided in Article 26 of the Constitution of the Republic of Slovenia.
On August 23rd 2022, the National Assembly of the Republic of Slovenia adopted the Act on an emergency measure in the field of value added tax to mitigate the increase in energy prices. The measure aims to reduce the tax (VAT) from 22% to 9.5% on district heating and on the supply of electricity, firewood and natural gas for the period from September 1st to May 31st 2023, for which all users are eligible.
One of the proposals was to reduce VAT on heating oil, since statistics show that around 15% of the population in Slovenia uses it, however such measures are not permitted under the EU Directive regulating the supply of heating oil. However, in view of the rise of the price of petroleum products, a model for a softer regulation of heating oil prices will be considered. It would be based on the current price regulation model for petroleum products.
At the same time, on August 31st 2022, the National Assembly of the Republic of Slovenia adopted the Act on Aid for the Economy due to High Increases in Electricity and Natural Gas Prices, which provides state aid in the form of subsidies for the costs of electricity and natural gas consumption.
According to the Act, the state will co-finance 30% of the costs of electricity and natural gas in 2022 above twice the increase in their prices in 2021. The law provides for three types of aid, namely:
The beneficiaries of the aid are legal and natural persons carrying out economic activities in the Republic of Slovenia who were registered as companies, sole traders or cooperatives by December 1st 2021. The beneficiary must not be the subject of bankruptcy or liquidation proceedings at the time of the submission of the application, and must not have outstanding tax liabilities and unpresented and unpaid withholding tax returns for employment income for the last year of EUR 50 or more. It should also be pointed out that undertakings which are eligible for a regulated price for natural gas or electricity under other regulations or which have included the increase in the cost of electricity and natural gas in the price of their products or services are not eligible for State aid. The above also applies to companies, sole traders and cooperatives whose primary activity is agricultural production and fisheries or aquaculture. They are only eligible for EUR 62,000 of maximum aid for agriculture and EUR 75,000 for fisheries.
Beneficiaries can submit their applications in the electronic application of the Public Agency SPIRIT Slovenia until November 15th 2022. The payments will be made in two instalments, i.e. for the eligible period from June 2022 to September 2022, the payment will be made by December 31st 2022, and for the eligible period from October 2022 to December 2022, the payment will be made by March 15th 2023.
The Ministry of Labour, Family, Social Affairs and Equal Opportunities (Ministry) has submitted a Draft proposal on Labour and Social Security Records Law (Proposal), which introduces new obligations for employers in several areas. The Law was originally adopted in 2006 and has not been amended since. Now, the Ministry has put forward a Proposal to regulate and improve mainly the area of keeping records on working time of the employees at the workplace.
The Proposal aims to prevent abuse in this area and also to allow for more effective inspection control.
The main objectives of the Proposal are:
In the light of the above, it is clear that the Ministry’s main aim with the Proposal is to curb, or at least significantly reduce, manipulations and other abuses of rights suffered by employees in the course of their work. One of most frequent abuses in practice are attempts to manipulate the amount of working time and consequently related payments, which in some cases do not always correspond to the actual amount of work being done.
The Proposal primarily foresees that the records on working time should also include information on the time of arrival and departure of the worker to and from work, the use and extent of use of breaks during working time, the hours worked in special working conditions, resulting from the distribution of working time, the hours worked in unevenly distributed working time and as in temporarily redistributed working time, as well as the aggregation of working hours over a longer period of time (week, month, year, or a single reference period). Under the current legislation, there is only a requirement for information on the number of hours worked by the employee. The records therefore do not show whether the work was done in less favourable working time or whether it has been done in irregularly distributed or rescheduled working time. This current arrangement also creates difficulties in carrying out state inspections and often makes it impossible to monitor working time, breaks and rest periods.
The second major change concerns the way records are kept. Under the current legislation, the way in which records are kept is still left to the employers. The Proposal proposes for records of working time to be kept in electronic form, which should in practice ensure their credibility and consequently provide more effective state related inspection of employers’ compliance with their obligations. Given that the introduction of electronic record-keeping represents a significant departure from current practice, the Ministry’s Proposal provides for a transitional period to allow for the gradual implementation of the electronic record-keeping system by employers. The obligation to use electronic record-keeping should be introduced no later than twelve months after the IT support for electronic record-keeping is in place.
In this respect, the Proposal also proposes that all alterations to the records must be recorded in such a way that any subsequent change to the data must include the reason for the change and the time at which the change was recorded, also the employer must provide the employee with access to the information contained in the working time records.
From the point of inspection and sanctioning those responsible, the Proposal foresees the establishment of fines in euros, as under the current legislation the fines are still set in tolars, and changes to the amounts by which the fines are set, as well as the authority of the Labour Inspector to impose fines within a range. The current legislation does not foresee a sanction for the responsible person, so the proposal also foresees a sanction for the responsible person in case of a breach of the failure to keep, store or update the records kept by employers.
As an addition worth mentioning, the Proposal is also changing the definition of worker, according to which a worker would be defined as a person who performs work for an employer on whatever legal basis, if they perform the work personally and are involved in the employer’s work process, or predominantly use the means of performing the work which are part of the work process.
In conclusion, the Proposal addresses an ever-present and pressing issue in the field of employment relations, which, if strictly adhered to, would in practice ensure transparency in record-keeping and make possible abuses very unlikely, while at the same time safeguarding the rights and interests of workers vis-à-vis their employers. However, it should be borne in mind that the Proposal, due to the introduction of the electronic system, foresees a longer implementation period of twelve months, which will depend on the establishment of IT support for electronic record-keeping. The latter means that the real impact of the Proposal, if it is actually adopted, may only be seen in a few years’ time, along with its potential flaws.
On the 1st of August, the Ministry of Finance submitted for public debate and inter-ministerial discussion draft amendments to four tax laws, namely the Personal Income Tax Act (ZDoh-2), the Tax Procedure Act (ZDavP-2), the Excise Duty Act (ZTro-1), and the Financial Administration Act (ZFU). The deadline for public comments and responses expires on 19th of August.
The Ministry of Finance wants to repeal the “mini-tax reform” of the previous Slovenian Government and introduce certain legal corrections, while keeping some of the reliefs and allowances in place. At the same time, a more comprehensive tax reform is in the making, which the Ministry of Finance intends to send out for public debate early next year, and to enter into force in 2024.
The proposed amendments and additions to ZDoh-2 introduce the following main measures:
The main solutions of the proposed amendments to ZDavP-2 are:
The proposed amendments and additions to the ZTro-1 concern the direct exemption from excise duties for the purchase of fuel for agricultural and forestry machinery, while the proposed amendments and additions to the ZFU concern the appointment of directors of the financial offices, the method of decision-making, the assignment of a procedure to another inspector for management and decision-making, the withdrawal of the inspector’s powers, and the financial investigation.
Recent case law of Slovenian Supreme Court, i.e. decision ref. no. I Up 109/2022 dated 8 June 2022, upgraded and partly changed previous interpretation of the procedure and conditions for issuing temporary injunctions in the area of administrative procedure.
Given that current legal regulation in the field of administrative action does not grant suspensive effect to such action, the Supreme Court intends to increase the effectiveness of judicial protection in this field by changing the case law. The possibility of issuing the temporary injunction in mentioned field is necessary since the effects of temporary injunction postpone or otherwise regulate the execution of the contested decision of the executive branch of power. If the temporary injunction is granted, the effects of contested decision are suspended until the competent court in the administrative dispute renders a final judgment confirming that contested decision is correct and legal.
In the above cited decision, the Supreme Court emphasized that a decision with respect to temporary injunction is, in its core, a settlement of a dispute between two parties. Consequently, when examining the facts of the case, the court must not impose a greater procedural burden on the plaintiff than it is imposed on the defendant, since there is no legal basis for such treatment. In addition, the Supreme Court further emphasized that the administrative court is also in this case obliged to provide the parties in the proceeding with adequate directions in substance of the course of proceedings. The Supreme Court pointed out as fundamental that if the administrative court considers that “hard-to-repair damage” – as one of the requirements needed to justify issuance of temporary injunction – is not sufficiently justified in the plaintiff’s proposal, the plaintiff must be provided with an adequate opportunity to sufficiently substantiate this legal term within the proceeding. Further, the court is not only obliged to provide the aforementioned treatment to the plaintiff but also to the
defendant and other parties to the administrative dispute, who are obliged to justify the public interest or other interests that could be disproportionately affected by the issuance of a temporary injunction.
With the above stated case law, the Supreme Court also further defined the legal standard of “hard-to-repair damage” in the field of tax law. The relevant damage qualifies as a loss of funds that the plaintiff could have had if there would not be an unlawfully established tax liability imposed by contested decision. According to the reasoning of the Supreme Court, the plaintiff could demonstrate difficulty of reparability especially in those cases where payment of tax liability would impair resources needed to comply with plaintiff’s legal obligations (such as obligation to provide child support) or assets, which are urgently needed for life and work. In the case where the plaintiff is a legal entity, difficulty of repairability could be demonstrated based on the fact that payment of tax liability would impair plaintiff’s performance of agreed contractual obligations and significantly interferer with its business operations. In accordance with the above, the Supreme Court deviates from the position represented until now, that material damage must always be considered as repairable.
On 16.6.2022, the Constitutional Court adopted an important decision to equalise the rights of same-sex partners with different-sex partners in the area of marriage and adoption of children.
According to the Constitutional Court’s decisions issued on 16 June 2022, the statutory regime, which provides that:
is inconsistent with the constitutional prohibition of discrimination.
Since the marriage and joint adoption arrangements under review constitute, in accordance with the Constitutional Court’s finding, impermissible discrimination against same-sex couples, the legislator has a six-month period within which to remedy the constitutional inconsistency found. Activities in this direction are already underway, as the Government approved the text of the draft law on amendments to the Family Code at a correspondence meeting on 15 July 2022 and sent it to the National Assembly under the abbreviated procedure.
Until the unconstitutionality has been rectified, the Constitutional Court has held that (i) marriage is a living union of two persons regardless of gender and (ii) same-sex partners living in a civil partnership may jointly adopt a child under the same conditions as spouses.
The Constitutional Court’s decision does not affect the legal status and rights of different-sex partners but allows same-sex partners to marry alongside different-sex partners. The same applies in the area of adoption of children.
In Slovenia, until the Constitutional Court’s decision, same-sex partners were only able to establish shared parenthood by one partner adopting the other partner’s child (unilateral adoption). Following the Constitutional Court’s decision, same-sex partners living in a formal civil partnership may now jointly adopt a child under the same conditions as apply to different-sex spouses (joint adoption). The choice of the most suitable adoptive parents for a particular child will continue to be made by the social work centre, on whose proposal the adoption will be decided by the court, taking into account the best interests of the child.
With this decision, Slovenia follows European countries that have already allowed same-sex couples to marry and, as a consequence, have equalised the rights of same-sex couples with those of different-sex couples. These are: Austria, Belgium, Denmark, Finland, France, Germany, Iceland, Ireland, Luxembourg, Malta, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland and the United Kingdom. Globally, same-sex couples can marry in countries such as the United States, Canada, Argentina, Brazil, Uruguay, Colombia, Ecuador, Costa Rica, Chile, Taiwan, Australia, New Zealand and South Africa.
In 2022 the Judicial Holidays will begin on 15 July 2022 and last for one month, until 15 August 2022.
In the period of the Judicial Holidays, the Courts, in accordance with the Courts Act (Official Gazette of the RS, No 94/07 with amendments), operate on a limited basis and therefore, hold hearings and take decisions only in urgent matters, such as in procedures for interim decisions, investigations and adjudication in criminal cases in which the defendant is deprived of liberty, executive matters as regards upbringing and childcare protection, and other cases in accordance with the legislation. In urgent matters, in the period of the Judicial Holidays, the procedural deadlines run normally.
During the Judicial Holidays, procedural deadlines are not running, i.e. deadlines given by the procedural law for performing certain procedural actions in the procedure and court documents are not served. For example, the deadline for payment of the court fee, which is 15 days, is a procedural deadline. In practice, this means that the procedural deadline for payment of the court fee, which started to run before the beginning of the Judicial Holidays, is interrupted and the deadline will begin to run again on the first day following the end of the Judicial Holidays. If the court document has been served during the Judicial Holidays, the procedural deadline will start to run on the first day following the end of the Judicial Holidays.
Despite the above, Courts may rule on non-urgent cases during the Judicial Holidays, but they may only hold hearings if all the parties to the proceedings agree to it.
Judicial holidays, however, do not apply to material deadlines, nor do they suspend them. Material deadlines are deadlines for exercising material rights granted to an entitled person by a material law. The material deadlines are, for example, a deadline for filing the lawsuit arising from the disturbance of property. The legislation provides that judicial protection against the disturbance of property shall be sought within 30 days of the date on which the landlord became aware of the disturbance and the perpetrator. In view of the fact that the material deadlines are not suspended during the Judicial Holidays, it is necessary to the action within 30 days, notwithstanding the fact that the Judicial Holidays are in progress. Missing a material deadline during the Judicial Holidays will result in the loss of the right.
Furthermore, Judicial Holidays refer exclusively to court documents and thus do not affect service according to the rules of administrative procedure or any other non-judicial documents.
In case of any doubt about the running of a certain deadline during the Judicial Holidays, we advise to consult a legal expert.
The Ministry of Justice of Republic of Slovenia (also “proposer”) has submitted a proposal to amend the Administrative Disputes Act (ZUS-1) at the end of 2021. The proposed amendment aims primarily at adapting to the views of case law and increasing the efficiency of decision-making in administrative disputes, while maintaining the standard of legal certainty. The proposer also emphasises, inter alia, the more appropriate exercise of the right to a trial within a reasonable time. The principle of audi alteram partem and the principles of publicity and orality are also to be strengthened.
One of the main solutions proposed by the proposer of the amendment to the ZUS-1 is a change in the composition of the administrative court. At present, the ZUS-1 primarily stipulates that the Administrative Court decides by a chamber of three judges, which is to be replaced by a single judge. For some time now, the legal theory has been problematising the exclusivity of principle of a chamber trial in administrative court, which has not included a single judge, even in the case of minor importance.[1] The main argument was, that the chamber trial should be reserved for cases involving complex questions of law and fact. The criterion for complex questions of law is cited by the proposer of the amendment as being, in particular, situations in which it is possible to expect a decision on an important question of law which has not yet been answered in the case-law. The single judge will still be able to propose that the case should be decided by the Chamber until the preparatory judicial hearing, the first hearing before the trial court or before the case is submitted to plenary session.
With regard to the proposed amendment in the composition of the Administrative Court, questions have already been raised in legal theory as to the effectiveness of such a change.[2] One of these questions relates to the judicial independence and impartiality, which are safeguarded by a chamber trial. Trial by a chamber reduces the influence of the circumstances related to individual judge on how he or she decides in a particular case. The principle of collegiality also forces judges to be more neutral in their decision-making.
The proposer of the amendment to the ZUS-1 explains that a judge of the Administrative Court is on an equal footing with a court of appeal judge and, as such, should provide the same guarantees as would otherwise be provided by a chamber. The legal theory on the quality of the trial emphasises that a chamber trial reduces the likelihood of errors in decision-making. It also allows for a confrontation of different views, which leads to a better-quality decision. As already mentioned, the proposal for a new ZUS-1 allows a single judge to suggest that a chamber decides on a more complex case.
Notwithstanding any concerns, legal theory also welcomes the possibility for the Administrative Court to rule by a single judge. This solution will also certainly contribute to the objectives pursued by the present proposal for amendment of ZUS-1.
In addition to the above-mentioned, the main solutions envisaged by the amendment include the extension of the possibilities for representation before the Administrative Court, the possibility for the Court to limit the scope and number of applications, the implementation of the principle of a concentrated main hearing, the relaxation of the standard for the granting of an interim relief and the introduction of a compulsory main hearing.
[1] B. Grafenauer, Osnove upravnega postopka in upravnega spora. Ljubljana: GV Založba (2001), str. 257.
[2] Prim. B. Žuber, T. Majnik, Zborno sojenje v upravnem sporu, Podjetje in delo, št. 2, 2022, str. 211.
New digital vouchers are available from 15 June 2022. They have been adopted as part of the Digital Inclusion Promotion Plan foreseen in the Law on the Promotion of Digital Inclusion, which entered into force on 12 March 2022. Under this Law, the Government of the Republic of Slovenia has granted beneficiaries a digital voucher for the purchase of computer equipment, which is regulated in Articles 18 to 23 of the said Law.
The aim of the Law on the Promotion of Digital Inclusion is to increase the digital inclusion of the population of the Republic of Slovenia and to benchmark the progress of the digital development of the economy and society of the Republic of Slovenia. Its objectives include, inter alia, raising awareness of the benefits of using digital tools for the life of the individual and society as a whole, strengthening understanding of digital technologies and their responsible and safe use, raising competences in the use of digital competences and increasing interest in secondary and higher education programmes that include professional digital competences, and reducing gender gaps in this area.
Who are the beneficiaries?
The beneficiaries of the Digital Voucher ’22 are persons who on 12th March 2022 had their permanent residence in the Republic of Slovenia and who were then:
However, the Digital Voucher may also be awarded to persons who meet the above conditions and are studying abroad, but who must first obtain recognition as a Digital Voucher ’22 beneficiary.
Vouchers can be pooled between school-going brothers, sisters, half-brothers and half-sisters for joint purchase. To merge vouchers, a declaration of merger of digital vouchers must be completed, which is available on the website of the Government Digital Transformation Service.
Eligibility for the digital voucher can be verified via the eTaxes application or on the open eTaxes portal by entering the tax number.
When can beneficiaries use the digital voucher?
From 15 June 2022 to 30 November 2022.
What can beneficiaries use the digital voucher for?
The Digital Voucher can be used for the purchase of new, refurbished or second-hand computer equipment:
How can beneficiaries redeem the Digital Voucher?
Beneficiaries must tell the retailer at the time of purchase that they wish to redeem the Digital Voucher ’22 and give the retailer the Digital Voucher Redemption Declaration ’22, which is available on the website of the Government Office for Digital Transformation. The trader can verify the identity of the buyer and ask for an identity document. The trader then checks in the Financial administration of the Republic of Slovenia’s information system whether the buyer is indeed entitled to the voucher and how much credit he/she still has. The same applies to online purchases, where the beneficiary must provide the signed declaration to the supplier of the goods or upload it if the online supplier allows attachments to be added during the purchase process.
Where can beneficiaries redeem their Digital Voucher ’22?
Business entities established in the Republic of Slovenia, whose business activity registered in the Business Registry of Slovenia on the date of redemption is one of the following activities according to the Regulation on the Standard Classification of Activities:
The Supreme Court of the Republic of Slovenia (the “Supreme Court“) issued a judgment, ref. no. III Ips 1/2022, of 10 May 10 2022, in which it decided on the appropriate manner of notifying the creditor of the agreement on the assumption of debt. Assumption of debt is regulated in Article 427 of the Slovenian Code of Obligations (“OZ“), which establishes the creditor’s consent to the assumption of debt as a mandatory element for the agreement to take effect.
The defendant, the owner of the office space, was obligated to pay the operating and maintenance costs of those premises to the plaintiff, the building manager. The defendant leased its business premises to a tenant, with which the defendant concluded, in addition to the lease agreement, also the agreement, pursuant to which the tenant bears its proportionate share of the operating, technical management, and maintenance costs for the premises. The defendant informed the plaintiff of the contents of the lease agreement, which also contained an assumption of debt clause. Having been informed of the lease agreement, the tenant, and no longer the debtor, was invoiced by the plaintiff for the operation and maintenance services, and the defendant was thus of the opinion that the plaintiff had thereby implicitly accepted the content of the assumption of debt and had consented to it.
The Supreme Court disagreed with the defendant’s view. Pursuant to Article 427/1 of the OZ the debtor and the acquirer cannot independently agree that the acquirer assumes the debtor’s debt. The creditor’s consent to the agreement to assume a debt is in this respect decisive for the effect of the assumption of debt to take effect, as only the creditor’s consent authorizes the arrangement between the debtor and the acquirer.
In addition, Article 427/2 of the OZ also provides that the creditor must be notified of the agreement on the assumption of debt by either of the two parties thereto. The discharge of debtor’s obligations pursuant to the agreement on the assumption of debt is thereby performed by the debtor first entering into an agreement on the assumption of debt with the acquirer, and then either of them notifies the creditor of the agreement. Based on the notification, the creditor can then decide whether to agree to the arrangement, which is crucial for the arrangement to become effective. Namely, the creditor’s consent is inextricably linked to the creditor’s knowledge of the agreement. The creditor’s consent to the content of the agreement on the assumption of debt is the key element that distinguishes between the assumption of debt and the debt accession, which is primarily governed by Article 432 of the OZ and with which the creditor’s consent is not required for the agreement to take effect.
The Supreme Court held that, even if it may have been the common intention of the defendant and the tenant that the tenant should assume the defendant’s debt, that did not mean, in the circumstances of the case, that the plaintiff, as a creditor, had been informed of that common intention merely by being informed of the wording of the lease agreement between the defendant and the tenant. If the creditor is not aware of the assumption of debt, his declaration of intent in that contract does not at the same time include his consent to the substitution of the defendant as debtor for the tenant. The creditor was aware of the content of the lease agreement and could therefore only consent to the content of the lease agreement and not also to the assumption of debt.
It is also necessary to point out Article 427/3 of the OZ, which states that a creditor is presumed to have given his consent if he has accepted, without limitation, any fulfillment from the acquirer which the acquirer fulfilled on his own behalf. The law thus allows the assumption of the debt to take effect from the creditor’s acceptance of the fulfillment from the acquirer. In the present case, the plaintiff had in fact accepted fulfillment from the tenant, who paid the maintenance costs on its own behalf, however, the Supreme Court judgment referred to above considers that, in addition to the creditor’s consent, a clear (preliminary) notification of the creditor of the agreement on the assumption of the debt is a mandatory element for the assumption of the debt to take effect. As the Supreme Court also points out, the creditor’s intention to consent to the substitution of a third party for the debtor in an existing relationship must be unequivocal.
Considering the judgment of the Supreme Court all debtors who enter into an assumption of debt agreement with a third-party, are required to send a notice to the creditor clearly stating that an assumption of debt agreement has been concluded between them and the third party, and also to clearly invite them to express their consent.
On 26 May 2022, the Constitutional Court (hereinafter: “the Court”) adopted two decisions in which it annulled Article 65(3) and the second sentence of Article 169(3) of the Enforcement and Insurance Act (hereinafter: “ZIZ”).
In its judgment No. U-I-189/21-12, the Court held that Article 65(3) of the ZIZ infringes the constitutionally protected human right to private property under Article 33 of the Constitution where it relates to the execution of movable property. It gave the Legislator one year to remedy the unconstitutionality it found. The paragraph in question provided a limitation period of 30 days for the commencement of proceedings for a declaration that enforcement on movable property was not permissible.
The Court confirmed that, although the provision fulfilled the condition of the constitutionally permissible objective of faster and more effective enforcement, it found that the measure was not proportionate in the strict sense, as there was an imbalance between the interests and entitlements of the creditor and the third party to the enforcement proceedings. More specifically, the repealed provision did not enable sufficient realistic and effective protection to individuals who may be involved in a ‘foreign’ enforcement proceeding by the creditor’s interference with their movable property, but not with the debtor’s movable property. As a result, the positions of the creditor and of the potential third party were thus unbalanced. Furthermore, the Court pointed out that the time limit of 30 days was too short and that, upon its expiry, the third party would normally lose the possibility to protect its civil law rights against the impending loss due to the sale in a movable property enforcement. Moreover, the possibility to bring exclusion actions, which would not be limited by this time limit, would not substantially limit the interest in a swift and efficient enforcement of the creditor.
In its decision No. U-I-179/21-14, the Court annulled the second sentence of the third paragraph of Article 169 of the ZIZ, as it interfered with the constitutionally protected human right to justice under Article 25 of the Constitution. The sentence in question provides that there is no appeal against a decision of the court of first instance on an application by a debtor in execution for the recovery of a pecuniary claim by means of execution on immovable property to divert the execution to another remedy or to another subject-matter of the execution. The repealed sentence of Article 169 of the ZIZ did not allow an appeal, irrespective of whether it is an appeal by the debtor against the rejection of the application or an appeal by the creditor against the granting of the application.
In its decision, the Court held that the effect of this sentence, because of the very intensive narrowing effect of the contested statutory provision, which denies an appeal or other remedy altogether to a party who is dissatisfied with the decision of first instance and who would otherwise have a legal interest in the appeal, must be regarded as an interference with the human right to a remedy under Article 25 of the Constitution. While the Court confirmed that the interference in question was based on the constitutionally permissible objective of faster and more efficient enforcement, as well as on the necessity of the interference in order to achieve such an objective, it also pointed out that the second sentence of Article 169(3) of the ZIZ completely deprives the party of a remedy. The effect of the interference on the human right to a remedy is thus very significant. However, the benefits of the interference are limited in view of the unsuccessful nature of the appeal. Given that the benefits cannot outweigh such an intense interference, the Court annulled the contested provision of the ZIZ.
On 13 April 2022, the Assembly of the Bar Association adopted the Amendment to the Attorneys’ Tariff, which was published in the Official Gazette of the Republic of Slovenia, No. 70/22 of 20 May 2022, and entered into force on the fifteenth day after its publication in the Official Gazette of the Republic of Slovenia, i.e. on 4 June 2022.
The amended Attorneys’ Tariff brings a number of changes both in the general and in the special part of the tariff.
In the general part, Article 7 has been substantially amended, in particular, by newly providing for an increase of the total value of the service by 100 per cent for the use of a foreign language when performing services, which applies only to the billing of services between the lawyer and the client, but not to the assessment by the court or other authority.
The Amendment especially modifies the special part, in which individual services are defined by a number of points. The substantial amendments to the special part of the Attorneys’ Tariff are set out below.
Tariff number 1 of the Attorneys’ Tariff, which determines the value of attorneys’ services in settlement and mediation proceedings in criminal proceedings, no longer determines the latter according to the method used to prosecute the offence, but according to the stage of the criminal proceedings in which the agreement is reached. It also provides an additional fee for the conclusion of an agreement on a pecuniary claim (during the criminal proceedings), which is calculated according to the current tariff number 19, i.e. according to the amount of the pecuniary claim.
In the second chapter of the special part of the Attorneys’ Tariff, which regulates attorneys’ services in arbitration proceedings, the services of drafting pleadings and representation at arbitration hearings, which are valued in essentially the same way as in litigation, are now specifically regulated in tariff number 5. In addition, the value of attorneys’ services in disputes before international commercial or investment arbitration or arbitration with an international element has been amended, which may now be increased by up to 200%, depending on the complexity of the case.
The chapter on criminal proceedings has been amended, in particular in tariff number 8, which sets the value of services of drafting pleadings. The Amendment adds two additional forms of application: a reasoned criminal charge for the most serious offences falling within the competence of the specialised public prosecutor’s office (250 points) and a request for an investigation (250 points), while the value of legal services for certain other forms of application is regulated differently. Namely, a reasoned submission of evidence, which was previously valued at 50 points, is now valued at 50 points for each piece of evidence, but not more than 250 points for all the submissions of evidence combined, and the service of drafting a reasoned pecuniary claim is still charged at the tariff number 19 (formerly 18), i.e. according to the amount of the pecuniary claim, however, no longer 50 % of the value of the service, but 100 %. Also specifically regulated now is the representation of the defendant at the hearing for the imposition of a criminal sanction, the value of which is set at 75 % of the value of the service otherwise provided for representation at the hearing in the proceedings.
Tariff number 11, which covers legal remedies in criminal proceedings, has also been amended. In addition to a slightly modified distinction between the types of judicial decision against which each remedy is brought, a reply to the prosecutor’s opinion has also been added and is valued at 50% of the value of the remedy.
Tariff number 13, which covers services in criminal proceedings against minors, has also been amended to a considerable extent. In particular, it no longer distinguishes between criminal offences punishable by up to eight years imprisonment and criminal offences punishable by more than eight years imprisonment, but between criminal offences punishable by juvenile imprisonment and other criminal offences.
The chapter on proceedings before the employers also contains new provisions, namely on employment acts and contracts. Thus, a completely new tariff number 15 has been introduced, which sets the value of the attorneys’ services in case of drafting certain acts and contracts relating to employment law, namely for (i) employment agreements, which are valued between 300 and 600 points, (ii) suspension of an employment agreement and other acts and contracts arising out of or in connection with the performance of work, which are valued at 400 points, (ii) employment agreement (or mandate agreement) of a procurator or director, which is valued according to the value of the annual salary or annual income, but not less than 800 points, and (iv) general acts of the employer, which are valued in accordance with the tariff number 36, which regulates the preparation of general acts and corporate matters.
The Amendment also introduces important changes to the services regarding litigation procedure. The Attorneys’ Tariff no longer lays down special rules for the drafting of pleadings in litigation proceedings in commercial disputes, and in particular increases the upper limit of the value of the attorneys’ services for drafting lawsuits in relation to the value of the (disputed) subject-matter, set out in tariff item 19, which is now set at a maximum of 9,000 points (and no longer 2,000 points, or in case of commercial dispute 3,000 points). Consequently, when the value of the (disputed) subject-matter is higher (above EUR 288,000 or, in commercial disputes, above EUR 528,000), so is the value of the attorneys’ services for the preparation of other pleadings and for representation at hearings, which is calculated as a percentage of tariff number 19.
The second paragraph of tariff number 19 (formerly 18), which determines the value of the attorneys’ services in certain other matters, now provides that copyright, industrial property, unfair competition and similar disputes, if not assessable under the first paragraph of tariff number 19, are to be valued at 500 points (and no longer at 300 points only).
Certain attorneys’ services which, due to changes in the substantive rules, were inappropriately covered by tariff number 19, paragraph 2, have been moved by the amendment to the chapter on the non-contentious civil procedure. Thus, tariff number 27 now covers services relating to matrimonial proceedings, proceedings for the establishment and contestation of paternity and maternity, and proceedings for the protection and best interests of the child. In the chapter on non-litigious proceedings, some other tariff numbers have also been introduced. For example, tariff number 25 regulates services relating to procedures for admission for treatment in a psychiatric hospital in a special ward without consent and in emergency cases, procedures for admission for treatment in a secure ward of a social care institution without consent and procedures for admission for treatment in a supervised ward without consent. Tariff number 26 covers services relating to the placing of an adult under guardianship, and tariff number 28 covers services relating to the acquisition of the legal capacity of a child who has become a parent, proceedings for the authorisation of marriage and other proceedings not covered by other tariff numbers of the non-contentious procedure.
Tariff number 31 governing enforcement and security furthermore makes a new distinction between an application for enforcement on the basis of an authentic document, which is valued at 50 per cent of tariff number 19, i.e. according to the amount of the (disputed) subject-matter in question, but not exceeding 200 points, and an application for enforcement on the basis of a writ of execution, which is valued on the same basis, but not exceeding 250 points.
In the chapter on administrative disputes, tariff number 34 now provides for a higher value for legal services in particularly complex administrative disputes under the law regulating banking, the law regulating the market in financial instruments, the law regulating takeovers, the law regulating auditing, the law regulating insurance, the law regulating the prevention of restrictions on competition, the law regulating measures by the Republic of Slovenia to strengthen the stability of banks and the law regulating legal protection in public procurement procedures.
Under tariff number 38, which relates to drawing up documents, the amendment also included a declaration of acknowledgement of paternity and the drawing up of a declaration of the parents’ expressed parental wish to exercise parental care, both of which are valued at 100 points, and in addition also the agreement on the transfer of shareholdings in a capital company and founder rights in other legal persons and the agreement on the payment of shareholders and members of a legal person on the termination of their shareholding, both of which are charged under tariff number 39 governing commercial contracts.
Tariff number 41 of the Attorneys’ Tariffs comprehensively determines the value of legal services in proceedings relating to offences. The value of legal services is linked to the amount of the fine imposed for each offence; if the fine is imposed within a range, the calculation of the value of legal services is based on the arithmetic mean of the fine imposed.
On March 31, 2022, the Financial Administration of the Republic of Slovenia sent first package of 989,325 informative personal income tax calculations for 2021. Taxpayers who have a personal income tax surcharge (there are 189,844 of them), the deadline for payment expires on June 2, 2022. Those taxpayers who have filed an objection against the informative calculation of personal income tax (deadline for filing an objection expired on May 3, 2022) are not obliged to pay the amount until the decision on the objection is made since the objection suspends enforcement.
Taxpayers can apply for payment of tax in instalments or for deferred payment of tax. During the instalment payment or deferral of payment, interest at interest rate of 2 % per annum shall apply. IF the taxpayer is late with the payment of an individual instalment, the unpaid part(s) of obligation fall(s) due and tax enforcement follows. The following options are available:
The amendment of the Corporate Income Tax Act (the “ZDDPO-2“), which entered into force last November, introduces a new tax relief for investments in the digital and green transition, which aims to change the existing model, promotes progress, improvements and sustainable development.
The conditions for reducing the tax liability in the case of investments in the digital and green transition are set out in Article 55.c of ZDDPO-2, whereas the Rules on Exercising Tax Reliefs for Investing in the Digital and Green Transition (the “Rules“) further specify the types of eligible investments which qualify as investments in the digital and green transition and process to claim the tax relief.
Pursuant to ZDDPO-2, a taxpayer can claim a reduction of 40% of a tax base in case of investments in cloud computing, artificial intelligence and big data (digital transformation), environmentally friendly technologies, decarbonisation of the energy sector, cleaner, cheaper and healthier public and private transport, energy efficiency of buildings and other standards for the climate neutrality (green transition). As an example, the tax relief can be claimed for investments in the establishment and upgrade of cloud computing, investments in software development related to artificial intelligence, investments in prescribed types of windows, doors, facades and roofing that contribute to energy efficiency of buildings.
The form for applying for tax relief, annexed to the Rules, envisages the following costs which can be considered as investments eligible for the tax relief: (i) costs of purchasing equipment and services, (ii) labour costs, (iii) costs of purchasing equipment for research and development, materials and services, (iv) training costs, (v) costs of contracts with external experts and researchers working on research and development projects or programs, (vi) costs of contracts for the implementation of research and development activities concluded with research and development organizations and other persons registered for the performance of research and development activities, and (vii) costs of vehicle purchase.
A taxpayer cannot claim the tax relief for investments in the part which is financed by budges of self-governing local communities, the state or the EU budget, if such funds have the nature of a grant. Tax relief is also excluded by R&D and investment relief.
The Constitutional Court of the Republic of Slovenia has reviewed constitutionality of decrees adopted by the Government on the basis of Communicable Diseases Act (Official Bulletin of the RS, no. 33/06), by which the Government regulated the method of determining compliance with the “PCT” (sick, vaccinated, tested) requirement in relation to the COVID-19 disease, and held a decision (no. U-I-180/21, dated April 14, 2022) that government decrees related to the method of determining compliance with the “PCT” requirement, that includes processing of personal data, are unconstitutional.
In accordance with the Article 38 (2) of the Constitution of the Republic of Slovenia, the collection, processing, designated use, supervision and protection of the confidentiality of personal data, even in an epidemiological situation, could be provided only by an act of law.
According to the Constitutional Court, the provisions of the Communicable Diseases Act, which were the legal basis for the adoption of the contested decrees, do not contain these conditions. Accordingly, two of the Government’s decrees, which were still in force at the time of decision-making, on the method of determining compliance with the PCT requirement in relation to the infectious disease COVID-19 are unconstitutional, namely incompatible with the Article 38(2) of the Constitution of the Republic of Slovenia and thus, the Constitutional Court annulled them.
Since the immediate effect of the annulment would prevent the Government, as the executive branch, to fulfil its positive constitutional obligations to protect people`s health and life, the Constitutional Court decided that the annulment would come into effect one year after the publication of the decision. It thus enabled the Government to adopt, within that period, the contested regulation on the basis of the legal provisions and in accordance with the requirements from the cited decision.
The Real Estate Records Act (ZEN), which has been in force for more than 20 years, has recently been replaced by the Real Estate Cadastre Act (ZKN), application of which started on 4 April 2022.
The ZKN establishes a single register, called the Real Estate Cadastre, which transparently replaces the previously used three separate registers (i.e., the Land Cadastre, the Building Cadastre, and the Real Estate Register), in which data on plots of land, buildings and parts of buildings in the territory of the country were entered. As before, the data will be maintained by the Geodetic Administration of the Republic of Slovenia, and the collection of documents will be maintained in both physical and electronic formats.
The fundamental goal of the ZKN is to ensure that data are entered in the real estate registers in such a way that they fulfil a multifunctional role, namely as a basis for the registration of rights in rem in the Land Register, for tax, spatial, housing, social, energy, security, statistical and other purposes.
All relevant property data is now held in two core, electronically interlinked systems, namely:
Among the most notable innovations, the ZKN provides for a single cadastral procedure, which replaces the separate procedures for the preparation of an elaboration and the procedure for the registration of new or amended data, and explicitly defines who has access to the information system, in a way that enables them to register elaborations prepared in cadastral and judicial proceedings. In the event of a claim of professional error by the land surveyor, the party in the administrative part of the cadastral procedure must, in accordance with the ZKN, submit a second opinion, i.e., a reasoned professional opinion on whether the elaboration filed in the information system reflects the correct and complete factual situation, established, and presented in accordance with the standards and rules of the surveying profession.
It is interesting to note that the ZKN introduces the possibility of registering both the area of the easement and the building right (e.g., registration of the area of an easement running along only part of a certain plot), which was not possible under its predecessor, the ZEN. The ZKN also regulates more appropriately the way in which the components of parts of buildings, such as atriums and parking spaces, are recorded, the data on plots, buildings and parts of buildings are recorded and how these data can be amended, considering the legal certainty of real estate owners.
In order to effectively correct deficiencies and irregularities in the entry of data on real estate in the Real Estate Cadastre, the ZKN introduces an alert system which provides information on plots of land, buildings or parts of buildings for which, on the basis of facts and circumstances which are likely to be proven, it may be assumed that their data in the Real Estate Cadastre are incorrect or incomplete.
The ZKN also establishes a register of addresses, which is a record of data on addresses in the Republic of Slovenia that were previously kept as an integral part of the register of spatial units. Address data are permanently stored and used for purposes such as location, identification, legal jurisdiction, delivery of parcels, etc.
Finally, the ZKN also provides for some offences, e.g., in relation to the marking of the country border, the carrying out of measurements and observations and landmarks, for the non-marking or mismarking of apartments and business premises, for the non-registration of a building or part of a building in the Real Estate Cadastre, etc. The ZKN also provides for a number of offences. The implementation of the provisions of the ZKN and the regulations issued on the basis thereof is supervised by the Survey Inspector, who may impose a fine in the event of an infringement being detected.
As of 1st of January 2022, the Republic of Slovenia is late with regard to the implementation of European directives that bring innovations in the field of consumer protection. The main legislative changes stem from Directive on certain aspects concerning contracts for the sale of goods (2019/771/EU), Directive on certain aspects concerning contracts for the supply of digital content and digital services (2019/770/EU) and Directive (2019/2161/EU) on better enforcement and modernisation of Union consumer protection rules (hereinafter collectively: “Directives”). Consumer protection in the Republic of Slovenia is regulated by the Consumer Protection Act (hereinafter: “ZVPot”) and the Consumer Protection against Unfair Commercial Practices Act. The following article is a summary of the most significant changes that can be expected with the amendment to the ZVPot.
The ZVPot currently stipulates that the consumer is free to choose between claims based on a material defect. Namely, the Slovenian legislator did not transpose the provision of the third paragraph of Article 3 of Directive 1999/44/EC into the ZVPot, which determined the hierarchy of customer claims. In practice, this means that the consumer can immediately withdraw from the contract in the event of a material defect. The transposition of the Directive on certain aspects of contracts for the sale of goods will change this, as the latter introduces a hierarchy of consumer claims against the seller for non-conformity, where the consumer can first request repair or replacement of non-conforming good and only then reduce the purchase price or terminate the contract. However, the consumer will have the right to terminate the contract immediately if the non-conformity of the goods occurs within 30 days of delivery of the goods. Among the major innovations, Directive on certain aspects concerning contracts for the sale of goods introduces an extension of burden of proof reversal period from 6 months to 1 year (the first year after delivery of the goods). This is the period during which the seller must prove that the defect in the goods did not exist at the time of delivery of the goods. Last but not least, Directive on certain aspects concerning contracts for the sale of goods introduces a right of recourse for sellers who fulfil a consumer claim against the responsible companies in the contract chain.
The transposition of Directive on certain aspects concerning contracts for the supply of digital content and digital services on certain aspects concerning contracts for the supply of digital content and digital services will re-regulate contracts for the supply of digital content or digital services, namely the fulfilment of contracts for the supply of digital content or digital services, conformity of digital content or a digital service or their changes. This directive will also transpose the obligation for companies to provide the necessary updates to digital content or digital services, including security updates.
The transposition of Directive on better enforcement and modernisation of Union consumer protection rules seeks to improve the enforcement and modernization of Union rules on consumer protection. Thus, the obligation of companies to indicate the previous lowest price in the last 30 days and the reduced price when offering discounts will now apply. False giving of consumer ratings and recommendations will also be prohibited. Short deadline for termination of the contract, cooling off period, will be extended from 14 to 30 days for unsolicited visits by a trader to a consumer’s home or excursions organised by a trader with the aim or effect of promoting or selling products to consumers for the purpose of protecting legitimate interests of consumers with regard to aggressive or misleading marketing or selling practices. In the case of cross-border infringements, the supervisory authorities will be able to impose a fine of up to 4% of the company’s annual turnover.
With the transposition of the Directives, the Republic of Slovenia will follow the European pursuit of ensuring a high level of consumer protection, but in the opinion of the European Commission a lot of work will be needed on consumer and trader awareness to exercise existing remedies more often.
On 25 January 2022, the Supreme Court of the Republic of Slovenia (the “Supreme Court”) adopted the judgment, ref. no. III Ips 27/2021, in which it adopted a position on the competition of seizure of claims and contractual fiduciary assignment of the same claims, which at the time of their seizure has not (yet) been concluded in the form of a notarial deed, in case of bankruptcy proceedings.
In the abovementioned case the plaintiff was a creditor of the company A d. o. o. (“A”). The plaintiff had done business with A, supplied it with goods and thus had claims against it, whereby at the same time A supplied goods to the defendant and thus had claims against the defendant. A assigned the claims (matured and future) arising from the supply of goods to customers to the plaintiff by way of a Fiduciary Assignment Agreement dated 10 April 2017. On the basis of the Loan Agreement dated 13 April 2017, the plaintiff, as lender and creditor (assignee), and A, as borrower and debtor (assignor), agreed on 14 April 2017 by means of a Fiduciary Assignment Agreement, to secure the claim from the Loan Agreement by assigning all present and future claims of the debtor (assignor) towards its buyers. On 30 May 2017 A notified the defendant (A’s debtor) of the assignment of its claim to the plaintiff. In the enforcement proceedings, commenced upon the motion of A’s creditor, the company B d. o. o. (“B”) against A, on 9 June 2017, the defendant as the debtor’s debtor was served with a resolution on the seizure of claims dated 5 June 2017 in favour of the creditor B, including A’s claim against the defendant. On 20 June 2017, the Assignment of Claims Agreement of 14 April 2017 was concluded (confirmed) in the form of a notarial deed. Insolvency proceedings against A were commenced on 5 March 2018.
The court of first instance, with which the appellate court also agreed, gave priority to the seizure of claims. As it explained, on the date the resolution on the seizure in favour of B was served to the defendant, which took place on 9 June 2017, the seizure of the claims was effected pursuant to Article 107 of the Enforcement and Security act (Official Gazette of the Republic of Slovenia, no 3/07 et seq., “the ESA”). The defendant was thereby prohibited from settling the claims and debtor A was prohibited inter alia from disposing of the claims in any way. By subsequently recording the Assignment Agreement in the form of a notarial deed on 20 June 2017, the subject-matter of which was precisely the assignment of those (previously seized) claims, the parties (A and the plaintiff) breached a mandatory statutory provision, due to which the Agreement was partially void pursuant to Article 86(1) of the Code of Obligations (Official Gazette of the Republic of Slovenia, no 97/07 et seq.). Consequently, there was no valid assignment of the claims to the plaintiff.
The Supreme Court disagreed with this interpretation. As it stated, the fiduciary assignment, which was relevant in the respective case, is pursuant to Article 207(1) of the Law of Property Code act (Official Gazette of the Republic of Slovenia, no. 87/02 et seq., “the LPC”) a form of securing a claim, in which the assignor assigns a claim to the assignee. Assignment of a claim is a dispositive transaction under the law of obligations, which has a direct effect on a property right, meaning that the conclusion of such a transaction has an immediate effect on the transfer of that property right from the assignor to the assignee. In the present case, that means that, by the Fiduciary Assignment Agreement of 10 April 2017, A’s claim against the defendant passed out of his proprietary interest on that date. Consequently, B, as a creditor, could not, by virtue of the resolution on seizure of 5 June 2017, have acquired his pledge on the disputed claims within the meaning of Article 107(3) of the ESA, since at the time those claims were not in the legal sphere of the defendant. In the opinion of the Supreme Court, this is in no way changed by the fact that upon the issuance and subsequent service of the resolution on seizure the assignment of claims was not concluded in the form of a notarial deed and that this occurred only after the service of the resolution on seizure (whereby, in the opinion of the Supreme Court, this did not represent conclusion of a new legal transaction, but the parties rather only gave the transaction additional quality). As it explained, the purpose of formality is to prevent abuse linked to uncertainty as to the date of the transaction, however, that the risk does not exist when the fiduciary assignment is notified to the debtor of the assigned claim, which happened in the present case on 30 May 2017. According to the Supreme Court, a notarial deed as a form of fiduciary assignment agreement is important especially in the case of the insolvency of the assignor. According to Article 209(2) of the LPC, in case of insolvency of the assignor, the provisions of Article 206 of the LPC, pursuant to which the fiduciary (assignee in fiduciary assignment) has the right of separation on the fiduciarily assigned property (claim in fiduciary assignment) in the event of bankruptcy or compulsory settlement of the assignor, shall apply mutatis mutandis only if the agreement on the assignment of the claim is concluded in the form of a notarial deed.
Once the bankruptcy proceedings commenced upon A on 5 March 2018 the assigned claim therefore automatically reverted to the plaintiff’s estate by law and the latter thus, since it was already in possession of the assignment agreement in the form of a notarial deed of 20 June 2017, acquired a right of separation over the claims.
The Supreme Court’s decision has been criticised by the legal profession. Professor Dr. Vrenčur is of the opinion that the key purpose of Article 209(2) of the LPC, which prescribes the form of the notarial deed, is to prevent abuse, which is crucial for the existence of a right of separation in insolvency proceedings. On that basis, in his view, priority should be given to the seizure, since the legal effect of the seizure, and thus of the right of separation, arose before the notarial deed of fiduciary assignment of those same claims was drawn up. Professor Dr. Vrenčur also points out that the parties could have chosen a pledge which does not require the form of a notarial deed.
On 8 April 2022, the public agency SPIRIT Slovenia published a public tender to assist companies in restarting activities after the removal of restrictions related to COVID-19.
The call aims to support companies from those sectors of the economy affected by the measures taken in connection with the Covid-19 epidemic, with the main objectives of the call being in particular:
The subject of the public tender is co-financing of costs that companies from the affected industries will have when resuming their activities in 2022 after Covid-19 restrictions are removed. Eligible costs under this call are labour costs incurred by applicants during the resumption of activities from 1st August 2021 to 31st January 2022.
Subjects, entitled to funds under this public tender are micro, small and medium-sized enterprises that are companies, sole proprietors or cooperatives (established under the ZGD-1 or ZZad or performing an activity in any of the legal organizational forms under ZGD-1) if, as of 31 July 2021 they had one of the following SKD activities registered in its AJPES database as its main activity:
The application for funding must be filled via the online form on https://www.podjetniski-portal.si/turizem-sofinanciranje. The application must then be printed and sent by mail to the address SPIRIT Slovenija, javna agencija, Verovškova 60, 1000 Ljubljana.
The deadline for submitting applications is April 22, 2022.
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On 15th March 2022, the European Union introduced additional sectoral sanctions against Russia in the light of the foregoing invasion of Ukraine, aimed at escalating the pressure on Russian economy and consequently disable the financing of their military operations.
The imposed Regulation limits transactions with corporations, specifically listed in Annex XIX, with their on-EU subsidiaries (min. 50% ownership), and persons acting on behalf of the listed companies or their subsidiaries. As expected, the EU did not go as far as to completely limit the import of fossil fuels, but they implemented certain exceptions, which allow transactions relating to the import of Russian fossil fuels, along with certain metals and alloys.
The EU also prepared an exhaustive list of steel and iron made products originating from Russia, to which restrictions on direct or indirect import of said products apply. The European Commission estimates that Russian Federation should suffer around 3.3 billion euros in losses from this measure alone. A similar ban also applies to several luxury products, if their value exceeds 300 euros, as well as to the export of cars, valued above 50,000 euros.
Russian companies also have severely limited access to the European financial markets, since European credit rating agencies cannot provide their services to Russian persons and entities anymore. However, this restriction does not apply to persons with permanent or temporary residence permit in a Member State.
One of the most important sanctions, adopted with the new Regulation pertain to the area of investment law. EU did not only limit new investments and the export of goods, technology and services in the Russian energy sector; they also, in cooperation with Member States of G7, removed Russia from the Most-favoured-nation status. The latter is one of the most important principles in international trade and investment law, since it ensures equal treatment of all countries (and investors) – a benefit that applies to one country (or one country’s investor) must also apply to all others.
Investments in the energy sector are constrained in several respects. It is prohibited to acquire new or increase existing stakes in legal entities operating in the Russian energy sector, as well as to establish new joint ventures. In addition, it is prohibited to provide investment services or in any way provide financing to legal entities and other entities operating in the Russian energy sector. However, investments are allowed if it is necessary to ensure critical energy supply in the EU or if they are legal persons or bodies incorporated or constituted under the law of an EU Member State, although it operates in the Russian energy sector. Russia’s energy sector will be further restricted, as it is now prohibited to provide, directly or indirectly, any technical assistance and services related to goods and various technologies, as well as financing and financial assistance in this sphere.
The above-mentioned measure is, however, only the latest in a series of sanctions adopted by the EU in response to Russia’s invasion of Ukraine. One of the most high-profile measures is the exclusion of some Russian banks from the SWIFT system, which is a financial communications system that allows messages to be sent between banks and other financial institutions around the world.
As there is virtually no other globally accepted alternative, SWIFT is essential for international business. The exclusion of (some) Russian banks from the SWIFT system, however, means that Russian companies lose access to the usual transactions provided by SWIFT. As payments for energy and agricultural products will be severely disrupted, the banks will have to do business directly with each other, which incurs additional costs and ultimately reduces the revenues of the Russian government. Any exclusion, even if only of certain banks, therefore has far-reaching and important economic consequences for Russia, its banks, and last but not least, the value of the ruble.
Despite its far-reaching consequences, such a measure is not without precedent. As early as 2012, SWIFT excluded Iranian banks from its system in response to Iran’s nuclear plan. Nor is it the first time that the Western world has considered introducing this measure specifically against Russia. Already in 2014, similar talks took place in the light of Russia’s annexation of Crimea. At that time the EU has not decided to take this step, but the latter has prompted Russia to take measures to mitigate the potential exclusion of Russian banks from the SWIFT system. Russia has since introduced its own payment system, SPFS. However, the SPFS is significantly more limited in its operation than SWIFT. SPFS is restricted in word-length of messages, making it less suitable for performing more complex transactions. But perhaps more important, is the fact that this system does not have sufficient international connectivity, especially compared to SWIFT. That being said, Russia simply does not have an adequate alternative to the SWIFT system.
EU’s restrictive measures now apply to a total of 877 individuals and 62 legal entities. All of these are subject to frozen assets, and persons are also banned from traveling to or from EU territory.
According to the latest reports, the Slovenian government will now be able to implement EU sanctions against Russia, especially when it comes to freezing the assets of Russian representatives. Namely, an amendment was adopted, which significantly empowers the government in the implementation of these measures. The new law thus gives bodies such as the Financial Administration (»FURS«) and the Surveying and Mapping Authority (»Geodetska Uprava«) all the powers to carry out supervision and to seal property of individuals and legal entities on the EU criminal list with real estate in Slovenia.
On 11 March 2022, the National Assembly adopted The Act Amending the Personal Income Tax Act (ZDoh-2Z), which entered into force on 22 March 2022, however applies as of 1 January 2022, which means that the determination of tax liability in accordance with the new rules can also be applied retroactively.
The Amendment to the Personal Income Tax Act introduces a number of novelties, namely:
The Amendment relieves the tax burden on labour income by gradually increasing the general relief, which will rise from EUR 3,500 EUR to 7,500 by 2025. In 2022 it will amount to EUR 4,500, in 2023 to EUR 5,500, in 2024 to EUR 6,500 and in 2025 to EUR 7,500. The Amendment thus results in a higher net salary with the same gross salary.
After the end of the transitional period, from 2026 onwards the amount of the general relief will be adjusted in line with the consumer price index.
The Amendment reduces the rate of taxation in the highest fifth income tax class from the current 50 % to 45 %.
For 2022, the tax bases will be adjusted to the consumer price index and the income tax amounts will be calculated accordingly.
The tax treatment of business performance pay is also changing, as it is no longer treated as part of salary for business performance. According to the Amendment, it may be paid in cash or in kind, once or several times a year, and is non-taxable up to amount of 100 % of the average monthly salary of employees in Slovenia, or up to 100 % of the average monthly salary of the employee, including salary compensation, paid during the last 12 months by the employer, if this will is more favourable for the employee.
One of the changes introduced by the Amendment to promote the green transition is the reduction of the value of the bonus for electric motor vehicles to zero.
The Amendment also introduces a change in the valuation of the bonus in case of purchase or acquisition of shares in an employer’s company. Under the Amendment, if an employer (a company) grants an employee the right to purchase or acquire shares in that company or its parent company, the value of the bonus is 65 % of the value, under the condition that the employment relationship has lasted more than one year up to the date of the exercise of the right and that no business performance pay benefits are claimed in respect of that bonus.
With regard to the treatment of severance pay not included in the tax base, in accordance with the Amendment to the Personal Income Tax Act, severance pay under other laws (not only under the Employment Act) whose grounds for dismissal or termination of the employment contract are comparable to those in the Employment Act are treated in the same way.
The Amendment also brings changes to the taxation of capital income. It lowers the rate of income tax on capital gains (interest, dividends and capital gains) from 27.5 % to 25 % and shortens the holding period, whereby no income tax is payable on capital gains realised on a disposal after 15 years of holding the capital, instead of 20 years.
In addition, as from 1 January 2022, the value of shares paid out in the event of a disposal of shares in the context of the acquisition of the company’s own shares will no longer be taxed as a dividend.
The rate of income tax on rental income is also reduced, namely from 27.5 % to 15 %. The percentage of standardised costs to be recognised in determining the taxable amount of rental income is also reduced, namely from 15 % to 10 %.
The Amendment promotes the employment of young people by loosening the conditions for the tax relief for employment.
According to The Amendment, a taxable person who newly employs a person under the age of 29 or over the age of 55, or who employs a person in an occupation for which there is a shortage of jobseekers on the market (such shortage is defined in a list, established by regulation by the Minister responsible for labour), who has not been employed by the taxable person or its related person in the last 24 months, may benefit from a reduction of the taxable person’s taxable income equal to 45 % of such person’s wages for a 24-month period. However, if the taxable person employs a person under the age of 25 who is employed for the first time, he may benefit from a reduction of the taxable amount equal to 55 % of such person’s salary, also for a period of 24 months.
In addition to the relief of income from employment, capital income and rental income, and changes to the tax relief for employment, the Amendment to the Personal Income Tax Act also introduces other important changes, namely:
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On 22 February 2022, the National Assembly of Slovenia adopted the Emergency Measures Act to mitigate the consequences due to the impact of high energy prices, which entered into force on 5 March 2022. The Act is adopting measures that will mitigate the consequences and impact of high energy prices in the field of energy, social protection and rights from public funds. The Act stipulates measures that are intended for natural persons and not legal entities. The measures below will apply from 1 February 2022 to 30 April 2022:
A. A one-off solidarity allowance of 150 EUR to address the consequences of rising energy prices. The allowance will be paid by 15 April 2022 at the latest, and the funds will be provided from the Climate Change Fund. Beneficiaries of the allowance are:
B. The Act temporarily provides for an exemption from the contribution for the provision of support for the production of energy in high-efficiency cogeneration and from renewable energy sources for final customers of the low-voltage non-metering power group and household electricity customers.
C. By the Act, the tariff settings for the distribution operator for billing power and assumed working energy for all customer groups are also reduced to zero.
D. As a last measure, the Act stipulates that condominium owners of individual dwellings in multi-apartment buildings who heat their dwellings with heat from common natural gas boilers, with household customers co-owners of common boilers, have all rights to purchase gas for these common boilers, with regard to the conditions of purchase of natural gas, such as those enjoyed by household customers of natural gas who purchase natural gas for their own use. Condominium owners cannot exercise their rights individually, but together at a common point of consumption.
The deadline for submitting tax returns concerning corporate income tax (DDPO) and personal income tax with regard to income from activities (DDD) for 2021 is approaching. Tax returns can only be submitted electronically via the e-Davki system, by entering date directly in the DDPO form or DDD form, as the case may be, or by importing xml.scheme DDPO or xml.scheme DDD.
In accordance with the tax measures adopted under the intervention act ZUOPDCE, the DDPO and DDD tax returns for 2021 must be submitted by 30 April 2022 at the latest. As this day falls on Saturday, the deadline for submitting tax returns is 3 May 2022. The deadline for notifying the determination of the tax base by taking into account the standardised expenses and the deadline for submitting annual reports to AJPES is also being extended until the mentioned dates.
A taxpayer who is unable to submit a tax return within the prescribed deadline for justifiable reasons, may be, upon their proposal, allowed by the tax authority to submit a tax return after the expiry of the prescribed deadline. In the proposal, the taxpayer must provide justifications and file the proposal no later than eight days from the day on which the reason for the delay ceased to exist, but no later than three months from the date on which the deadline for submitting the tax return expired (i.e., 30 July 2022). If the tax authority approves the proposal, the tax return submitted in such a way shall be considered timely.
Please also be advised that the taxpayer, who intends to inform the Financial Administration of the Republic of Slovenia in the DDD tax return for 2021 about the termination of determining the tax base taking into account the standardized expenses, must keep relevant books and records as stipulated in paragraph 5 of Article 308 of ZDavP-2 from 1 January 2022.
All aids received on the basis of intervention measures represent the taxpayer’s income, which means that they must be included in the DDPO and DDD tax returns, whereas the income shall be treated as follows:
On 23 February 2022, the European Commission has adopted a proposal for a Directive on corporate sustainability due diligence (the “Proposal”). The Proposal aims to foster sustainable and responsible corporate behavior throughout global value chains, i.e. in companies’ activities related to the production of goods or the provision of services, including the development of the products or services, and use and disposal of the products as well as the related companies’ activities of upstream and downstream established business relationships.
The Proposal establishes new rules on the obligation of companies to identify, prevent, remedy or mitigate adverse impacts on human rights and the environment of their activities, the activities of their subsidiaries and their value chains (for both directly and indirectly established business relationships).
Application of new rules:
The new rules will apply to companies established in the EU that meet one of the following conditions:
The rules will also apply to certain companies established outside the EU but operating and doing business in the EU.
New obligations of companies:
In order to meet their duty of due diligence, companies will need to, among other things, establish an internal policy describing the company’s approach to addressing the issue and identifying potential adverse impacts on human rights and the environment. Companies will be required to prevent and address such impacts, monitor the effectiveness of the policy and communicate due diligence to the public. They will also be required to establish a specific complaints procedure for violations. The Proposal also provides for the responsibility of the directors for establishing and monitoring corporate due diligence. Moreover, directors will also have to take into account the impact of their decisions on human rights, climate change and environmental change within their duty to act in the company’s interest.
Breaches of obligations:
Member States will have to appoint the competent authorities which will be responsible for monitoring possible breaches of the rules. Such supervisory authorities will be able to impose certain fines on the persons responsible in the event of non-compliance of due diligence. In addition, victims of infringements will have the possibility to bring civil actions before the competent national authorities.
The Proposal is currently with the European Parliament and the Council for the approval. Once adopted, Member States will have two years to transpose the Directive into national law.
In December 2021, the Ministry of Justice issued a proposal for the Whistleblower protection Law, which would transpose Directive (EU) 2019/1937 of the European Parliament and of the Council of 23 October 2019 on the protection of persons who report breaches of Union law (OJ L 305/17).
The proposer of the law points out that the draft regulation will contribute to the protection of the budget of the Republic of Slovenia (and the EU) and ensuring equal competitive conditions necessary for the proper functioning of the single market and the operation of companies in a fair competitive environment. The protection of whistleblowers should increase the general level of protection of workers in line with the objectives of the European Pillar of Social Rights (EPSR). Protection of whistleblowers is also recognized and pursued internationally, including by the United Nations Convention against Corruption. The basis for applicants is the constitutional right to freedom of expression, which the state must actively guarantee. Currently, Slovenian legislation only indirectly protects whistleblowers through criminal, misdemeanor (Minor Offences) and employment relationships law regulations. The fragmentation of the regulation in question can also be seen at EU level, which is reflected in the small number of reports and opportunities to prevent and detect breaches of Union law that can cause serious harm to the public interest.
The draft of Whistleblower protection Law introduces some key solutions, namely informing workers about procedures, protection and judicial protection and the availability of free advice, the obligation to define a clear application procedure to ensure confidentiality, the obligation to take serious action when reporting, protection for whistleblowers who have suffered retaliation.
At the beginning of January 2022, the public debate on the proposed law ended, where the public pointed out certain shortcomings and limitations of the regulation. Comments on the draft of regulation were also made by Transparency International (TI) Slovenia, which points out, among other things, the lack of analysis of the consequences of the supervisory body, where the overall effectiveness of the body in preventing corruption could be jeopardized in the absence of additional funds. Furthermore, TI pointed out the narrow definition of the law to which the regulation in question is supposed to refer, as it is not entirely clear from the provisions of the regulation whether it refers in all parts to EU law or Slovenian law. The draft regulation is also supposed to allow too much discretion for the trustee or official person in assessing that the application is not being considered, without procedural options on the part of the whistleblower. In the area of trustees, TI also points out the lack of protection against them, who may also be subject to retaliation. TI further problematizes the provision that does not allow the handling of anonymous applications, which is contrary to international recommendations in the field of protection of whistleblowers. This is one of the ways of self-protection of the whistleblower. Failure to deal with anonymous whistleblower is a disproportionate approach, as the legislator could provide another way to communicate with an anonymous whistleblower.
In the rest of the TI, he points out the ambiguities of the regulation draft and proposes a number of nomotechnical improvements in order to pursue the clarity of the regulation and its compliance with the principles of protection of whistleblowers.
The draft of Whistleblower protection Law is currently in inter-ministerial coordination and in the service of the government office for legislation. Given that the deadline for the implementation of the directive has already expired and that a public debate has already taken place, it is more likely that we can expect the adoption of the regulation in the near future.
At its session held on 26 January 2022, the National Assembly of the Republic of Slovenia adopted the Amendments to the Employment Relationships Act (ZDR-1C), which was published on 4 February 2022 in the Official Gazette of the Republic of Slovenia, no. 15-215/2022, which shortens the period of payment of compensation for sick leave at the expense of the employer.
The amended Article 137 of the Employment Relationships Act stipulates in the third paragraph that the employer pays salary compensation from its own resources in cases of incapacity of the employee for work due to his/her illness or non-work-related injury, up to 20 working days (previously 30) for individual absence from work, but for a maximum of 80 working days (previously 120) in a calendar year. In cases of incapacity for work due to an occupational disease or injury at work, the employer pays salary compensation to the employee from its own resources for up to 30 working days for each individual absence from work. During long periods of absence from work, the employer pays salary compensation to the debit of health insurance.
The fourth paragraph of Article 137 of the Employment Relationships Act has also been amended, which regulates the circumstances of several consecutive absences of the employee from work and stipulates that in case of two or more consecutive absences from work due to the same illness or non-work-related injury up to 20 working days (previously 30), but in an individual case a break between one and the other absence lasts less than 10 working days, the employer pays for the period of further absence from the break onwards salary compensation to the debit of health insurance.
The Amendment to the Employment Relationships Act (ZDR-1C) enters into force on the fifteenth day after its publication in the Official Gazette of the Republic of Slovenia and it is applicable from 1 March 2022.
Due to the shortening of the length of payment of salary compensation during the sick leave for the employer, the National Assembly of the Republic of Slovenia at its session on 26 January 2022 also adopted the Act Amending the Health Care and Health Insurance Act (ZZVZZ-R), which was on 4 February 2022 published in the Official Gazette of the Republic of Slovenia, no. 15-216/2022, by which the text of the Act was adapted to the above summarized amendments of the Employment Relationships Act, which will also be applicable from 1 March 2022.
Another important amendment of the Employment Relationships Act may be expected in the coming months. On 7 January 2022, the Slovenian Police Trade Union on behalf of voters submitted the Proposal of Amendments to the Employment Relationships Act to the National Assembly.
In the proposal, the Slovenian Police Trade Union proposes an amendment to the currently valid Article 85 of the Employment Relationships Act, which regulates the obligations of the employer before termination of the employment contract. The first paragraph of Article 85 of the current Employment Relationships Act stipulates the employer’s obligation in case of regular termination of the employment contract due to fault reason and stipulates that the employer shall no later than 60 days from the finding of the breach and no later than six months from the occurrence of the breach notify the employee in writing of the fulfilment of obligations and the possibility of termination of the employment contract if the employee again breaches contractual and other obligations from employment relationship in one year following the receipt of the written warning, unless stipulated differently by the collective agreement at the activity level, but however not longer than in two years. The second paragraph of the article in question regulates the obligation of the employer before regular termination due to incapacity or fault reason and before extraordinary termination of the employment contract. It stipulates that the employer must inform the employee in writing of the alleged breach or the alleged reason for incapacity and allow him to defend himself within a reasonable time, which may not be less than three working days, unless there are circumstances which would make it unreasonable to expect the employer to enable this to the employee.
The Slovenian Police Trade Union proposes that the above-mentioned warnings of the employer be additionally regulated by law, namely,
It is the opinion of the Slovenian Police Trade Union that the proposed amendments to the currently valid Article 85 of the Employment Relationships Act thus more clearly stipulate that the reasons for issuing a warning to an employee must be grounded (fault or incapacity reason), and introduce the right to a legal remedy against the warning. According to the Slovenian Police Trade Union, the proposed regulation prevents the arbitrary conduct of employers, who often abuse the institute of written warning to put pressure on employees and harass them. On 10 February 2022, the Slovenian Government already published its opinion on the Proposal of Amendments to the Employment Relationships Act, in which it expressed its disagreement with the proposed amendments and pointed out its inconsistency and ambiguity.
Before the National Assembly adopted the law aimed at protecting Swiss-franc borrowers from currency risk on 2 February 2022, the Constitutional Court of the Republic of Slovenia adopted its first decision on the matter on 13 January 2022, ruling on the constitutional appeal brought by the appellants, borrowers (consumers) under the credit agreement in Swiss francs, against the judgment of the High Court of Ljubljana (ref. no. I Cp 250/2020 of 11 May 2020) and the partial judgment of the District Court of Ljubljana (ref. no. P 442/2018 of 9 July 2019), by which their claim against the bank was rejected. With its decision, ref. no. Up-14/21-30, the Constitutional Court overturned the abovementioned judgments and referred the case back to the first instance court.
By their action against the bank, the appellants sought from the court(s) to declare the Swiss franc credit agreement and the agreement on securing the money receivable as void, repayment of the money (namely the alleged overpayments) and the invalidity and deletion of the mortgage, registered as security for the obligations under the credit agreement. They pleaded the invalidity of the transactions, entered into with intention to provide financing for the purchase of a family home, by claiming the unfairness of a contractual term (the currency clause) due to the bank’s breach of its duty of disclosure and of the principle of good faith and fair dealing in relation to the bad faith conduct. In addition, they argued the existence of a significant imbalance in the contractual relationship and emphasized their particular sensitivity due to the purchase of the family home as a fundamental subsistence good and the (excessive and unusually) risky nature of the transaction, while also pointing out the adverse consequences for their social status, personal development and family life.
The judgments contested by the constitutional appeal, were based on two independent supporting positions, whereby each of them may justify the rejection of the appellants’ claim on their own. The first position consists of (i) the initial premise assuming that (un)fairness of the main subject matter (the currency clause) is not to be considered at all if duty of disclosure has been met, and (ii) the assessment of compliance with duty of disclosure in the respective case. In its second position, the court made a substantive assessment of the contractual term (the currency clause) and concluded that it was not unfair.
According to the established constitutional case law, if the contested decision is based on two (or more) supporting positions, the appellant must prove the unconstitutionality of both (or all) positions in order to succeed with the appeal. In Constitutional Court’s opinion, the initial premise of EU law according to which the court shall always verify the clarity and intelligibility of a contractual term (including the fulfilment of the duty of disclosure), relating to the main subject matter of the contract, and the connection of such premise’s meaning to the assessment of the (un)fairness of the contractual term, allows the limitation of the Constitutional Court’s assessment only to the alleged infringements regarding the standard of duty of disclosure assessment. However, due to the precedential significance of the issues raised by both courts’ positions, the Constitutional Court decided to examine both of them.
In assessing the above-mentioned positions, the Constitutional Court considered that the parties’ contractual freedom, by which the courts (relying on the case law of the Supreme Court) justified the limitation of their assessment only to the issue of the clarity and understandability of a contractual term (fulfilment of the duty of disclosure) by interpreting the Consumer Protection Act, is an expression of the general freedom of conduct under Article 35 of the Constitution. The latter depends on social integration and on the principle of social inclusion as an integral part of the principle of the welfare state set out in Article 2 of the Constitution. The judiciary is obliged to recognise and protect contractual disposals and may not, in principle, interfere with them. However, such requirement reflects only the negative (”defensive”) aspect of the contractual freedom. Due to effective enforcement in social reality, such aspect is placed in a mutual value co-determination with a positive aspect. In respective case, this aspect represents an obligation to evaluate the need for legal protection (unfairness assessment) on the basis of the appellants’ wider legal position. This is particularly accentuated in the circumstances of the bank’s relationship with the consumer, as particularly asymmetrical (in terms of information, wealth and expertise). In such relationship the possibility of excessive (or exclusive) assertion of the stronger party’s interests, and thus the risk of exercising a mere semblance of autonomy, cannot be ruled out.
In the light of the aforesaid, pursuant to the Constitutional Court’s view, the categorical conclusion that assessment of unfair nature of the contractual term is never legally relevant if the duty to clarify (i. e. clarity and understandability of a contractual term) has been met, is not in conformity with the freedom of action provided for in Article 35 of the Constitution of the Republic of Slovenia The personal circumstances invoked by the appellants (namely that the purpose of credit is satisfaction of their basic life necessities, the bank’s awareness of their financial situation and the fact that they are repaying the credit with their current income in the local currency, as well as the element of unlimited and unpredictable risk of the transaction) may also, by their very nature, justify a claim for positive (and not merely negative) protection of contractual freedom based on general freedom of action (Article 35 of the Constitution), as dictated by the principle of the welfare state (Article 2 of the Constitution).
In the context of its assessment of the first position, the Constitutional Court also examined the content of the standard of the duty of disclosure. Thereby it agreed with the courts’ view that the duty of disclosure does not require to provide information in a specific manner. However, according to the criteria set out by the CJEU, the Constitutional Court considers that an average consumer shall be provided with information enabling him to assess the actual risk deriving from entering into a credit agreement. In case of a credit agreement with a currency clause (with a concurrent foreign variable interest rate), this is expressed primarily as the potential increase in the consumer’s credit obligations. According to Constitutional Court’s view, the contested judgements haven’t explained which of the bank’s explanation (or material) could and should have made the applicant aware not only of the exchange rate fluctuations and the possibility of changes in the amount of the instalments, but also of the actual consequences of the significant depreciation of the domestic currency (and of the increase in foreign interest rates) on the amount of his credit obligations for the entire period of the repayment of the credit. Whereas this represents a key content of the duty of disclosure standard, the courts also infringed the appellants’ right to a reasoned decision under Article 22 of the Constitution in that respect.
With regard to the courts’ second position (i.e. assessment of the contractual term’s unfairness), the Constitutional Court pointed out that the appellants emphasized the bank’s expert knowledge of the currency market and the nature of the risks involved throughout the proceedings. They associated such knowledge to the key features of the long-term credit agreement in foreign currency and the transparency of their own asset position for the bank. These themselves constitute a relevant element for assessing the (un)fairness of a contractual term according to Article 3(1) of Directive 93/13/EEC and the criteria developed by the CJEU. Considering the foregoing, pursuant to the Constitutional Court’s view, the appellants’ submissions that (i) they took a housing loan, intended to provide their basic life necessities, (ii) the risk for a housing loan was unusual, unpredictable and unlimited and they (unlike the bank) could not evaluate and control; and (iii) the loan was repaid with the family’s current income in local currency, which endangered the social situation of the family and the possibility of personal development of the family’s members. By failing to address these aspects in their assessment of unfairness, the courts infringed the appellants’ right under Article 22 of the Constitution.
Two dissenting opinions were adopted on the decision: an affirmative dissenting opinion by Dr Matej Accetto, Judge, and a negative dissenting opinion by Dr Rok Svetlič, Judge, who was accompanied by Dr Dr Jaklič, Judge.
In his affirmative dissenting opinion, Dr Accetto agrees with the emphasis placed on the importance of the duty of disclosure and the finding that (at least in the light of the contested judgments’ reasoning) such duty has not been met. However, Dr Accetto disagrees with the Constitutional Court’s view on both courts’ positions being mutually independent and that each of them may justify the rejection of the appellants’ claim. He opines this only applies if the duty of disclosure is satisfied and thus the question of the (un)fairness of the main subject-matter of the contract is not even relevant and the answer to such irrelevant question cannot influence the decision. Finding of the fairness of a contractual term does, however, not in itself render the duty of disclosure irrelevant.
In his dissenting opinion, Dr Svetlič strongly criticised the consideration of personal circumstances in the respective case. As pointed out therein, the obligation of taking into account the borrower’s personal circumstances while granting the credit, may have an adverse effect on the borrowers themselves, thereby interfering with their freedom of contract, the very constitutional category the Constitutional Court’s decision seeks to protect. Dr Dr. Jaklič, who joined the dissenting opinion of Dr Svetlič, also raised an interesting concern on how to delineate such transactions from the multitude of other comparable, perhaps much more high-risk and unpredictable transactions that (particularly in modern times) occur.
Take a look at what our colleagues at CEE Legal Matters had to say about our new Partners mag. Sanja Vujanović and Teja Podržaj:
Congratulations once again ladies!
On 29 January 2022, the Government of the Republic of Slovenia adopted a proposal of the Act to mitigate the consequences of rising energy prices in the economy and agriculture as one of the measures to alleviate the consequences suffered by natural and legal persons due to high energy prices. It foreshadows financial assistance to the economy to be paid in a lump sum to beneficiaries by 20 April 2022. The amount of the financial assistance will depend on the level of revenues and sales and the share of the cost of energy in revenues. The financial assistance scheme is subject to approval by the European Commission and will therefore be published at a later date, with an expected minimum financial assistance amount of 50 euros and a maximum of around 2 million euros. The amount of financial assistance will not exceed 60 % of the damage suffered by the beneficiary as a result of the increase in energy prices.
Legal and natural persons who meet all the conditions set out below will be eligible for financial assistance:
The deadline for submitting the declaration for financial assistance to the Financial Administration of the Republic of Slovenia via the information system is 31 March 2022.
The proposed act also stipulates that if the beneficiary is found to have received an overpayment of financial assistance as a result of a control by the Financial Administration of the Republic of Slovenia, he/she will be obliged to repay the overpaid part by 31 January 2023.
In addition to the proposal of the Act to mitigate the consequences of rising energy prices in the economy and agriculture, the Government of the Republic of Slovenia has adopted, in the context of the above-mentioned measures, (i) a proposal of the Act on emergency measures to mitigate the effects of the impact of high energy prices, which focuses, inter alia, on improving the social security of vulnerable groups through the payment of a one-off security allowance and on the equalisation of the rights of all household consumers of natural gas; and (ii) two excise duty regulations which reduced excise duties and are applicable as from 1 February 2022.
We are happy to announce that Sanja Vujanović and Teja Podržaj were promoted to Partners in our firm. Sanja will head the litigation and dispute resolution practice, and Teja will head the employment and commercial law practice. Welcome and well deserved, ladies!
In its judgment ref. no. X Ips 61/2021 of 15th December 2021, the Supreme Court ruled that the payment of the purchase price for the purchase of own shares in a limited liability company does not constitute illicit tax evasion in regard to the taxation of the distribution of profits to shareholders per se, which according to the fourth paragraph of Article 74 of the Tax Procedure Act (ZDavP-2) occurs when taxpayers enter into transactions or several interrelated transactions without a justified business purpose, with the sole or main purpose of obtaining a tax advantage and to prevent the achievement of the objective of the tax regulation.
Simply put, the purchase price for the purchase of own shares in an independent legal transaction shall be taxed as capital gain. It shall be taxed as a payment of dividends in the case of illicit tax evasion only in connection with other concluded legal transactions that serve (only) for different taxation of a limited liability company and other persons who were involved in these transactions. The boundary between illicit tax evasion and permissible tax optimisation shall be determined by a comprehensive assessment of all relevant facts and circumstances of each individual case.
The Supreme Court further assessed whether the payment of the purchase price for the purchase of own shares may constitute a concealed payment of profits under point 7 of Article 74 of the Corporate Income Tax Act (ZDDPO-2) and concluded that only such a legal transaction, which in its amount (and not the basis) (!) represents an unjustified benefit to a qualified shareholder may represent a concealed payment of profits.
In other words, the payment of the purchase price for the purchase of own shares corresponding to the market price shall be taxed as capital gain. Only if a limited liability company pays a purchase price to a qualified shareholder (i.e., a person who directly or indirectly owns 25 % of the value or number of shares in the capital or the management or contractually controls the company or in a manner different from unrelated relationships) that is higher than the market price, the excess over the market price shall be taxed as a dividend payment.
If you have received unfavourable tax treatment in the past due to the purchase of own shares in a limited liability company, we advise you to consult your advisers regarding the legal possibilities of refunding the overpaid tax.
In the previous article, we wrote about paying attention when buying real estate in bankruptcy proceedings. This time, we will bring attention to possible pitfalls in buying real estate in enforcement proceedings.
As explained in the previous article, in principle, real estate is sold at public auctions at lower than market prices, so buyers often think that such a purchase will save a good amount of money. This may be true, but only if buyers really know what they are buying, so what is the actual and legal condition of the property.
The law determines which rights and encumbrances registered on the property shall be deleted upon sale in enforcement proceedings. With the finality of the decision on the delivery of immovable property to the buyer, pledged liens and land debts on the real estate ceases. However, personal easements, encumbrances, and building rights entered before the pledgee’s right or the creditor who proposed enforcement do not cease. The sale extinguishes other personal easements, encumbrances, and building rights unless the holders of these rights agree otherwise with the buyer.
Therefore, it should be noted that the court only determines by a decision on the allocation of immovable property to the buyer which rights and encumbrances registered on the real estate are deleted. This means that if buyers want to avoid losing the security with certainty if they do not decide to purchase the property, they are obliged to check the property’s condition before paying the security. Therefore, if the buyer does not decide to buy because he finds out in the decision on the allocation of immovable property to the buyer that the property’s condition is different than he thought, he loses the security.
After issuing the decision on the allocation and after paying the purchase price, the court issues a decision that the property is handed over to the buyer, and the property right is registered on it. The court determines the deadline when the debtor needs to move out of the family house or apartment with the same decision. Such a decision is an enforceable title for the vacating and handing over of the property. However, beware, a debtor (as the owner) that lives in a sold family house or apartment, in some cases has the right to live in that house as a tenant for another three years counting from the date of sale. The debtor must submit such a proposal within 60 days of receiving the decision on enforcement or at the latest until the auction hearing. He is obliged to pay the rent for the for-profit apartment throughout the lease.
However, the sale of real estate does not affect the rental or lease relationship related to the sold property. The buyer thus “steps in the shoes” of the previous owner (the debtor) as the landlord or lessor. Suppose the lease or rental relationship arose after acquiring the creditor’s lien or land debt on the real estate. In that case, the buyer could terminate such a contract with a one-month notice period, regardless of the legal or contractual deadlines.
It is crucial to be attentive and careful, and consulting an expert will certainly save many grey hair.
In these (post) corona times, there is an increased supply of real estate (commercial and residential) that is selling at forced public auctions, either in enforcement or bankruptcy proceedings. Despite the crisis, real estate is still becoming more expensive, which means that many people think buying a property at a forced auction will save a good amount of money. Is this so?
The answer may be affirmative, but the same as with the classic real estate purchase, it is necessary to be careful when buying real estate in bankruptcy proceedings. Also, the new buyer is differently protected when buying real estate in bankruptcy or in enforcement proceedings. In the first part, we will explain the purchase of a real estate in bankruptcy proceedings.
The law stipulates that by paying the purchase price for real estate sold in bankruptcy proceedings, the court, at the proposal of the bankruptcy administrator, issues a decision on handing over the real estate to the buyer, deciding that the conditions for entering ownership in favour of the buyer are met. The purchase price payment thus terminates certain rights of third parties, namely the lien or mortgage and the land debt, regardless of when these rights were established. However, personal easement, real encumbrance, or building right ceases solely if acquired after the commencement of bankruptcy proceedings or after the earliest mortgage or land debt entry in the land register. Thus, for example, the right to the usufruct, use, or easement of an apartment registered before the commencement of bankruptcy proceedings does not cease and remains registered. This means that if the debtor has established a right of usufruct in favour of a third party before the commencement of the bankruptcy proceedings, the new owner will acquire only a bare right of ownership. In contrast, a third party will actually enjoy it.
Special rules also apply to purchasing real estate in personal bankruptcy proceedings if the subject of the sale is a residential or family residential house in which the debtor lives as the owner. In such a case, the court orders the debtor to vacate the property within three months of receiving the decision and hand it over to the buyer – as will be explained in the second part – in such a case, the new buyer is more secure than when buying the property in enforcement proceedings. However, it will still pass some time before the new owner can start using the property.
In case of leases, the law designates that the bankruptcy administrator acquires the right to terminate the lease concluded before the commencement of the bankruptcy proceedings. The length of the notice period shall be one month, notwithstanding the general rules laid down by law or contract. However, if the bankruptcy administrator does not take advantage of this option, the lease also affects the new buyer.
Finally, potential buyers should note that purchasing real estate in the proceedings in the topic does not include guarantee for material defects. It is considered that the buyer is aware of the property’s condition, so it is worth paying particular attention. In any case, it is recommended to talk to an expert before buying, as that can prevent many difficulties.
On 1 September 2021, an amendment to the Decree on the tax treatment of reimbursement of costs and other income from employment (the Decree) entered into force for private sector, which affects the tax treatment of transportation costs to and from work. The changes will apply to expenses for September 2021, which employers are expected to pay in early October.
Under the new regulation, the reimbursement for transportation costs to and from work shall not be included in the tax base of income from employment up to the amount of:
Determining the reimbursement of transportation costs to and from work under the amended Decree has the following advantages: