JUDGMENT OF THE COURT OF JUSTICE REGARDING THE ACT ON JUDICIAL PROTECTION OF FORMER HOLDERS OF ELIGIBLE LIABILITIES

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:

  • providing better support in regard to balance between work and private life of parents and carers;
  • promoting a more equal sharing of parental leave between men and women; and
  • tackling the under-representation of women in the labour market.

The main measures under the Directive include the following:

  • Introducing paternity leave: under the Directive, fathers must be able to take at least 10 working days of paternity leave at the birth of a child, with a minimum sick pay allowance. In this context, it is up to the Member States to determine whether paternity leave can be taken partly before or only after the birth of the child.
  • Ensuring that 2 out of 4 months of parental leave are non-transferable between parents and are compensated at a rate to be determined by the Member State. The purpose of this provision is to encourage fathers to take parental leave while preserving the right of each parent to take at least 4 months of parental leave under Directive 2010/18/EU.
  • Introduction of leave for carers: workers who provide personal care or support to a relative will be entitled up to 5 days of leave per year.
  • Extension of the right to request flexible working arrangements for carers and working parents of children up to (at least) 8 years of age. The Directive considers flexible forms of work to mean the possibility for workers to adapt their working time arrangements, including remote working arrangements, flexible working schedules, or reduced working hours.

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:

  • promoting the use of European funding to improve the provision of formal care services,
  • ensuring that parents and carers are protected from discrimination or dismissal; and
  • removing economic barriers to other earners in the family.

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:

  • simple aid for the economy of up to EUR 500,000 and up to 30 % of eligible costs;
  • specific aid for the economy of up to EUR 2,000,000 and up to 30 % of eligible costs, with a ceiling on the calculation of costs at a maximum of 70 % of spending in 2021; and
  • aid for energy-intensive businesses up to a maximum of EUR 2,000,000 and up to 50 % or in some cases up to 70 % of eligible costs.

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:

  • to define the range of information to be recorded in the records on working time;
  • to establish a method of keeping and storing records that would prevent abuse;
  • to ensure more effective inspection;
  • to ensure that the employee has the opportunity to be informed of the information contained in the records;
  • to ensure compliance with the provisions on working time and the provision of rest and break periods for employees; and
  • to establish and define sanctions and fines for the legal person responsible in the event of breaches of the provisions.

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 amount of the general allowance is set at EUR 5,000 and the gradual increase to EUR 7,500 is abolished;
  • the total income up to which a resident is entitled to an additional general allowance on top of the general allowance is increased;
  • a reduction in the tax base on income from employment for taxable persons up to the age of 26 or 29;
  • the tax rate in the last 5th income tax bracket is from the current 45% increased to 50%;
  • the mechanism for automatically reconciling the amounts of allowances and the net annual tax bases is abolished;
  • for 2023, there is no adjustment of allowances and net annual tax bases;
  • introducing a condition that performance-related pay is paid no more than twice in a calendar year and removing the possibility of tax-favoured treatment for performance-related income of 100% of an employee’s average salary;
  • introducing a a condition for entry into, or existence in, a normalised expenditure system in relation to the compulsory pension and invalidity insurance of the taxable person or of a person employed by the taxable person, and extends the period of continuous membership of the insurance;
  • the taxation of rental income is reintroduced;
  • reintroduction of taxation of the value of shares paid out on the disposal of shares in the context of the acquisition of the company’s own shares (except where the company acquires its own shares on a regulated market) as dividends.

The main solutions of the proposed amendments to ZDavP-2 are:

  • extension of the automatic exchange of information between Member States, additions to the joint agreement procedure and proper transposition of the EU Tax Dispute Settlement Mechanisms Directive;
  • the introduction of reporting obligations for operators of digital platforms;
  • disclosure of certain information to a beneficiary who needs it to comply with an obligation;
  • the taxable person will not need a qualified digital certificate to receive documents from the eDavki portal; and
  • the income tax return is no longer limited to one year.

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:

  1. only two persons of different sexes may enter into marriage and
  2. same-sex partners living in a formal civil partnership cannot adopt a child together

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:

  • a child enrolled in the 7th, 8th or 9th grade,
  • a secondary school student,
  • a student of a higher education institution under the regulations on higher vocational education,
  • a student of a first-, second- or third-level study programme under the regulations on higher education, or,
  • aged 55 or over and who will participate in digital literacy training subsidised under the DILG (for this group of beneficiaries, the date of commencement of the benefit depends on the commencement of the above-mentioned training courses, which are expected to start in August 2022).

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:

  • laptop, tablet or desktop computer,
  • a laptop docking station,
  • a computer screen,
  • keyboard and mouse,
  • digital paper,
  • a digital pen,
  • smart card reader,
  • a webcam,
  • headphones with microphone,
  • multifunction device, scanner, printer,
  • 3D printer,
  • an external storage unit,
  • special computer equipment for the digital inclusion of people with disabilities; and
  • a kit for learning to code (including a card computer and software for development environments).

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:

  • G 46.5 – Wholesale trade services of information and communication technology equipment,
  • G 47.4 – Retail sale in specialised stores of computer, communication, audio and video equipment.

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:

  • the Real Estate Cadastre, where data on the position, shape, physical and other characteristics of parcels, buildings and parts of buildings are kept; and
  • the Land Register, where information on the rights in rem on real estate is kept.

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:

  • maintaining the existence of activities operating in the affected sectors of the economy,
  • facilitating the relaunch of activities following the release of key Covid-19 measures and the reopening of activities, and
  • contributing to the preservation of businesses and jobs with a view to their further growth and development following the removal of Covid-19 restrictions.

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:

  • 100 Hotels and similar accommodation
  • 300 Beverage serving activities
  • 110 Travel agency activities
  • 900 Other reservation service and related activities
  • 300 Organisation of conventions and trade shows
  • 010 Performing arts
  • 020 Support activities to performing arts

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.

We are thrilled to be ranked as one of the leading firms in Slovenia and to improve our ranking to Tier 2 by the Legal 500 this year! We are extremely grateful to all of our clients for their trust and opportunities and very proud of our amazing team!

The latest package of sanctions against Russia

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.

Exclusion of Russian banks from the SWIFT system

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.

Freezing of Russian assests

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:

1. Employment income relief

a) increase in the general relief

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.

b) changes to the income tax scale

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.

c) change in the tax treatment of business performance pay

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.

d) exceptions or advantages in the valuation of bonuses and their inclusion in the tax base

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.

e) change in the tax treatment of the severance payment

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.

2. Capital and rental income relief

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 %.

3. Modification of the tax relief for employment and new tax relief for employing young people entering employment for the first time

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.

4. Other provisions

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:

  • exemption from income tax on family pensions under the law regulating pension and invalidity insurance,
  • exemption from income tax on payments to pre-school children, primary school pupils, high school pupils or students from the school fund,
  • the exclusion of exempt social security contributions from tax deductible revenue and expenditure,
  • an increase of the tax relief on performing practical work within professional education from 20 % to 80 % of the average monthly salary of employees in Slovenia for each month in which the individual performs practical work within professional education,
  • a new tax relief for investment in digital transformation and green transition of 40 % of qualifying investments,
  • changes to the tax relief for donations, which is increased to 1 % of the taxable income of the taxpayer in the tax year, and extending the possibility of claiming an additional reduction of the tax base with a higher amount of the tax relief which can be claimed for sporting purposes in addition to cultural purposes and protection against natural and other disasters,
  • a new tax relief for donations to top-level sport programme providers for investments in top-level sport of 3.8 % of the taxable income of the taxable person’s tax period,
  • a relief for the elderly and a relief for voluntary services in the field of protection, rescue and assistance, both amounting to 1.500 EUR,
  • tax relief for individuals with a status of a high school pupil or student in a fixed amount of 3.500 EUR,
  • the possibility of changing the rate of advance payment of income tax on pensions or occupational pensions paid by an employer other than the main employer.

Happy and excited to be ranked as one of the leading lawyers in Corporate / Commercial by Chambers & Partners. I am very grateful to all of our clients for their trust and the opportunity to work on such great project and proud of each and every member of our amazing Sibinčič Križanec team who do all the hard work!

Sincerely Jan Sibinčič, Managing Partner

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:

  • pensioners whose income for the month of December 2021 was 1000 EUR or less;
  • beneficiaries of disability benefits for the month of December 2021 under the Act governing the social inclusion of the disabled;
  • recipients of social allowance or protection allowance for December 2021;
  • beneficiaries of the child allowance from the first to the sixth income class for the month of December 2021;
  • beneficiaries of the large family allowance for 2021; (additional allowance of 50 EUR for four or more children);
  • foster parents who had concluded at least one foster care contract in December 2021 in accordance with the provisions of the Act governing the performance of foster care activities.

 

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.

  1. Deadlines for submitting tax returns

 

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.

 

  1. Consideration of aids received under intervention measures

 

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:

 

  • aid in the form of exemption from social security contributions for employees who are employed shall not be exempted from the calculation,
  • aid in the form of uncovered fixed costs shall not be exempted from the calculation,
  • aid in the form of reimbursement of employees’ compensation shall not be exempted from the calculation,
  • aid in the form of part-time subsidies shall not be exempted from the calculation,
  • crisis allowance shall not be exempted from the calculation,
  • aid to finance the holiday pay for 2021 shall not be exempted from the calculation,
  • aid for the purchase of antigenic rapid tests for SARS-CoV-2 virus for self-testing shall not be exempted from the calculation,
  • reimbursement of part of the minimum wage in the form of a monthly subsidy shall not be exempted from the calculation,
  • monthly basic income (MTD) shall not be exempted from the calculation, unless the beneficiary (already) finds that they do not meet the conditions for MTD – in this case they shall not include such income in the tax returns,
  • partial reimbursement of lost income due to quarantine and childcare shall be exempted from the calculation.

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 company employs more than 500 employees and generated net revenues of more than EUR 150 million worldwide in the last financial year;
  • the company does not meet the threshold in the previous point, but employs more than 250 employees and, in the previous financial year, had net worldwide revenues of more than EUR 40 million, with at least 50% of its net revenues derived from operations in specific sectors (including, but not limited to, textiles, agriculture, minerals, food and beverages, iron and steel, etc.).

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,

  • that the employer may issue a written warning to the employee referred to in the first or second paragraph above only if there is a well-founded fault reason or a reason of incapacity specified in Article 89 of the Employment Relationships Act. These reasons are:
    1. failure to achieve the expected work results because the employee does not perform work on time, professionally and with quality, failure to meet the conditions for performing work specified by laws and other regulations issued on the basis of law, due to which the employee does not fulfil or cannot fulfil contractual or other obligations (the reason for incapacity), or
    2. breach of a contractual obligation or other obligation arising from an employment relationship (fault reason); and
  • that the employee has the right to judicial protection against the warning referred to in the first paragraph under the conditions and in accordance with the procedure laid down for the regular termination of the employment contract. The employer may start the procedure of regular termination of the employment contract only after a court decision by which the court determines the validity of such a warning becomes final.

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:

https://ceelegalmatters.com/on-the-move/19127-sanja-vujanovic-and-teja-podrzaj-make-partner-at-sibincic-krizanec.

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:

  • they have been carrying out an economic activity in the Republic of Slovenia since at least 1 December 2021,
  • they have at least five employees,
  • they have not experienced difficulties in the 2019 financial year,
  • the the cost of energy represented at least 5 per cent of their revenue in 2019 and at the same time at least EUR 10,000 of their costs for this purpose,
  • their energy costs will increase by more than 30% this year compared to last year.

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:

  • EUR 0.18 for each completed kilometre of distance between the usual place of residence and the place of work for each day present at work, if the place of work is at least one kilometre away from the employee’s usual place of residence, or
  • EUR 140, if the amount calculated in accordance with the previous indent is less than EUR 140 per month.

 

Determining the reimbursement of transportation costs to and from work under the amended Decree has the following advantages:

  • recalculation of the reimbursement by working days for an amount up to EUR 140 is no longer necessary,
  • the employer and the employee may agree on any amount up to EUR 140,
  • the collection of data on the prices of monthly tickets in public transport is no longer necessary.

On Tuesday, 14 September 2021, the European Court of Human Rights (“ECHR”) issued a judgment in the case of Pintar and Others v. Slovenia, ruling that expropriated investors did not have the possibility of an effective remedy in Slovenia in national bank’s extraordinary measures canceling shares and bonds in in 2013 and 2014,

The judgment refers to a total of seven applicants, one of whom was represented by our law firm, who filed legal remedies due to the lack of appropriate legal proceedings in which they would have the opportunity to challenge the extraordinary measures of the Bank of Slovenia, on the basis of which eligible liabilities of banks ceased in 2013 and 2014. For the applicants, the concrete measures meant the termination of their shares and subordinated bonds

The disputed decisions of the Bank of Slovenia were based on the provisions of Slovenian law, in particular the Banking Act. According to the ECHR, the latter are appropriate in terms of accessibility and predictability, but any interference with the peaceful enjoyment of assets must be accompanied by procedural guarantees that provide the affected individual with a reasonable opportunity to present his case to the responsible authorities in order to effectively challenge measures.

The ECHR ruled that the shares and bonds in the present case constituted assets within the meaning of Article 1 of Protocol No. 1. to the European Convention for the Protection of Human Rights and Fundamental Freedoms (“ECPHRFF“), which stipulates that every natural or legal person is entitled to the peaceful enjoyment of his assets and that no one shall be deprived of his assets unless in the public interest, in accordance with the conditions laid down by law and in compliance with the general principles of international law. Consequently, the termination of the specific shares and bonds constituted an interference with the applicants’ assets.

According to the ECHR, neither the claim for damages under the Banking Act nor other legal remedies used by some of the applicants provided a reasonable possibility to challenge the decisions of the Bank of Slovenia or claiming damages. At the same time, the interference with the applicants’ assets was not accompanied by an adequate procedural guarantee, so the interference was not lawful within the meaning of Article 1 of Protocol No. 1 to the ECPHRFF.

The ECHR emphasized in particular that, in accordance with the ECPHRFF and under the supervision of the Committee of Ministers, the country must take appropriate general and specific measures to guarantee the applicants the rights that have been violated. Measures must also be taken in respect of all others who are in the same situation as the applicants. All of them must therefore have access to legal proceedings which will enable them to challenge effectively the interference with their assets as soon as possible.

The ECHR did not award the applicants pecuniary damage, explaining that it could not speculate on the outcome of the proceedings if the applicants could effectively challenge these decisions in proceedings corresponding to the country’s procedural obligations under Article 1 of Protocol No. 1 to the ECHRFF. However, it awarded them non-pecuniary damage and the costs of the proceedings, explaining in relation to non-pecuniary damage that the fact that they could not claim damages and were in uncertainty as to the legal remedy that would enable them to do so caused distress to the applicants.

In accordance with the Employment Relationships Act, parents of first-graders today have the right to paid absence from work due to accompanying the child. The employer is obliged to allow the employee who is the parent of the first-grader to be absent from work, and the employee must provide the employer with prior evidence of his absence, which shows that his child will attend the first grade in the following school year.

The right to parental absence from work due to accompanying a first-grader on his or her first day of school described above applies to both parents and to all employees, regardless of the type of activity or sector in which they work. It was included in the Employment Relationships Act with an amendment adopted on 18 December 2019.

More current changes are brought about by the amendment to the Kindergartens Act, which today introduces a free kindergarten for another child from the same family who is at the same time in kindergarten with an older child. In addition, parents will now be exempt from paying for kindergarten for the third and each subsequent child from the same family, regardless of whether he or she will be enrolled in kindergarten at the same time as his or her sibling.

Furthermore, the amendment to the Kindergartens Act also brings more powers to the school inspection, tightens the conditions for the protection of pre-school children and provides for stricter sanctions for misdemeanors. Thus, natural and legal persons who are not entered in the register of providers of publicly valid programs or in the register of guardians of pre-school children are immediately banned from carrying out pre-school education and childcare activities and fined in the range of EUR 5,000 to 10,000.

On 16 July 2021, the National Assembly adopted an amendment to the Road Traffic Rules Act (ZPrCP), which, among other things, is increasing penalties for telephone users while driving and for parking in places for the disabled, while reducing penalties for speeding. The amendment is also introducing the possibility of turning right at a red light and is setting out the conditions for the participation of light motor vehicles in road traffic, which include electric scooters. The amendment enters into force on 11 August 2021.

 

Due to the increasing use of telephones, the penalty for using a telephone while driving is being increased from 120 euros to 250 euros and 3 penalty points. The fine for violating the ban on stopping or parking in a designated parking space for the disables is also being increased from 80 euros to 200 euros, while penalties for speeding are being significantly reduced.

 

The amendment determines the meaning of the red light and the traffic sign for turning right at the red light. The new rule stipulates that a driver is allowed to turn right at a red traffic light, to which a traffic sign allowing to turn right at a red light (a green arrow pointing right on a black background) has been added, but only if the direction is free.

 

The amendment also determines the conditions for the participation of light motor vehicles in road traffic (motor-driven wheelchairs, scooters, skateboards, etc.). Drivers of light motor vehicles must ride on a cycle lane, bike lane or cycle path. Where such traffic areas are absent or non-transportable, the drivers may drive along the right edge of the directional carriageway of the road in a settlement where the maximum permitted speed is limited to 50 km/h. Driving of electric scooter is only allowed to persons over 14 years of age, and the driver (and passenger) is required to wear a properly fitted protective bicycle helmet until 18 years of age.

 

Drivers, who disregard the importance of special light and sound signs installed on priority vehicles, vehicles for escort and accompanying vehicles, and drivers, who join or overtake such vehicles are treated more strictly. The amendment also stipulates an appropriate lateral distance for overtaking cyclists and drivers of light motor vehicles and mopeds, which must be at least 1.5 meters.

 

The powers of municipal wardens and toll inspectors are also being expanded, as they will be able to control the area of common traffic, the approach to intersections, and the conditions for the participation of light motor vehicles in road traffic. They will also be able to monitor the use of winter equipment in traffic.

The Financial Administration of the Republic of Slovenia started a three-week tax vacation on 26 July, which will end on 13 August 2021. During this time, taxpayers will not be required to submit documentation, and FURS will perform only emergency procedures. Exceptions are also claims for VAT refunds, where due to the short deadlines for refunds and the taxpayer’s interest in the process, the process proceeds as usual. However, FURS will be prepared for taxpayers who will want to perform certain activities, such as the assessment of real estate transfer tax, assessment of tax on motor vehicles, inheritance, and gifts. Irrespective of the holidays, FURS will perform work in the field of supervision with taxpayers in proceedings where dates have been previously agreed. If the taxpayer is not available, the Financial Administration will send him a written invitation after 15 August.

We are pleased to announce that attorney Matic Novak joined our team as Senior Counsel and will be heading our M&A department.

Matic has more than ten years of post-qualification experience in regional M&A and Financing transactions. His transaction track record and negotiation skills, as well as experience in corporate litigation and international arbitration, are a valuable addition to our law firm and will provide great added value to our clients.

Until recently, the lease of business buildings and business premises (the so-called business lease) was in detail regulated by the Business Buildings and Business Premises Act (Zakon o poslovnih stavbah in poslovnih prostorih; “ZPSPP”), which was adopted in 1974. In relation to the general Obligations Code (Obligacijski zakonik; “OZ”) the ZPSPP represented a special regulation that set forth special regulation of certain sets of issues in the area of business leases, namely:

  • the object and creation of the lease,
  • rights and obligations arising out of lease and
  • termination of the lease.

 

Article 52 of the Act Amending the Housing Act (Zakon o spremembah in dopolnitvah Stanovanjskega zakona; “SZ-1E”) repealed the ZPSPP in its entirety. However, the legislator has determined that, despite the repeal, the provisions of the ZPSPP shall continue to apply to lease agreements concluded before SZ-1E’s entry into force (i.e. before 19 June 2021).

 

In the past, the ZPSPP has been the subject of numerous criticisms, the most important of which were probably its conceptual outdatedness and ever changing and inconsistent case law, but it nevertheless represented a certain constant in the field of business leases. The issues regulated by the ZPSPP would probably require a more modern and comprehensive regulation by the legislator, which calls into question the sense of a sudden and simple repeal of the entire ZPSPP. Such a decision by the legislator could lead to a considerable lack of clarity in the area of ​​business leases.

 

The repeal of the ZPSPP means that, as of 19 June 2021, tenants and lessors of business buildings and business premises shall comply with the provisions of the more general OZ, in particular, the provisions on lease agreements, when regulating mutual legal relationships. On the one hand, the repeal of the ZPSPP allows the parties to business lease agreements greater freedom in regulating their mutual legal relationship, however, on the other hand, this requires much greater care and more detailed contractual regulation of business leases.

 

Given the repeal of the ZPSPP and the (current) absence of case law in the field of business leases after the repeal of the ZPSPP, we advise clients to be more careful when concluding business lease agreements and to conclude as detailed contractual arrangements as possible, taking into account the provisions of the OZ. In this manner, the parties may avoid, as far as possible, the risks related to the content of the legal relationship related to the business lease.

On 17 May 2017, the European Parliament and the Council adopted Directive (EU) 2017/828 on shareholders’ rights, also called the Shareholders Rights Directive II (hereinafter: the Directive), amending and revising Directive 2007/36/EC. One of the Directive’s substantive sections is intended to regulate related parties’ transactions, and the associated protection of the company and its (minority) shareholders (Article 9c), as the related parties’ transactions can be detrimental to companies and their shareholders since they allow related parties to “seize” property belonging to the company. Therefore, guarantees to protect the interests of companies and shareholders are of the utmost importance.

 

The very issue of the regulation of related parties’ transactions in the Directive has been one of the most controversial among Member States. As a result, a number of compromise solutions have been reached, including the need to regulate the issue in national legislation, leaving Member States a wide margin of manoeuvre in the implementation. In Slovenia, the Directive was implemented with the amendment of the Companies Act (ZGD-1K). It should be noted that the level of protection of the interests of companies and shareholders was already high before the amendment, as ZGD-1 contained many provisions intended to regulate transactions with related parties. Following the German law (verbundene Unternehmen), Slovenia has a fairly detailed regulation of concern law, which regulates the same issues as the Directive when it comes to related parties’ transactions.

 

The existing rules have already regulated the elimination of conflicts of interest when concluding related parties’ transactions with a company official (Article 38a). The rules on the subsequent formation (Article 188), the preservation of capital (Article 227), the transfer of at least 25 % of the company’s assets (Articles 330 – 332), affiliated companies (Articles 527 – 562), legal status transformations and changes in share capital shall be mentioned as well. Regarding transactions with members of management or supervisory bodies, the company’s loans to members of bodies and executive directors have been specifically regulated (Article 261) and the approval of the supervisory board for contracts determining the rights and obligation of members of management and supervisory bodies has been envisaged (Article 262). It has been already stipulated that the company shall be represented by the president of the supervisory board in relations with the members of the management board (Article 283) and that payments to members of the supervisory board and non-executive members of the management board shall be determined by the articles of association or the general meeting (Article 284).

 

The provisions of the Directive regarding related parties’ transactions have been substantially implemented in the new provisions of Articles 281.b to 281.d, applying only to public limited companies whose securities are traded on a regulated market. A different regulation is envisaged for transactions with company officials and related persons, as the rules also apply to non-public public limited companies and in some cases also to limited liability companies. Company officials are also subject to stricter regulation under Article 270a in relation to new provisions of Articles 284a, 290a and 515a of ZGD-1. The amendment ZGD-1K has also interfered with Articles 38a and 261, the former of which was almost completely deleted, and supplementing the latter.

 

Related parties are considered to be related companies and individuals as defined in international accounting standards. In any case, members of the management and supervisory bodies of the parent company, affiliate companies, joint ventures and companies controlled or jointly controlled by a member of the management or supervisory body of the company or the parent company are included in the definition. According to ZGD-1, the aforementioned subjects are defined as related companies, but according to the international standards, this definition may be significantly broader. In defining significant transactions, the amendment ZGD-1K determined one quantitative indicator, namely 2.5 percent of the value of assets shown in the balance sheet form the last approved annual report. Related parties’ transactions do not include only legal transactions, but also various measures of a factual nature, whereby it is essential that assets are transferred from the company to another entity, such as the sale and purchase of assets, order and provision of services, use and relinquishment of the use of objects and rights, financing and provision of guarantees, and provision of collateral for claims. In Article 281b are exhaustively specified exemptions, where the transactions are not considered to be related parties’ transactions.

 

The related parties’ transactions are still concluded by the company’s management as its legal representative; however, they require an approval by the competent authority. The amendment ZGD-1K designated the supervisory board in companies with a two-tier management system and the board of directors in companies with a one-tier management system as such a body. The amendment also extended the application of the rules on the obligation to submit a transaction for approval to non-public public limited companies and limited liability companies that meet criteria for medium and large companies. All companies, unless the company is organised as a limited liability company and does not have a supervisory board, must also establish an internal procedure for regular verification, whether the transaction falls within the scope of regular activities and is concluded under normal market condition. In case of a “regular” transaction, consent is not required, unless otherwise provided in the articles of association.

 

In addition to approving transactions with related parties, transparency is also essential, so the new Article 281d stipulates the obligation to publish the information on the conclusion of a transaction immediately thereafter. The company must publish the notice in accordance with Article 11 of ZGD-1, i.e., on the website of the Agency of the Republic of Slovenia for Public Legal Records and Related Services (AJPES). In addition to publication on the AJPES website, the company must also publish the same information on its website or another information system. Additionally, ZGD-1 stipulates the obligation of the controlling company to publish the conclusion of transactions, concluded by subsidiaries of the company with clients related to the company, assuming that the company would have to publish such information if it would carry out such transactions itself.

 

Due to the new regulation of concluding and approving transactions with related parties, the amendment ZGD-1K comprehensively regulated the conclusion of contracts, legal transactions and other legal acts between the company and its directors and supervisors. The conclusion of four types of contracts is regulated in a new or amended manner, namely contracts on performance of functions, consulting contracts, loan agreements, and transactions with the members of management and supervisory bodies.

 

Article 689a provides for a criminal sanction for violation of the presented provisions. A fine of 4,000 to 5,000 euros may be imposed on the management or procurator who concludes a legal transaction without the appropriate consent of the supervisory board, board of directors or general meeting. Other civil sanctions are not determined, so the principle of unlimited authority in external relations under Article 32 of ZGD-1 shall still apply.

 

Source: Companies Act (ZGD-1): with the amendment ZGD-1, introductory explanations by Marijan Kocbek, Saša Prelič, GV Založba, 2021.

The latest amendment to the Slovenian Companies Act supplemented the set of data that has to be included in the application for the first entry of a company into the register; in addition to the company name, activities, registered seat and other information specified by law, it must now (inter alia) also contain the information on the company’s e-mail address. The obligation to register the e-mail address, however, does not apply to newly established companies only, as all companies must harmonize their data in accordance with the new statutory requirement.

The company’s e-mail address is public information that will be published on the ePRS portal. It can be submitted for entry into the register in several places, namely at the SPOT point, AJPES branch or notary, by no later 24 February 2022.

Failure to comply with the obligation to enter the company’s e-mail address into the register is considered a misdemeanor for which a fine can be imposed on both the company and its responsible person. We thus suggest that you check whether all required information of your company is entered into the register and supplement it, if necessary.

In general, applicants can wait a disproportionately long time for response to a building inspection initiative to introduce an inspection. The latter also applies to cases of damage to buildings that occur due to inadequate renovation or construction of a facility in the immediate vicinity.

In cases such as those described above, the building inspector initiates an inspection procedure on suspicion that the building directly endangers human health and life due to injuries. It should be noted that the applicant in the inspection procedure cannot assert a claim for damages, which would claim compensation for damage caused to him as a result of improperly performed work on the neighbouring building, or compensation for any non-pecuniary damage caused to him as a result of an interference with his constitutionally protected rights. Furthermore, the subject of the inspection procedure cannot be the assertion of the inferiority of the property due to the execution of construction works on a nearby construction site.

If the building inspector finds that the building is dangerous, ie. that it directly endangers human health and life, property of greater value, traffic or neighbouring buildings, he will prohibit its owner from using the building and order that the facility is adequately insured at owner’s expense within a certain period of time or that maintenance work is carried out on the building or part of the building that is dangerous within the specified period. The building inspector will also take action if he finds that the construction is not carried out in accordance with the final building permit or that it is not in accordance with the law and other regulations.

If the owner of the damaged building believes that the damage to the building (for example cracks) occurred due to the implementation of construction work on a nearby building or. construction site, he may claim damages from the participants in the construction in a court proceeding.

If you notice damage on your own building, it makes sense to seek the help of an expert who would examine the damage, take appropriate measurements, and assess whether the damage may have occurred due to construction or works on a nearby building or construction site. Such findings may be useful in the eventual subsequent assertion of damage claims against participants in the construction.

On 1 July 2021 the provisions of Council Directive (EU) 2017/2455 dated 5 December 2017 will be transposed into Slovenian law, bringing changes mainly with regard to VAT on delivery of goods.

The VAT exemption for imports of consignments from countries outside the EU of small value, i.e. up to EUR 22, will be abolished. These shipments will be subject to VAT at the rate of each Member State. This eliminates the VAT exemption for shipments from countries outside the EU of all values.

Shipments up to the value of EUR 150 will continue to be exempt from customs duties after 1 July 2021, as will gifts worth up to EUR 45, which will also be exempt from VAT.

At the beginning of May, the Slovenian Government submitted a proposal for the Act Amending the Value Added Tax Act to the National Assembly, which has not yet been adopted.

In accordance with the provisions of the Companies Act (“ZGD-1”), the Register of Companies Act and the Decree on the registration of companies and other legal entities in the register of companies in particular the following documents are required for limited liability company incorporation:

  1. articles of association or act of foundation,
  2. appropriate documentation on payment of share capital, which differs in cases of in-kind and cash contributions,
  3. documentation on the appointment of members of management and/or supervisory board,
  4. consents of future members of management and/or supervisory board to their appointments to these positions with statements that there are no obstacles to their appointments,
  5. resolution of the company’s management on determination of the company’s business address and
  6. a statement by the real estate owner that it permits the company to operate in the real estate on that business address or a statement by the company if the real estate at the business address is handed over to the company as an in-kind contribution.

 

Following the entry of ZGD-1K amendment into force, in cases of foreign shareholders (i.e. shareholders from other European Union Member States or from third countries), special attention shall be paid to the provision of paragraph 12, Article 10.a of ZGD-1, which entered into force on 24 February 2021. According to the said provision, foreign natural or legal persons shall submit appropriate evidence on fulfilment of conditions referred to in points 1 to 4, paragraph 1, Article 10.a of ZGD-1, namely:

  1. an extract from the appropriate register or, failing that, an equivalent document issued by the competent judicial or administrative authority showing that grounds for restriction of company incorporation in relation to points 1 and 4, paragraph 1, Article 10.a of ZGD-1 (i.e. impunity for certain criminal offences and for certain labour law minor offences) do not exist and
  2. a certificate issued by the competent authority showing that the shareholder has no outstanding tax liabilities in relation to points 2 and 3, paragraph 1, Article 10.a of ZGD-1 (i.e. in relation to the publication of the entity or its direct or indirect subsidiaries (based on more than 25% participation) as a non-submitter of tax returns or as a tax non-payer),

whereby these documents shall not be older than 30 days. In cases of Slovenian natural and legal persons, the aforementioned checks are carried out in the official records by the registration authorities and notaries, ex officio.

 

Regarding foreign shareholders and members of management and/or supervisory bodies, it shall be noted that such persons need to be entered into the Slovenian tax register and obtain Slovenian tax numbers. With regard to the new company incorporation attention should also be drawn to the requirements of the Prevention of Money Laundering and Terrorist Financing Act regarding the identification and registration of the beneficial owners of a newly established company.

 

Limited liability company incorporation in Slovenia is not overly demanding, but the provisions of the relevant regulations contain a number of requirements both in terms of the required documents and in terms of formal requirements. These require future shareholders to act carefully and to plan the incorporation process in advance in order to avoid any unwanted complications with the incorporation of a company, in particular in cases where companies have to be incorporated in a short timeframe.

On 30 March 2021, the National Assembly of the Republic of Slovenia adopted an amendment to the Foreigners Act (ZTuj-2F), which entered into force on the fifteenth day after its publication in the Official Gazette of the Republic, i.e., on 27 April 2021, and will be applied on the thirtieth day after its entry into force, i.e., on 26 May 2021. The amendment introduces a new institute of a complex crisis in the field of migration, and at the same time brings some novelties, especially in the direction of tightening the conditions for the stay of foreigners in the Republic of Slovenia. The main solutions thus refer to the knowledge of Slovene language, family reunification, sufficient means of subsistence and Brexit.

 

The amendment tackles the emergence of a complex crisis in the field of migration, especially in circumstances where a very large number of illegal migrants would enter a certain or more areas of the Republic of Slovenia, who would at the same time express their intention to apply for international protection. Such circumstances could lead to a situation where public authorities would not be able to fully implement all their obligations, and thus such situation could also affect the functioning of other systems and subsystems. Therefore, the National Assembly of the Republic of Slovenia will be able to declare (with at least 46 votes) a complex crisis, which will temporarily suspend the implementation of the International Protection Act and thus restrict access to asylum.

 

The amendment introduces, among others, a requirement for knowledge of the Slovenian language at entry level (A1 under the Common European Framework of Reference for Languages) for the extension of a temporary residence permit for a third-country national due to family reunification, and at basic level (A2 under the Common European Framework of Reference for Languages) to issue a permanent residence permit to a third-country national. The scope of co-financing the participation in the Slovene language learning programs and acquaintance with Slovene history, culture and the constitutional system has also been redefined – in the amount of 50 percent of the program price -, while also limiting the categories of foreigners who will be eligible for co-financing. However, the provisions relating to the condition of knowledge of the Slovene language will not apply until two years after the amendment has entered into force.

 

In addition, the conditions for family reunification are being tightened as well. According to the new rules, foreigners (third-country nationals) will be able to exercise this right only after two years (and no longer after one year) of legal residence on the territory of the Republic of Slovenia have elapsed. Furthermore, in the field of demonstrating sufficient means of subsistence, reimbursements of work-related expenses, which include expenses for meals during work, transport to and from work, and reimbursement of travel expenses, are excluded from the pool of assets taken into account in the calculation.

 

The amendment also ensures the implementation of the provisions of the Agreement on the withdrawal of the United Kingdom from the European Union in the part governing residence rights and residence permits of citizens of the United Kingdom and their family members who legally resided in the Republic of Slovenia on 31 December 2020 and continue to reside in the Republic of Slovenia after that date, and on the issuance of a certificate on the rights of a border worker.

 

Most of the solutions from the amendment was met with sharp criticism from non-governmental organisations. In particular, the introduction of a complex crisis is, in their opinion, contrary to the International Convention on the Rights of Refugees, which guarantees the right to apply for international protection, and violates the principle of non-refoulement, so they have already announced (another) trial before the Constitutional Court.

The amendment to the Enforcement and Insurance Act (hereinafter: ZIZ), which is valid from 27 March 2021 onwards, enables debtors who are natural persons the possibility of individual postponement of enforcement in the event of exceptional circumstances. Previously, such a postponement for natural persons was provided for in the Seventh Anti-Corona Law, ie. PKP 7.

In accordance with the amended Article 71 of the ZIZ, the court will now be able to postpone enforcement at the proposal of the debtor or ex officio, if justified reasons are given.

As situations in which a proposal for postponement is justified, the provision considers, inter alia, (i) the case of enforcement against the debtor’s home in the case of the recovery of a monetary claim which is manifestly disproportionate to the value of the property and (ii) the case of enforcement for vacating and handing over an apartment or dwelling house which is the debtor’s home, if the debtor proves that he could not regulate the housing problem differently and the continuation of enforcement would endanger the position and interests of the debtor more than postponing enforcement and the interests of the creditor.

Furthermore, the amendment also marks as a situation in which a postponement would be justified the case when the debtor, as a consumer, asserts the invalidity of a legal transaction from a directly enforceable notarial deed. Last but not least, the reason for the postponement of enforcement can be due to other specially justified reasons shown by the debtor. With the latter, the debtor’s possibilities for postponing enforcement are noticeably expanded.

In accordance with the amendment to the ZIZ, the court will warn the debtor of the possibility of postponing enforcement in the enforcement order. In the case of enforcement against a property, the postponement will be possible only until the issuance of a sale order is issued, which the court warns the debtor in the enforcement order.

We are excited and proud to be again recognized as one of the leading law firms in Slovenia by The Legal 500.

We are very grateful to our clients and their trust in us as well as their generous contribution in this research that made this ranking possible.

The Legal 500 has been analysing the capabilities of law firms across the world, with a comprehensive research programme revised and updated every year to bring the most up-to-date vision of the global legal market. The rankings are based on a series of criteria, but simply put, they highlight the practice area teams who are providing the most cutting edge and innovative advice to corporate counsel.

We are participating in this research for many years, and it is encouraging to see development of our law firm recognized by such esteemed legal directory.

More about ranking you can see on The Legal 500 official website.

We are proud to have succesfully defended a EUR 13.5 million tax matter in relation to a transaction that was completed in 2015. Financial Administration initiated the tax audit of the transaction shortly thereafter and taxed our clients in the amount of EUR 13.5 million. After the Ministry of Finance had granted our appeal and returned the matter back to the Financial Administration, the latter had issued a (now final) taxation decision in the amount of slightly over EUR 50 thousand, thus resulting in a 99.54% reduction of the tax obligation. We are very happy for the Ministry of Finance to have objectively investigated the matter, which resulted in legimite taxation of our clients.

Due to renewed restrictions on public life and measures taken to limit the COVID-19 epidemic, including home schooling, restrictions on childcare and restrictions on public transport, the Slovenian Government extended the measure of salary reimbursement to employees not working due to quarantine and inability to perform work due to force majeure.

The amount of compensation is unchanged and amounts to 80 percent of the average employee’s monthly salary for the last three months, whereas the amount of compensation may not be lower than the minimum wage.

Due to child care, parents of children up to and including the fifth grade of primary school are entitled to compensation, if the parents cannot provide other care.

During the period of extended measures (until 30 June 2021), employers are entitled to reimbursement of the full amount of compensation paid to employees. Employers must claim the reimbursement no later than eight days from the beginning of the employee’s absence from work.

As a result of adoption of new restrictive measures due to the COVID-19 epidemic, the President of the Supreme Court of the Republic of Slovenia issued an Order amending the order on special measures from Article 83a of the Courts Act in the territory of the Republic of Slovenia on 29 March 2021, which stipulates that all hearings scheduled between 1 and 9 April 2021 are cancelled in matters which are not considered urgent under applicable regulations.

The operation of the courts is therefore again limited; the hearings scheduled between 1 and 9 April 2021 will be postponed to later dates.

A Real Estate Cadastre Act proposal, which, in addition to important systemic solutions in the area of real estate records, sets forth a new, uniform “cadastral procedure” replacing separate procedures of preparation of studies by land surveyors and of recording new or amended information as currently set forth by the Real Estate Records Act, has been published.

Under the proposed Real Estate Cadastre Act the cadastral procedure includes (i) procedures for preparation of studies and preparation of study that shall be performed by land surveyors (specific assignments in relation to entry of buildings and parts thereof may also be performed by building designers), and (ii) administrative procedures of authentication and decision-making on proposed amendments and (iii) entry of information into the real estate cadastre that shall be performed by the surveying and mapping authority. Such uniform cadastral procedure includes, amongst others, determination of land plot borders, land allotments, land consolidations, determinations of superficies rights’ and easements’ areas, entries of buildings and parts thereof and amendments of information on buildings and parts thereof.

In relation to the new cadastral procedure the proposed Real Estate Cadastre Act also has an important consequence for holders of ownership rights on real estate.

Namely, the proposed Real Estate Cadastre Act sets forth that persons entered in the land register with Slovenian PIN (for natural persons) or registration number (for legal entities) shall be notified of a cadastral procedure by an invite for participation in an act sent to their permanent residence address or address for service in such a manner that the persons receive it at least 8 days before the commencement of the act. However, persons who are not registered in the land register with Slovenian PIN (for natural persons) or registration number (for legal entities) shall be deemed to have been invited if the cadastral procedure is published in the cadastre information system at least 8 days before the commencement of the act, meaning that such persons do not need to be personally invited.

These provisions may have important consequences for a large number of persons. Based on the data of the Supreme Court of the Republic of Slovenia as of 8 January 2020 as many as 1,628,424 holders of ownership rights have not been entered in the land register with complete data, which represents as much as 15.4 % of all holders of ownership rights.

In light of the mentioned solutions of the proposed Real Estate Cadastre Act, we therefore recommend that all persons check the entries in the land register and, if necessary, affect supplementation or correction of the entered data. Otherwise, in accordance with the proposed Real Estate Cadastre Act, important legal consequences may occur.

On 9 March 2021, the first e-auction of the Slovenian judiciary, in which several bidders participated, was successfully completed. At the auction, which lasted 40 minutes, the apartment in the size of 63.8 square meters with the starting price of 39,256.70 euros, was sold for 77,000.00 euros. More than 550 e-auctions are announced in the next three months.

 

Since 1 February 2021, judicial auctions in enforcement proceedings may be conducted online and not merely in person at the auction venue. Online judicial auctions can be accessed through the security-supported web portal sodnedrazbe.si, which replaces publications on the websites of the judiciary and individual courts. All sales of real estate, movable property and rights that are carried out in court proceedings after 1 February 2021, are now published on one website. The execution of online public auctions is possible in the sale of real estate and rights in the enforcement proceedings, and the method of auctioning in other types of proceedings is visible on the web portal.

 

Access to publications is free of charge and is possible without user registration. However, for other activities, such as saving favourite matches and bidding itself, users must obtain a qualified certificate of one of the trusted service providers, and log in into the SI-PASS system, whereby the use of a one-time smsPASS password is also enabled. This facilitates easier access to the public auction, which increases the circle of potential bidders and competition, with the aim of achieving higher prices of things sold, for more efficient repayment of creditors’ claims. The online auction is locationally and timely independent, anonymous (after the confirmed application, the bidder is assigned a unique sign with the system to participate in the selected online auction) and prevents possible collusion and blackmail between individual bidders. 

 

The portal allows you to search by multiple keys, and the interested bidder can easily register for the auction with one click. The court that called the auction confirms or rejects the interested bidder after reviewing the application and verifying the payment of the security, of which the bidder is informed via e-mail and the portal system. All users are guaranteed the authenticity of transactions, which means that bidders cannot withdraw or deny the given bids. It is also impossible to place bids before and after the time set for the online auction. The online auction starts and ends automatically, allowing the auction to be extended if a new bid arrives two minutes before the end of the auction. After the auction, each bidder receives a report on the progress of the online auction.

By decision no. UI-16 / 21-11 of 18 February 2021, the Constitutional Court temporarily suspended the implementation of the third, fourth and fifth paragraphs of the Employment Relationships Act (Official Gazette of the Republic of Slovenia, No. 21/13, as amended; hereinafter ZDR- 1) and Article 156.a of the Public Employees Act (Official Gazette of the Republic of Slovenia No. 63/07; hereinafter ZJU), which refer to the regulation of retirement of older employees with fulfilled conditions for retirement due to old age.

The Constitutional Court assessed the legality of Articles 21 and 22 of the Act Determining Intervention Measures to Assist in Mitigating the Consequences of the Second Wave of COVID-19 Epidemic (Official Gazette of the Republic of Slovenia, No. 203/20; hereinafter ZIUPOPDVE), which determined a new economic reason for termination of an employment contract in the private and public sectors. These are provisions that allow the employer to terminate an employee’s employment contract for economic reasons without justifying the reasons with a notice period of 60 days, if the employee meets the conditions for acquiring the right to retire due to old age.

As stated in the decision of the Constitutional Court, the termination of the employment contract terminates the employment relationship and thus the rights of employees arising from the employment relationship. Termination of an employment contract for older employees, who are particularly difficult to employ, would not only mean the loss of employment, but could also mean the end of their professional careers. In the opinion of the Constitutional Court, the consequences that would arise from the further implementation of a possible unconstitutional statutory regulation would be greater than the consequences that would arise if its implementation were delayed until the final decision of the Constitutional Court. Until its final decision, the Constitutional Court also withheld the effect of already served terminations of employment contracts, which were issued in accordance with the new regulation. The latter entered into force with the seventh anti-corona law, i.e., 31 December 2020, and the 60-day notice period based on the disputed regulation in the case of already served terminations of employment contracts would expire at the beginning of March.

With this provision, the Constitutional Court changed its previous position that the termination of an employment contract due to the fulfilment of conditions for acquiring the right to retire due to old age cannot endanger the rights of employees, as social security is guaranteed at the end of their professional career.

We are proud to announce that our Managing Partner Jan Sibinčič was again ranked in Chambers and Partners Global guide.

We are pleased that our clients recognized his and our team’s work, and we would like to thank everybody who helped and gave the opportunity for ranking among such amazing legal experts.

We always strive for excellence and we will do our best to keep providing quality legal service.

More on Chambers and Partners official website.

Monday, 1 March 2021, is the deadline to submit tax returns with regard to personal income tax from capital income (i.e. profit from the sale of securities and other shares and investment coupons, interest on cash deposits, other interest and dividends), rental income and tax returns with regard to profits derived from the sale of derivatives for 2020. The tax returns are submitted on the prescribed forms and can also be filed electronically, via the eDavki system.

The statutory deadline for submitting the tax returns is 28 February 2021, however, as this year that is Sunday, when the Financial Administration of the Republic of Slovenia does not work, the deadline for submitting the tax returns is on Monday, 1 March 2021.

On 5 February 2021, the eighth anti-corona act came into force (Act on Additional Measures for Mitigation of Consequences of COVID-19, “PKP8”). PKP8 prolongs some of already adopted measures as well as implements new ones. Below is a short overview of most relevant measures:

  1. PKP8 introduces certain restrictions in respect to payment of bonuses to management: employers which have received reimbursement of salaries under PKP8, must return such reimbursements in the event that in 2021 or for 2021 from 1 February 2021 onwards:
  • paid out the profits;
  • acquire treasury shares or treasury shares; or
  • paid rewards or part of salaries for business performance to management.

The employer must notify FURS of the payment no later than 2 months after the payment;

 

  1. PKP8 determines subventions for the increase of minimum salary, amounting to EUR 50 per month. Employers are entitled to a subsidy for each employee whose full-time salary (allowances excluded) does not exceed the statutory minimum wage;

 

  1. PKP8 is changing prior provisions regarding payment of crisis allowance: also employees who have received payment for business performance are entitled to payment of crisis allowance;

 

  1. Measure of temporary waiting for work at home is prolonged until 30 April 2021, conditions for ordering employees to do so are unchanged. The upper amount of paid compensation for waiting for work at home is limited to the amount of the average salary in the Republic of Slovenia for the month of October (i.e. EUR 1,821.44 gross);

 

  1. PKP8 determines additional categories of employers eligible to request subventions for shorter working time: since 1 February 2021, this measure is available also to employer – a legal or natural person who was entered in the Business Register of Slovenia before 18 October 2020 and employs employees on the basis of a full-time employment contract or a natural person performing an agricultural activity and was entered in the Register of Agricultural Holdings before 18 October 2020 and according to employer’s estimate, he cannot provide work to at least 10% of employees at least 90% of work per month;

 

  1. PKP8 extends the measure of short-time absence from work (up to 3 consecutive days) due to illness without doctor’s confirmation until the end of 2021;

 

  1. PKP8 is lowering the basis for calculation of social security contributions for employees from July 2021 until the end of 2021, due to epidemic and increase of minimum salary in 2021. The lowest basis for payment of social security contributions paid from July 2021 to December 2021 is the minimum wage (i.e. EUR 1,024.24), and not 60% of the average wage.

On 27 January 2021, the amendment to the Companies Act (ZGD-1K) was adopted, which amends and supplements certain provisions of the Companies Act (hereinafter: ZGD-1). Some novelties brought by the amendment are highlighted below.

The amendment extends the restrictions on the establishment of companies and entrepreneurs and the acquisition of partner status to natural and legal persons from another Member State or a third country. In addition, the range of criminal offences that prevent a person from becoming a founder, shareholder or entrepreneur is also noticeably expanding. The latter now also applies to criminal offences against human health and criminal offences against the general security of people and property. At the same time, there is an additional restriction on establishing, acquiring the status of a shareholder, and performing the activities of an entrepreneur for persons who have been publicly announced on the list of taxpayers who do not pay VAT in the last 12 months. An additional restriction on the establishment and acquisition of business shares in accordance with the amendment also applies to persons who have been fined by a final decision of the Market Inspectorate of the Republic of Slovenia for an offense related to unauthorized interference with the company’s share capital.

Furthermore, the amendment also interferes with the operations of limited liability companies, so that it redefines the obligation to form a supervisory board in those companies that are considered to be a subject of public interest. In such companies, the Supervisory Board must also form an audit committee, unless the amendment provides for an exception to this obligation. In addition to the above, in some cases the obligation to obtain the consent of the supervisory body and even the public disclosure of the transaction is newly determined, and a special article regulates the conclusion of transactions between the company and directors or procurators and related persons.

In addition to the registered office, the business address of the company will now have to be entered in the register. The set of data that must be included in the application for the first entry of the company in the register has also been supplemented, and the company will also have to state its business and e-mail address.

Finally, it is worth nothing the new criminal provisions introduced by the amendment. According to the amendment, new offenses are, for example, determination of a business address in contravention of the law, storage of personal data on the company’s shareholders for more than 12 months, and waiver of the obligation to publish and ensure free access to the remuneration policy and the remuneration report. The misdemeanours of intermediaries in the exercise of voting rights of shareholders, institutional investors, asset managers and voting advisers, which the amendment introduces as a new legal category in ZGD-1, have also been newly determined.

Article 59 of the Act determining intervention measures to assist in mitigating the consequences of the second wave of COVID-19 epidemic (ZIUPOPDVE) stipulates that, notwithstanding the Article 109(1) of the Personal Income Tax Act (ZDoh-2), the personal income taxable base for years 2020 and 2021 shall not include allowances received by employees for work in risky conditions, for danger and special workloads at social care providers, at the Government Office for the Support and Integration of Migrants, and at external at external contractors, who perform work at contractors referred to in Article 56 of ZZUOOP.

 

Also, the annual personal income taxable base does not include allowances for work due to temporary assignment to a provider in the public health service network, a provider in the public service network in the field of social care – institutional care, or a crisis accommodation provider in case of increased workload, as well as the allowances of certain public servants, employee in the field of public works, and pupils and students for work with patients and users suffering from COVID-19.

 

This will have impact on the calculation of rights arising from public funds, which usually take into the account the income from the personal income tax decision of the previous calendar year: child allowance, state scholarship, reduced kindergarten fee, break-time snack (malica) subsidy for pupils and students, and lunch subsidy for pupils.

 

By 31 January of the current year for previous calendar year, employers must report the data on employees who were paid allowances in 2020 and/or 2021 and the amount of paid allowance to the Financial Administration of the Republic of Slovenia via file called VIRIZV.DAT – data on paid allowances, which are not included in the taxable base for the annual assessment of personal income tax.

 

There has also been a change for personal income taxpayers regarding the allocation of a part of personal income tax for donations. A resident taxpayer can now request up to one percent (previously up to 0.5 percent) of personal income tax to be used for financing of donation beneficiaries. At least a percentage of personal income tax rounded to one tenth of the percent (i.e., 0.1 percent) may be allocated to a single beneficiary, whereby the total percentage allocated to several beneficiaries may not exceed one percent of the assessed personal income tax. The resident taxpayer is not required to submit a new request for the allocation of part of personal income tax for donations. Requests that are valid on the day of entry into force of ZIUPOPDVE, i.e., 31 December 2020, shall be considered and percentages are automatically doubled unless the resident taxpayer changes his or her request.

 

In order to enable funding from the allocation of part of personal income tax to the widest possible circle of non-governmental organisations, the beneficiaries of donations for the allocation of part of personal income tax are:

  • for 2020, also non-governmental organizations that operated on 31 December 2019 and, in accordance with the law governing non-governmental organizations, have the status of non-governmental organization in the public interest on 31 March 2021 and are entered in the register of non-governmental organizations in the public interest; and
  • for 2021, also non-governmental organizations that operated on 31 December 2020 and, in accordance with the law governing non-governmental organizations, have the status of a non-governmental organization in the public interest on 31 March 2021.

 

The Agency of the Republic of Slovenia for Public Legal Records and Related Services shall send data on all non-governmental organizations for the purposes of preparing the list of beneficiaries of donations for 2020 and/or 2021 to the Financial Administration of the Republic of Slovenia. In accordance with the Article 142(8) of ZDoh-2, the Government of the Republic of Slovenia shall determine the amendment of the list of beneficiaries of donations (for 2020 by 15 May 2021). A taxpayer who wishes to allocate a part of personal income tax for donations to beneficiaries from the amended list will have to submit a request or change in the request for the assessment year 2020 no later than on 31 May 2021.

Just before the new year, the National Assembly of the Republic of Slovenia adopted the seventh anti-corona law, called Act Determining Intervention Measures to Assist in Mitigating the Consequences of the Second Wave of COVID-19 Epidemic Intervention (“ZIUPOPDVE” or “PKP7”), which entered into force on December 31st 2020. PKP7 brings several additional measures in the field of economy, which should facilitate companies to cope with the epidemic, preserve jobs and enable the survival of activities that are not allowed to operate or act truncated. One of such measure is the obligation to pay a crisis benefit, presented below.

 

According to the provisions of PKP7, employers in the private sector are required to pay a crisis benefit of EUR 200 upon payment of the December salary to employees who performed work in December 2020, regardless of whether the employee performed work at the employer’s headquarters, from home or elsewhere.

 

An employee whose last paid salary (for the month of November 2020) does not exceed twice the minimum wage is entitled to the crisis benefit, which means that his last paid gross salary may not exceed EUR 1,881.16. From the payment of the crisis benefit in the amount of EUR 200, no social security contributions or advance payment of personal income tax are calculated and paid.

 

When calculating twice the last paid salary, all components of the salary are considered, which, in addition to the basic salary, are also part of the salary for work performance and benefits, and the payment for business performance, if agreed in a collective agreement or employment contract. If the last paid monthly salary of an employee exceeds twice the minimum wage, the employee is not entitled to a crisis benefit.

 

If the employee has not worked for a whole month, he is entitled to a proportionate share of the crisis benefit. It should be clarified that the employee is entitled to the crisis benefit for a holiday and other non-working day determined by law, if he would actually work on that day, and the crisis benefit is not due to him for any other forms of absence from work, such as due to temporary waiting for work, use of annual leave, etc. If an employee has a part-time employment contract, he is also entitled to a crisis benefit in proportion to the working time for which he has concluded an employment contract, unless the employee works part-time in special cases in accordance with the law governing employment.

 

Funds for the payment of the crisis benefit are provided in the budget of the Republic of Slovenia. In order to reimburse the paid crisis benefit to employees, the employer must submit a statement via the eDavki portal, stating that he has paid the crisis benefit to the employees.

 

The declaration is expected to be available in the second half of January and must be submitted by the end of February 2021 at the latest.

The Slovenian Government has adopted a Resolution on suspension of the deadlines for exercising the rights of the parties in court proceedings determined by legislation (Official Gazette of the Republic of Slovenia no. 190/2020; the “Resolution”), published in the Official Gazette on 17 December 2020. The Resolution has been adopted on the basis of the recommendation given by the president of the Supreme Court.

Pursuant to the Resolution, the deadlines for exercising the rights of the parties in court proceedings determined by legislation, have been suspended. The Resolution came into force on 20 December 2020 and shall remain in force until 10 January 2021. The deadlines for exercising the rights of the parties in court proceedings determined by the legislation are suspended during this time.

Suspension of the deadlines applies also to procedural deadlines in non-urgent matters, which have been suspended with the Order on special measures from Article 83a of the CA due to the declared epidemic of the infectious disease COVID-19 in the territory of the Republic of Slovenia (Official Gazette of the Republic of Slovenia no. 165/2020; the “Order”). The Order remains in force until its revocation.

The new Act Determining the Intervention Measures to Mitigate the Consequences of the Second Wave of COVID-19 Epidemic also called the Sixth Anti-Corona Act or PKP6, affects 38 laws. As the epidemic can also have an impact on the position of the parties in administrative proceedings, by restricting or preventing the conduct of proceedings, the legislator with PKP6 also intervened in the field of regulation of administrative proceedings. With the entry into force of PKP6, a new Chapter XXII.a entitled MANAGEMENT OF THE PROCEDURE IN THE EVENT OF AN EMERGENCY was added to the General Administrative Procedure Act (ZUP), which contains Article 306.a, the content of which is presented below.

 

It follows from the very name of the chapter that Article 306.a of the ZUP is not a temporary provision that would be valid only during the COVID-19 epidemic but will also apply in the event of natural and other serious disasters or similar emergencies to a greater extent, that can affect the position of the parties in the administrative procedure, limit or prevent the administrative decision-making of the body in the administrative procedure.

 

In accordance with the aforementioned amendment, the ZUP will enable the government to determine, in the event of extraordinary events, temporary measures, the bodies to which these measures apply and the period of validity of the measures. Such interim measures must be necessary, appropriate and proportionate to safeguard the position of the parties and to enable decision-making in administrative matters and will only take effect with the entry into force of a government decree in each individual case of an emergency.

 

Depending on the circumstances of the emergency, the government will be able to decide on one or more interim measures, choosing between the following:

  • determination of a different territorial competence of bodies or holders of public authority,
  • making applications outside business hours and on public holidays,
  • submitting applications electronically without a secure electronic signature with a qualified certificate,
  • restriction on submitting applications directly to the Authority,
  • restriction of public participation in procedural acts in order to protect the health of participants,
  • restriction of the exercise of the right to inspect the case documents on the authority’s premises (where a copy of the documents may be sent to the party),
  • determination of service by filing in an electronic mailbox that is not a secure electronic mailbox (if the addressee agrees to such a method of service and is allowed to become acquainted with the filed writing),
  • extension of the deadline for fulfilment of obligations set by an individual administrative act (at the request of a party),
  • extension of the deadline for issuing and service of the decision, and
  • interruption of the course of all procedural and material deadlines, but only if the extraordinary event prevents the operation of the body or prevents or significantly impedes the exercise of rights and fulfilment of obligations of the parties, except in urgent cases.

 

Those provisional measures may be ordered only for the duration of the individual emergency, but for a maximum of three months. If the emergency lasts longer than three months, the government will be able to extend the temporary measures, but for a maximum of three months each time. In doing so, the government will have to check the circumstances of the emergency on a monthly basis and the justification of the interim measures.

 

Given the current situation in the country and around the world, it can be expected that the adoption of the regulation will soon achieve its purpose in terms of new government decrees based on the new provision of the ZUP.

At today’s 49th extraordinary session, the National Assembly of the Republic of Slovenia will discuss and vote on the proposal of the Act on Intervention Measures to Mitigate the Consequences of the Second Wave of the COVID-19 Epidemic (ZIUOPDVE), adopted by the Government of the Republic of Slovenia on the correspondence session dated 10 November 2020. This is the sixth package of measures (#PKP6), which seeks to mitigate and eliminate the effects and impact of the infectious disease COVID-19 in many areas of the economy, labour and employment, social protection and health care.

 

The proposal extends the partial subsidy measure for the reduction of full-time work until 30 June 2021, which is the final date by which an employer may order a part-time work for an employee despite the full-time employment contract. The proposal also extends the possibility to temporary lay-off an individual employee until 31 January 2021, whereby an employer must submit an application for reimbursement of benefits paid no later than 15 January 2021. The period to benefit the deferred payments of obligations under the existing loan agreements as well as newly approved loans during the validity of #PKP6 is being prolonged. Moreover, the guarantee scheme of the Republic of Slovenia for liquidity loans under the ZDLGPE is slightly changing.

 

As before, this package also introduces some new measures, of which we highlight (i) a partial reimbursement of uncovered fixed costs for most endangered undertakings and sole proprietors in the period between 1 October 2020 and 31 December 2020, whereby the eligible period may be extended by the Government’s decision for a maximum of six months, (ii) a possibility of concluding a fixed-term employment contact without announcing of a vacancy, but no later than 31 August 2021, (iii) a simplified procedure to inform the Labour Inspectorate of the Republic of Slovenia before starting work at home via a form available on the website of the mentioned inspectorate, (iv) work allowance in grey and red zones in the amount of 30 percent of the salary base, regardless of the declaration of an epidemic, (v) a possibility of granting a deferral of payment of tax or contribution for up to two years and a possibility of granting the payment of tax in a maximum of 24 monthly instalments over a period of 24 months, and (vi) a possibility of holding a virtual assembly during an epidemic.

 

The proposal also brings a significant increase in penalties for individuals who shall not respect the prohibitions and restrictions on gathering of people in public places during an epidemic. For such an offence, an individual may be fined between EUR 1,000 and EUR 10,000. An individual who shall publicly call for a violation of regulations or orders by which the competent authority prohibited or restricted the gathering of people in public places in order to limit the spread of an infectious disease, or, contrary to the latter, shall organise a gathering of people in public places, may be fined between EUR 1,500 and EUR 15,000.

On the basis of Article 83.a of the Courts Act (the “CA”) the President of the Supreme Court of the Republic of Slovenia issued on 13 November 2020 the Order on special measures from Article 83a of the CA due to the declared epidemic of the infectious disease COVID-19 in the territory of the Republic of Slovenia (the “Order”), which further restricts the work of the courts. The Order was published in the Official Gazette of the Republic of Slovenia on the same day and is in effect as of 16 November 2020 until its revocation, whereby – as the previous order of the President of the Supreme Court of the Republic of Slovenia of 19 October 2020, which was replaced by the Order – envisages the measures set out therein to be reviewed weekly.

Pursuant to the Order, all courts have been since 16 November 2020 operating in a limited extent in accordance with Article 83 of the CA. The courts thus call hearings and perform other procedural acts only in certain urgent matters set out in Article 83 of the CA; in addition, the work of courts has also not been affected in criminal matters in which criminal prosecution would become statute-barred within six months of the enforcement of the Order.

In non-urgent matters and in matters which, notwithstanding the provision of Article 83 of the CA, are not considered urgent pursuant to the Order, the courts issue decisions and serve judicial documents, however, do not hold hearings or perform other procedural acts that inevitably require the physical presence of the parties or other participants in the proceedings and also do not provide office hours. All hearings in these matters during the term of the Order are deemed canceled, unless convened by videoconference.

In non-urgent matters and in matters, which are not considered urgent in accordance with the Order, procedural deadlines have been suspended; they will start on the first day following the publicly announced revocation of the President of the Supreme Court of the Republic of Slovenia.

Finally, the Order also maintains in force the other special measures provided for in the previous order of the President of the Supreme Court of 19 October 2020.

On 24 October 2020, the so called Fifth Anti-Corona Package (PKP5) or the Act on Interim Measures for Mitigation and Elimination of Consequences of COVID-19 (ZZUOOP) came into force.

In the field of labour law, PKP5 prolongs certain measures available to the employers which have already been implemented by previous intervention acts and also introduces some new ones.

The main measures available to the employers with the aim of mitigating and eliminating the consequences of COVID-19 are the following:

EMPLOYEES TEMPORARILY WAITING FOR WORK

PKP5 prolongs the measure of temporarily waiting for work with the possibility of reimbursement of wage compensation. The employers may claim reimbursement for employees ordered to wait for work at home until 31 December 2020. The Government of the Republic of Slovenia may extend this measure for additional 6 months (however, for no longer than until 31 July 2020).

The conditions under which the employers may claim reimbursement of paid wage compensation from the Employment Service of Slovenia for employees waiting for work at home are stricter under the PKP5 as they were under previously valid intervention acts. Namely, the threshold of assessed suffered decline in employer’s revenue which represents a main condition for successful reimbursement, is higher.

The application for reimbursement should be filed in electronic form within 8 days from sending an employee to wait for work at home, but no later than on 15 December 2020.

SUBSIDIES FOR SHORTER FULL-TIME WORK

The same as previously valid intervention acts, PKP5 maintains the possibility for subsidized shorter full-time work, while the conditions remain unchanged. This measure is valid until 31 December 2020 (with the possibility of extension).

The employer must apply for the subsidies at the Employment Service of Slovenia no later than on 10 December 2020.

REIMBURSEMENT OF SALARY COMPENSATION FOR EMPLOYEES DUE TO QUARANITE OR FOR EMPLOYEES UNABLE TO WORK DUE TO CHILD CARE

Under the PKP5, the employers have the possibility to exercise the right of reimbursement of paid wage compensations for employees unable to perform work due to the ordered quarantine, provided that the employer cannot organize work from home for such employees. This option is also provided to the employers in case the employees are unable to perform work due to force majeure, which is a consequence of the obligation to care for a child up to and including the 5th grade of primary school or a child with special needs.

The employers may claim reimbursement of compensation for employees with ordered quarantine from 1 October 2020 until 31 December 2020. In case of inability to perform work due to childcare, the employers are entitled to claim reimbursement of wage compensation from 1 September 2020 onwards (also until 31 December 2020), in both cases with the possibility of extension for six months.

PKP5 sets shorter deadlines for submitting the request for reimbursement compared to previously valid intervention acts. Namely, the employers must submit the application within 8 days since the employee’s absence or within 8 days since PKP5 entered into force (if the employers claim reimbursement of wage compensation for the period prior its enforceability). In any case, the employers must submit the application by 31 December 2020.

PKP5 also sets out additional conditions and requirements under which the employers may successfully claim reimbursement of paid compensation to employees.

In addition to the above measures, PKP5 also introduces the following two novelties:

ABSENCE FROM WORK WITHOUT DOCTOR’S APPROVAL

PKP5 introduces the possibility for employees to stay at home due to illness and not perform work without doctor’s approval and confirmation. Such absence from work is permitted for maximum of three subsequent work days and only once a year. The employee should inform the employer about absence in writing (email notification is also valid) on the first day of absence.

Wage compensation for days of absence is advanced by the employer, having the possibility to request reimbursement from the Slovenian Health Institute. This measure applies until 31 December 2020 whereas the Slovenian Government may prolong it for additional six months.

THE COST OF COVID-19 TEST IS NOT CONSIDERED AS EMPLOYEE’S BENEFIT

In the event that the employers refer the employees to test for COVID-19, the payment of the test is not considered as employee’s credit rating up until 30 June 2021.  If so decided by the Slovenian Government, also this measure may be extended for additional six months.

 

On 19 October 2020 the president of the Supreme Court issued an Order on special measures from Article 83.a of the Courts Act due to the declared epidemic of the infectious diseases COVID-19 on territory of the Republic of Slovenia (the “Order”) pursuant to Point 2, paragraph 2 of Article 83.a of the Courts Act (“CA”). The said provision of the CA authorises the president of the Supreme Court to, in cases of extraordinary events, which are specified in paragraph 1 of Article 83.a of the CA, issue an order on special measures determining the courts’ operations, taking into account the specific extraordinary event, in order to maximise regular exercise of the judiciary branch of power.

The order was published in the Official Gazette on 19 October 2020 and is in effect from 20 October 2020 until its revocation, whereby the adopted measures shall be reviewed on a weekly basis. Unlike the measures, which were adopted in March, when the courts worked only in urgent matters, the Order does not (for the time being) stop the courts’ activities, instead it only sets out certain measures intended for courts to be working as smooth as possible during the new wave of the COVID-19 epidemic.

The specific measures that were adopted by the Order relate to the following areas:

 

  1. Access to courts

With regard to the entry into court buildings, the Order stipulates that, where possible, courts shall designate separate entry points for parties, their counsels and other users of court services on the one hand and for judges and court staff on the other hand. In doing so, preventive measures shall be taken at all points of entry in order to prevent the spread of COVID-19, including temperature checks for those entering and publication of a written notice on preventive measures imposed at the premises of that specific court.

Except in urgent matters, as they are determined by the CA:

  • court writings may only be submitted to the courts by post or via the eSodstvo portal and
  • for communication with the courts the published e-mail addresses and telephone numbers shall be used during office hours.

In addition, if a person is not invited to appear in front of the court, such person is only allowed to enter the court building during office hours with prior notice.

 

  1. Hearings, sessions and examinations

The Order provides a possibility of conducting hearings, sessions and examinations via videoconferencing systems, provided that the technical and spatial conditions are met, and with due regard to other procedural conditions for the performance of such procedural acts.

In case hearings, sessions and examinations are not held by videoconference, the following rules shall apply:

  • the distance between judges, court staff, parties, their counsels and other persons shall be at least 1.5 meters,
  • all persons present at a procedural act shall wear protective equipment,
  • the room in which the procedural act takes place shall be disinfected and ventilated and
  • an attendance list with contact details of all persons present shall be kept.

However, if in a specific case it is not possible to follow the above-mentioned rules, the courts shall, in accordance with the Order, cancel such hearings.

 

  1. Publicity of main hearings

From the viewpoint of constitutional and procedural rights or guarantees of the parties in court proceedings, the measure under which the (presiding) judge has the possibility to temporarily restrict the publicity of the hearing (or its part) or impose additional safety measures is also of high importance.

 

  1. Other measures

In addition to the measures determined by the Order, the Order also gives the possibility to the presidents of individual courts to take additional measures applicable only to specific courts. Therefore, before going to a specific court, it is necessary to check whether any additional measures have been taken for that court.

Revolut Ltd, a British fin-tech company that offers banking services, has started shifting its customers to its Lithuanian entity Revolut Payments UAB, which is a e-money institution licensed and regulated by the Bank of Lithuania, as it prepares for UK’s exit from the European Union. The move is aimed at ensuring Revolut can continue to offer the same services to its non-UK customers in case of any Brexit outcome. The process is anticipated to be completed before the Brexit transition period, which is ending on 31 December 2020.

 

For those worried about the shift to Lithuania, there is no cause for concern as Revolut Payments UAB is just as strictly regulated and supervised by European Union authorities as Revolut Ltd was. On the national level, electronic money institutions are supervised by central banks of European Union member states, and each such central bank is simultaneously under the supervision of institutions of the European System of Financial Supervision and under the obligation to comply with all applicable European Union regulations. In fact, Revolut Payments UAB has been operating in Lithuania under an electronic money institution licence since the end of 2018.

 

After the migration the Revolut accounts will remain the same in nearly every way and the users will be able to use their accounts as normal. An old GB IBAN for receiving inbound payments will be replaced with new LT IBAN, however, users will still receive payments to their old GB IBAN for two months. After this time, payments to the GB IBAN will be returned to the sender. Therefore, it is important to update IBAN details, if required. The migration brings another very important duty for customers, who must notify new Lithuanian Revolut accounts to the Financial Administration of the Republic of Slovenia (since the Financial Administration does not obtain data on foreign accounts ex officio), as well as the date of the closure of old British Revolut accounts, which is expected to be received by users from Revolut.

 

A taxpayer must make a notification within 8 days after opening an account, whereby the registration of a new account and deregistration of an old account may be performed at the same time. The application may be submitted in two ways: (i) electronically through e-commerce services eDavki (on DR-Račun Form) or (ii) in person or by post (on DR-02 Form for natural persons, on DR-03 Form for natural persons with an activity, and on DR-04 Form for legal persons), at any financial office (except at the Special Financial Office and the General Financial Office). The list of financial offices with contact information is published on the website of the Financial Administration: contacts. The application must be accompanied by a document showing the foreign account information (for example bank card, contract on opening a bank account, screenshot of the IBAN account) so that the Financial Office may check the correctness and accuracy of the provided data. When entering the account number, it is necessary to be careful not to enter the bank card number but the account number. More information can be found on the websites of the Financial Administration for natural persons and for legal entities.

We are proud to announce that our law firm has been ranked #Tier 3 for Corporate and Financial law in Slovenia by legal guide IFLR 1000.

Furthermore, our managing partner Jan Sibinčič has been recognised as Highly Regarded Lawyer in Capital markets and M&A legal practice area. 

Sincere thanks to our clients and their generous contribution in this research. Based on your feedback we are doing good job providing quality legal service and we will try our best to do so as long as possible.

More about the ranking is available on the IFLR 1000 official website

  

By decision U-I-83/20 of 27 August 2020, the Constitutional Court ruled that the temporary restriction of movement during the first wave of the COVID-19 epidemic was not inconsistent with the Constitution of the Republic of Slovenia. It assessed the constitutionality of two Government ordinances adopted to contain and control the COVID-19 epidemic, namely the Ordinance on the temporary prohibition of the gathering of people at public meetings at public events and other events in public places in the Republic of Slovenia and prohibition of movement outside the municipalities and Ordinance on the temporary prohibition of the gathering of people at public meetings at public events and other events in public places in the Republic of Slovenia and prohibition of movement outside the municipalities (hereinafter both together as: the challenged ordinances). The assessment took place in the context of the question whether the prohibition of movement of persons outside the municipality of permanent or temporary residence, determined by the challenged ordinances, was in accordance with the first paragraph of Article 32 of the Constitution, which guarantees freedom of movement to everyone.

 

The assessment was performed by the Constitutional Court on the basis of the legitimacy test, which means the assessment of whether a certain measure pursues a constitutionally permissible goal, and the proportionality test, which includes an assessment of the appropriateness, necessity and narrower proportionality of the measure.

 

The Constitutional Court ruled that the Government of the Republic of Slovenia pursued a constitutionally permissible goal by introducing a restriction of movement on the municipality of residence, ie. containment and control of the spread of the infectious disease COVID-19, and thus the protection of the health and lives of people at risk. In doing so, the Constitutional Court emphasized that the pursuit of this goal is also a constitutional duty of the state authority, as too slow or insufficient response to the occurrence of an infectious disease that can seriously endanger human health or even life could be inconsistent with the state’s obligation to protect human rights – the right to life, the right to physical and mental integrity and the right to health care.

 

In assessing proportionality, the Constitutional Court first as an important circumstance of the assessment pointed out the fact that the state authorities faced a high level of uncertainty when introducing measures, as COVID-19 disease was scientifically and medically unexplored at the time of the outbreak. Despite the uncertainty, the introduced measures must be based on sound reasons and assumptions that could have been taken into account at the time of their adoption, and in this context the authority responsible for managing epidemic risks has a wide margin of assessment in the choice of measures.

 

The prohibition on movement outside the municipality of residence is, in the opinion of the Constitutional Court, an appropriate measure to achieve the pursued goal, as it was shown that (according to the data existing at the time of the adoption of the challenged ordinances) it could contribute to reducing or slowing the spread of COVID-19, mainly by reducing the number of contacts between persons living in areas with a higher number of infections, ie. with a higher risk of transmission, and persons in areas with a lower number of infections or even without them.

 

In assessing the necessity of the intervention, the Constitutional Court took into account as essential that there was no indication that mere use of the measures adopted so far (closure of schools and kindergartens, suspension of public transport, etc.) would prevent the spread of the infection to the extent that all patients could be provided with adequate medical care. indicate infections to the extent that all patients could be provided with adequate medical care. Under these conditions, further measures that could prevent the spread of the infection while also maintaining the stability of the health system were necessary.

 

Furthermore, the Constitutional Court ruled that the measure of restriction of movement to the municipality of residence was also proportionate in the narrower sense. The latter means that the demonstrated degree of probability of the positive impact of the measure on the protection of human health and life outweighed the severity of the measure with their freedom of movement. As relevant to this assessment, the Constitutional Court considered as an important circumstance that the prohibition of movement outside the municipality of residence provided for several exceptions (eg access to pharmacies, grocery stores, arrival and departure for work, etc. was provided). In addition, the Constitutional Court emphasized that the longer the measure lasts, the more invasive the interference becomes, so it is necessary to periodically check the situation and adapt to it. The challenged ordinances did not set an explicit time limit upon their entry into force, but they were in force for a relatively short time and during the days of their validity they could not (yet) exceed the weight of their original invasiveness. At the same time, the Constitutional Court clarified that measures may cover the entire territory of the country if the areas for which the existence of risks can be established on the basis of existing professional information are scattered throughout the country and the constitutionally permissible goal cannot be achieved in any other way.

 

In accordance with the above, the Constitutional Court ruled that the prohibition of movement outside the municipality of residence did not disproportionately interfere with the freedom of movement from the first paragraph of article 32 of the Constitution.

 

In addition to the above-mentioned initiative for the assessment of constitutionality, several other initiatives were submitted to the Constitutional Court alleging the inconsistency of the challenged ordinances with the Constitution and the Infectious Diseases Act, as well as the inconsistency of certain other provisions on which the challenged ordinances are based with the Constitution, on which the Constitutional Court has not yet ruled.

In light of the COVID-19 pandemic, some parties to M&A agreements, especially in those sectors particularly affected by the virus containment measures, have been forced to start thinking about how to adapt their contractual commitments to changing economic conditions. One of the provisions that is regularly included in M&A agreements and actually allows this is the Material Adverse Change (MAC) provision. Although these provisions differ significantly from one agreement to the other, they generally allow a buyer who has otherwise signed an M&A agreement to avoid its performance (ie, transfer of business share, business, etc. and to thereby avoid fulfilling its obligation to pay the purchase price) by unilateral termination of the agreement if certain circumstances occur that affect the operation of the target to such an extent that the buyer cannot achieve the purpose of the agreement.

Due to the right they include and its far-reaching consequences, the MAC provisions, like the correlated legal construct of dissolution or amendment of an agreement due to changed circumstances (Article 112 et seqq. of the Slovene Code of Obligations), should be interpreted as narrowly as possible and used only when changed circumstances and their significant impact on a particular contractual relationship have been convincingly demonstrated.

Accordingly, it is not surprising that in many M&A transactions, sellers find it difficult to agree to MAC provisions, which leave them bearing a significant part of the risk of unforeseen deterioration of the target’s condition at a time when the M&A agreement has already been signed but not yet implemented (closed). This is all the more pronounced in cases where the buyer wishes to negotiate a more general MAC provision covering a wide range of events and circumstances. In consequence, the sellers usually demand that the scope of the situations covered by the MAC provision is as narrow and specific as possible (eg, decrease in EBITDA by a certain value), that short-term events (eg, with duration shorter than three months) are excluded, and that the onset of a material adverse change is confirmed by, eg, an independent expert. However, such detailed provision will also have positive effects for the buyer – in the case of a judicial or arbitral intervention in respect of the withdrawal from the agreement, it will be much easier to prove that there are specific circumstances that justify such withdrawal, and, in consequence, that the buyer has validly withdrawn from the agreement. What is more, in order to balance the competing interests, the parties often agree on a break-up fee, which reduces the buyer’s motivation to withdraw from the agreement.

Despite resistance of sellers to include MAC provisions in M&A agreements, the pandemic of the new coronavirus can be expected to lead to their (more) widespread use (in varying contents, depending on the bargaining powers of parties and the specifics of individual business sectors).

It is also interesting to distinguish between the MAC provisions in the M&A agreements concluded before the outbreak of the new coronavirus and those concluded after it. Namely, most of the “classic” MAC provisions do not cover material adverse changes that concern the entire industry or even broader market conditions (as opposed to individual companies). The effects which the new coronavirus pandemic has had or is having on the markets are therefore, as a rule, explicitly excluded from the scope of (existing) MAC provisions. On the other hand, the contractual freedom allows parties of new M&A agreements to allocate the risk posed by the changed business conditions for the target’s operations at their own discretion. Appropriate contractual regulation of this issue is also important considering that the new coronavirus represents a circumstance that the parties may or even have to take into account when concluding an agreement, which means that the dissolution or change of the agreement on the basis of the law itself (ie, Articles 112 et seqq. of the Slovene Code of Obligations) will generally not be available. Since the outbreak of a pandemic is already a known circumstance, it might be advisable for the parties of new M&A agreements to focus on what constitutes a “material adverse change” in the target, based on which the buyer will be allowed to unilaterally withdraw from the agreement.

Where the purchase price is financed by a loan, special attention should also be paid to ensuring that the MAC provision in the M&A agreement is in line with the MAC provision (if any) in the loan agreement, as this will allow the buyer to avoid a situation where the lending bank may cancel the loan, whereas the buyer will still be obliged to pay the purchase price under the M&A agreement.

Considering all of the above, there is one of very important weaknesses of the MAC provisions which should not be overlooked: if the parties agree that this provision will be included either as a negative condition precedent for the completion of the transaction or as an independent right of withdrawal, this may result in several years of an ongoing dispute, during which it remains completely unclear in what way and with what restrictions the seller should manage the target.

As there is no single answer to the question of whether the outbreak of COVID-19 constitutes an appropriate trigger for the withdrawal from the agreement based on a MAC provision, and, at the same time, MAC provisions in the post-COVID-19 period must be adapted to the specifics of each target, its business, etc., a careful analysis of all the circumstances of an individual case or transaction, as the case may be, is required in order to ensure an optimal solution regarding the MAC provision in an individual M&A agreement.

On 9 September 2020, the General Court dismissed Slovenia’s action against the European Commission (“EC”) in case T-626/17. With its action Slovenia requested that the General Court annuls the Commission Delegated Regulation (EU) 2017/1353 of 19 May 2017 amending Regulation (EC) No 607/2009 as regards the wine grape varieties and their synonyms that may appear on wine labels (the “contested regulation”). Slovenia’s main arguments were that by adopting the contested regulation the Commission exceeded its powers, that the contested regulation interfered with acquired rights of Slovenia’s wine producers and that adoption of the mentioned regulation disproportionately interfered with their property rights.

The contested regulation was adopted on the basis of Regulation (EU) No 1308/2013 of the European Parliament and of the Council of 17 December 2013 establishing a common organisation of the markets in agricultural products and repealing Council Regulations (EEC) No 922/72, (EEC) No 234/79, (EC) No 1037/2001 and (EC) No 1234/2007 (“Regulation 1308/2013”).

Paragraph 3, Article 100 of Regulation (EU) No 1308/2013 of the European Parliament and of the Council of 17 December 2013 establishing a common organisation of the markets in agricultural products and repealing Council Regulations (EEC) No 922/72, (EEC) No 234/79, (EC) No 1037/2001 and (EC) No 1234/2007 (“Regulation 1308/2013”) stipulates: “Where the name of a wine grape variety contains or consists of a protected designation of origin or a protected geographical indication, that name shall not be used for the purposes of labelling agricultural products. In order to take into account existing labelling practices, the Commission shall be empowered to adopt delegated acts in accordance with Article 227 laying down exceptions from that rule.” On the basis of the afore-mentioned provision of Regulation 1308/2013, which applied from 1 January 2014 (meaning, after Croatia’s accession to the EU), the Commission adopted the contested regulation.

The General Court established that the Commission used the above-mentioned provision retroactively, but this has nevertheless not resulted in violation of European Union (“EU”) law. Before Regulation 1308/2013, a similar provision was included in its predecessor, which was in effect on the day of Croatia’s accession to the EU. None of the provisions stipulated any time limits for actions by the Commission. As before Croatia’s accession the Commission had no territorial jurisdiction and therefore could not adopt the contested regulation, the General Court decided that the Commission acted in accordance with the general scheme and the wording of the provisions concerned.

In relation to Slovenia’s claim that by giving retroactive effect to the contested regulation, the Commission breached the principles of legal certainty, the respect for acquired rights and the protection of legitimate expectations, the General Court recalled that the principle of legal certainty precludes retroactive effect being given to EU measures, except where the objective pursued by the contested measure requires it to be given retroactive effect and the legitimate expectations of the persons concerned are duly respected.

The General Court found that the contested regulation pursued an objective in the public interest as its purpose was to protect legal labelling practices existing in Croatia on 30 June 2013 and to resolve the conflict between those practices and the protection of the Slovenian protected designation of origin. Given the sensitive nature of the issue the Commission also legitimately attempted to find a negotiated solution between the two countries, but this was not successful. Additionally, the General Court held that the Commission did not give precise, unconditional and consistent assurances to Slovenian wine producers, which would entertain well-founded expectations that no derogation with retroactive effect would be granted to Croatia concerning the use of the name “Teran” on the labels of wines produced on its territory. According to the General Court, Slovenia had not established that the extent and details of the retroactive effect of the contested regulation had infringed the legitimate expectations of Slovenian wine producers.

The General Court dismissed the afore-mentioned and other arguments of the Slovenian side as unfounded.

With its dismissal of Slovenia’s action, the General Court therefore decided that the contested regulation was adopted in accordance with the EU law. By doing so, it also confirmed that the name “Teran”, which is a protected designation of origin of Slovenian wines, may be used to refer to a wine grape variety on the labels of wines produced in Croatia. However, in accordance with the EU law the afore-mentioned name may only be used for the designation of origin “Hrvatska Istra” and only if “Hrvatska Istra” and “Teran” appear in the same visual field and if the font size of the name ‘Teran’ is smaller.

Slovenia may bring an appeal on points of law against the General Court’s decision before the Court of Justice, so perhaps the story of the use of “Teran” is not yet finished.

Applications to determine the eligible amount of state aid can be submitted by 31 August 2020

The deadline for submitting applications for determining the eligible amount of state aid, as set out in ZIUZEOP-A, expires on 31 August 2020.

In accordance with ZIUZEOP, the total amount of public funds received by a company with regard to salary compensation and exemption from contributions referred to in Articles 28 and 33 of ZIUZEOP may not exceed EUR 800,000 (or EUR 120,000 in case of a company active in the fisheries and aquaculture sector, or EUR 100,000 in case of a company active in the field of primary production of agricultural products).

Despite these limitations, the law allows large companies, which have received public funds in an amount that exceeds the above mentioned maximum values, to be allocated additional public funds (exceeding the above mentioned maximum) in accordance with the rules on state aid to compensate for damage caused by an extraordinary event. This gives large companies the opportunity to receive (or retain) public funds exceeding the maximum value, however, they have submit an application to the Ministry of Labor, Family and Social Affairs by no later than 31 August 2020 to determine the eligible amount of state aid, in which the damage caused to the company by COVID-19 must be demonstrated.

If the application is not submitted or approved, it can be expected that the received state aid will have to be returned.

On 29 March 2020, an amendment to the Law of Property Code (hereinafter: SPZ-B) entered into force, which was understandably overshadowed by the epidemic of the COVID-19 virus, given the course of events around the world. Nevertheless, it is not too late to get acquainted with the novelties of SPZ-B, as the individual provisions, which we draw attention to below, began to apply at the beginning of the previous month, ie. with 1 July 2020, and some will only start to apply with 1 July 2021.

One of the central changes brought by SPZ-B is the renewal of the register of non-possessory liens and confiscated movables, maintained by the AJPES web portal. The operation of the register will be regulated in more detail by the Government with a decree, also a more user-friendly and modern register is promised, with a direct link to some other registers and official records, such as e.g. Central population register, land cadastre and building cadastre, motor vehicle record, etc.

In addition, thanks to SPZ-B, from now on, a notarial deed will be sufficient for the creation of a consensual non-possessory lien on movable property which may also be directly enforceable in accordance with the agreement of the contracting parties.

Furthermore, SPZ-B extensively regulates the legal positions related to commonhold, namely the issue of linked property, individual parts of the building and individual plots, which also serve other commonhold or other property.

In connection with the institute of joint ownership, SPZ-B solves the problem of significantly aggravated or impossible management of the item in joint ownership that occurs in the case of inactive or unknown joint owners. Active joint owners, whose joint ownership shares represent more than half, now have the option of incident management of joint ownership in accordance with SPZ-B upon approval of the transaction by the court.

As a novelty, on the basis of SPZ-B, it is possible to establish a quasi-real easement in favour of a person who performs commercial undertaking for the public benefit and the easement is established for the purposes of performing this undertaking. Such an easement can be established for a period longer than thirty years, or even for an indefinite period. Easement in the public benefit is also transferable since the entry into force of the SPZ-B, and can be transferred to another entity that manages public utility infrastructure that is in the public benefit.

The regulation of the building title has also undergone several renovations, in connection with which SPZ-B removes the compulsory limitation of the duration to 99 years and at the same time allows the landowner and the holder of the building title to autonomously regulate the amount of compensation to be paid by the landowner to the holder of the building title after its termination.

Finally, one of the most resounding changes – SPZ-B grants a special legal status to animals. Namely, the new Article 15a states that animals are not things, but sentient living beings, whose protection is regulated by special laws.

Last year, at the beginning of July, we wrote that, as every year, in year 2019 the judicial holidays will begin on 15 July and last until 15 August. The COVID-19 epidemic has left consequences in this area as well, so this year’s judicial holidays are (only) half as long.

The new Law on Intervention Measures for Mitigation and Elimination of the Consequences of the COVID-19 Epidemic (ZIUOOPE), which entered into force on 31 May 2020, stipulates that in year 2020 courts will hold hearings and decide only in urgent cases from 1 August 2020 to 15 August 2020. Judicial holidays therefore last only two weeks this year under ZIUOOPE.

During the judicial holidays, it is considered that there are no procedural deadlines, nor are any court documents served. If the court document has been served, the deadline shall begin to run on the first day following the end of the judicial holidays. Procedural deadlines are deadlines given by the procedural law for performing certain procedural actions in the procedure. Such a deadline is, for example, the deadline for payment of the court fee.

Judicial holidays, however, do not apply to material deadlines, nor do they suspend them. Material deadlines are deadlines for exercising material rights granted to entitled person by a material law. The material deadlines are, for example, a deadline for filing the lawsuit arising from the disturbance of property and deadlines for protection of employees’ rights arising from employment relationship.

It should be emphasized that 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.

For a peaceful holiday, we advise you to consult a legal expert in case of doubt about the running of a certain deadline.

Sibinčič Križanec law firm is proud to announce that Senior Associate, Nina Čuden, has been promoted to Junior Partner.

She concentrates her practice on Corporate Law, M&A, Dispute Resolution and Commercial Contracts.

Nina, congrats on your new role!

As part of the third package of measures in connection with COVID-19 epidemic, which were adopted by the Act Determining the Intervention Measures to Mitigate and Remedy the Consequences of the COVID-19 Epidemic, the National Assembly also adopted rules on the screening of foreign direct investment (FDI). Although this measure has not received much public attention, it may be expected to have a significant impact on mergers and acquisitions, the formation of new companies, real estate transactions, etc. The provisions on the screening of FDI apply until 30 June 2023.

The screening of FDI covers investments of any foreign investor: accordingly, the screening is not limited to investments from third countries, but also includes investments of natural persons or legal entities from EU Member States. The Act covers any investment made by a foreign investor, the purpose of which is to establish or maintain permanent and direct links between a foreign investor and an economic entity with its registered office in the Republic of Slovenia. The notification threshold is set at the acquisition of at least 10% of the share capital or voting rights, and it can be expected that the screening (despite some ambiguities in the wording of the law) will not be limited to sales of shares or business stakes, but will cover a significantly wider range of foreign investments (eg, investment in tangible and intangible assets, which refers to significant changes in the entire production process of the existing business unit, as well as the acquisition of the right to dispose of land and real estate that are essential for, or located near, critical infrastructure).

Nevertheless, not every FDI is subject to screening, as the latter is limited to investments which pose a threat to the security and public order of the Republic of Slovenia. These include especially investments affecting critical infrastructure (including real estate “in the vicinity” of such infrastructure), critical technology and dual-use goods, supply of critical resources (eg energy, medical and protective equipment), access to sensitive information (including personal data), freedom and plurality of media and projects or programs in the interest of the European Union (eg Trans-European Networks for Energy). As it is very difficult to determine in practice which investments are subject to screening, and high fines are threatened for violations at the same time, it can be expected that many investments will be notified out of caution, ie, “just in case”.

The obligation to notify arises within 15 days from the conclusion of the relevant contract, the publication of the takeover bid or the incorporation of a company in the Republic of Slovenia. The notification to the Ministry of Economic Development and Technology must be made by either a foreign investor or a target or acquired company. The Ministry may approve, prohibit or cancel FDI, or determine the conditions for its implementation. The prohibition or cancellation results in the annulment of the transaction, whereas the failure to notify results in a  fine in the amount of up to EUR 500,000 for the legal entity and up to EUR 10,000 for the responsible person of the legal entity.

The Ministry must issue a decision within two months of notification, but if this deadline is not met, the transaction is not considered approved. The decision of the Ministry (or the lack thereof) may be appealed to the Government.

The proposal for Act on intervention measures to prepare for the second wave of coronavirus COVID-19, which amends and supplements temporary measures to mitigate and eliminate the consequences of the epidemic in the field of labour, employment, scholarships and social protection, is pending before the National Assembly. Among other things, the proposal is interesting because it contains a basis for the introduction of an application for monitoring contacts with COVID-19 infected people and quarantine control, which could prevent the possible need for stricter territorial closure in the event of mass use. The Ministry of Public Administration will be responsible for the establishment and operation of the mobile application.

Installation and use of the application will be voluntary and free of charge, except for those persons who have been confirmed to be infected with COVID-19 or have been ordered to be quarantined. In this case, the person must install the mobile application so that a random code can be entered into it.

The purpose of the application is to inform its users about the existence of the risk of infection, because they were nearby or in contact with another user with the same mobile application who is infected or quarantined. The application contains a recommendation that in case of obvious symptoms, the person should immediately call the chosen personal doctor or the emergency medical service.

The mobile application will not be allowed to identify the user, collect information about his location and his other personal data. The government claims that the use will not involve the processing of personal data.

Tourist voucher is one of the government measures to mitigate the consequences of the Covid-19 epidemic, as the tourism is one of the economic sectors that was hardest hit by the epidemic. In June 2020, the Government adopted a decree governing the method of redeeming vouchers.

Persons over age of 18 with permanent residence in Slovenia as of 13 March 2020 are entitled to redeem the voucher in the amount of EUR 200 and those under the age of 18 in the amount of EUR 50. Beneficiaries will not receive vouchers in physical form, as the vouchers are recorded as a credit in favour of the beneficiary in the FURS (eDavki) information system, to which all service providers will have access. Vouchers are transferrable between family members, exempt from taxation and may be used in parts. They are valid from 19 June to 31 December 2020. If vouchers are not redeemed in this period, the beneficiary may not claim the voucher in cash or redeem it later.

On the day of arrival at the time of registration for accommodation or for accommodation with breakfast (service), the beneficiary must inform the service provider that he/she will redeem the tourist voucher. The vouchers are redeemed at the service provider by entering the data on the beneficiary and the amount of the redeemed voucher into the eDavki system, and the beneficiary confirms the use of the voucher by signing the prescribed form Confirmation of redeeming the voucher (Potrditev unovčitve bona) and submitting a copy of identity card or passport. The form of written confirmation of the redemption of the voucher will be delivered to the beneficiary by the service provider at the reception.

On 29 May 2020, the National Assembly adopted the Intervention Measures to Mitigate and Eliminate the Consequences of the COVID-19 Epidemic Act (hereinafter referred to as: ZIUOOPE), which has been in force since 31 May 2020, and temporary measures apply from 1 June 2020 further. Among other things, the ZIUOOPE contains a measure of partial subsidization for the reduction of full-time work and the reimbursement of salary compensation to workers on temporary lay-off.

The measures are not mutually exclusive, so that in June the employer may send some employees on temporary lay-off and order part-time work for others. Both measures aimed at preserving jobs are presented below.

 

  1. Partial subsidization of full-time work reduction

With this measure, ZIUOOPE offers employers the option of ordering the employees to work part-time while also being on temporary lay-off.

The measure can be exercised by those employers (legal or natural persons) who were entered in the Business Register of Slovenia before 13 March 2020 and, in their estimation, cannot provide at least 90% of work per month to at least 10% of employees. Direct or indirect users of the state budget or the municipal budget whose share of revenues from public sources in 2019 was higher than 50% are not eligible for the subsidy.

An employer who meets the above conditions may order an individual employee with whom he has an employment contract for an indefinite period of time to work part-time during the period between 1 June 2020 and 31 December 2020. According to ZIUOOPE, during this period, the employer must provide the employee with work for at least part-time (i.e. at least 20 hours per week to 35 hours per week). An employee who is temporarily assigned to work part-time retains full-time employment and thus all rights and obligations arising from the employment relationship as if he were working full-time, except for those otherwise regulated by the ZIUOOPE. That time when the employee is not working (i.e. 5 to 20 hours per week) is considered as a temporary lay-off. For the time of the ordered temporary lay-off the employer can claim a partial refund of the salary compensation due to the order of part-time work. The latter is defined by ZIUOOPE as a subsidy.

Subsidies do not depend on the amount of salary of the individual employee, but only on the extent of the reduction in working time. Therefore, for example, the subsidy for part-time work in the range of 20 to 24 hours per week per month amounts to EUR 448 per employee, and for part-time work in the range of 30 to 24 hours per week the subsidy amounts to EUR 224 per month.

The application for subsidizing part-time work is expected to be publicly available on 12 June 2020. The employer must submit the application within fifteen days after the ordering of part-time work.

 

  1. Reimbursement of salary compensation to workers on temporary lay-off

The measure of posting a temporary lay-off and reimbursement of compensation to employees on temporary lay-off was introduced under previously adopted intervention legislation, namely under the provisions of the Act Determining the Intervention Measures to Contain the COVID-19 Epidemic and Mitigate its Consequences for Citizens and the Economy (hereinafter referred to as: ZIUZEOP). The ZIUZEOP initially limited the measure of posting a temporary lay-off and partial reimbursement of salary compensation until 31 May 2020, while ZIUOOPE extended the implementation of this measure until 30 June 2020, provided that certain conditions are met.

Initially, the extension of the measure was intended only for employers in the field of tourism and hospitality, but ZIUOOPE extended this possibility. Thus, the employer whose income in 2020 will fall by more than 10% compared to 2019 due to the epidemic is entitled to state aid in the form of reimbursement of compensation. However, the measure will not be able to be exercised by an employer who is a direct or indirect user of the budget of the Republic of Slovenia or the municipal budget, whose share of revenues from public sources was higher than 70% in 2019, an employer who performs financial or insurance activities and has more than ten employees on 13 March 2020 and foreign diplomatic missions and consulates, international organizations, missions of international organizations and institutions, bodies and agencies of the European Union in the Republic of Slovenia.

The amount of partial reimbursement of salary compensation paid by the Employment Service of Slovenia amounts to 80% of salary compensation and is limited by the maximum amount of cash benefit in the event of unemployment, which amounts to EUR 892.50. At the time of receiving the compensation, the employer may not dismiss the employee who is included in the measure.

The application for reimbursement of salary compensation to workers on temporary lay-off is already publicly available, and the employer must submit it within eight days of the posting of the worker on temporary lay-off.

On 29 May 2020, the National Assembly received an urgent proposal from the Government of the Republic of Slovenia to amend the Prevention of Money Laundering and Terrorist Financing Act (the ZPPDFT-1B). The harmonization with the Union acquis follows an official reminder from the European Commission because Slovenia has not notified the regulations for transposition of Directive (EU) 2018/843, which should have been harmonized with the directive by 10 January 2020. This contribution outlines some novelties in the crypto industry field.

The amendment transposes into the Slovenian legal order individual definitions of the Directive (EU) 2018/843. Virtual currency is a digital representation of value that is not issued or guaranteed by a central bank or a public authority, is not necessarily attached to a legally established currency and does not possess a legal status of currency or money, but is accepted by natural or legal persons as a means of exchange and which can be transferred, stored and traded electronically. It defines a custodian wallet provider as a natural or legal person that provides services to safeguard private cryptographic keys on behalf of its customers, to hold, store and transfer virtual currencies.

The amendment also (in a non-systemic manner) regulates the crypto industry. Legal and natural persons performing transactions related to the activity of exchanges between virtual and fiat currencies or other transactions included in these services or offering custodian wallets will be liable for measures to detect and prevent money laundering and terrorist financing. In order to ensure control in this area, a register of providers of exchanges services between virtual and fiat currencies and providers of custodian wallets will be established. Providers with their registered office or branch in the Republic of Slovenia will have to register in the relevant register before the start of the provision of services. They will also have to notify the Office of the Republic of Slovenia for the Prevention of Money Laundering within 8 days of any changes and notify the providers involved in their virtual and fiat currency exchange services.

The amendment ZPPDFT-1B is not yet effective. Nevertheless, it is in the interest of providers of exchanges between virtual and fiat currencies and custodian wallets to prepare for it in due time. EU Member States are required by the directive to ensure registration. Thus, the registration obligations will almost certainly be transposed into national law. For violations, the law provides for high fines in the range between EUR 6,000 and 120,000 for a legal entity, wherein fines are also envisaged for sole proprietors and responsible individuals.

Do not forget to submit the annual report for 2019 and the and tax returns concerning corporate income tax and personal income tax with regard to income from activities, the deadline is 1 June 2020.

In order to administratively relieve the burden on entrepreneurs and companies at a time when the latter are facing the consequences of the COVID-19 epidemic, the Intervention Measures in the Fiscal Area Act (ZIUJP) was adopted, which entered into force the day following its publication, i.e. 29 March 2020, and determined, inter alia, an extension of the deadlines for the submission of tax returns and annual reports for 2019.

The deadline for submitting the tax return of personal income tax with regard to income from activities for 2019 was thus postponed by the ZIUJP, namely from 31 March 2020 to 31 May 2020. The same applies to the deadline for submitting the corporate income tax return for taxpayers that prepare tax returns for a tax period that does not differ from the calendar year.

Also extended was the deadline for submitting annual reports. Those entities that are obligated to submit annual reports to AJPES and the deadline for submitting their annual reports for the previous year would generally expire prior to 31 May 2020, have to, in accordance with the ZIUJP, submit annual reports in 2020 by no later than 31 May 2020.

As the last day of the deadline for submitting tax returns and annual reports for 2019 is Sunday, when neither FURS nor AJPES work, the deadline for submitting tax returns and annual reports for 2019 is 1 June 2020.

Discussions on the draft of the third anti-corona act began earlier this week, and the government is expected to approve the proposal today, 20 May 2020. Some of the main measures envisaged are outlined below.

The main measure is a subsidy for part-time work on the basis of a proposal from the Ministry of Labour, which, according to the text of the draft, would be given to those employers who will not be able to provide 90 percent of work for at least 10 percent of employees. Thus, the subsidized work of employees would be reduced to 20 to 36 hours per week, and the subsidies would amount to between EUR 112.13 and EUR 448.52, which could be used for a maximum of five months.

The Ministry of Labour also proposed expanding the range of beneficiaries of national aid, which would also benefit providers of social care services at home, private providers of institutional care and providers of family assistance at home. An increase in salary subsidies for the disabled is also planned.

The Ministry of the Economy focuses its proposals mainly on special aid for catering and tourism, for which, among other, it proposes extending the measure of temporary lay-off for one month, that is until the end of June. For other sectors, temporary lay-off is not expected to be extended. With regards to tourism sector the envisaged vouchers for the promotion of additional consumption in tourism have attracted a lot of public attention. These are to be paid in the amount of EUR 200 to all persons with permanent residence in Slovenia over the age of 18, including persons who will turn 18 this year, and minors will receive vouchers in the amount of EUR 50. The vouchers are expected to be transferable within the family and can be used in accommodation establishments until the end of 2020.

The Ministry of Agriculture is in favour of extending the financial compensation to holders of agricultural holdings and ancillary activities on the farm, forest owners and holders of commercial fishing permits who have lost their income due to the epidemic until the end of this year.

Several proposed measures are also linked to the objective of accelerating obtaining of building permits. Among them is the solution that the application for the issuance of this permit should not be accompanied by proof of the right to build on the land that is the subject of construction. Under the new proposal, the investor will be able to start construction already on the basis of an administratively final building permit, and not only when it is final, which means that he could start work despite possible lawsuits, but at his own risk.

We are proud to announce that legal directory The Legal 500 again awarded Sibinčič Križanec as one of leading law firms in Slovenia.

For many years we are participating in this research, so it is encouraging to see development of our law firm recognised by such esteemed legal directory.

This of course wouldn’t have been possible without our clients and their generous contribution in this research.

Based on your feedback we are doing good job providing quality legal service and we will try our best to do so as long as possible.

More about ranking you can see on The Legal 500 official website.

With the occurrence of the COVID-19 Coronavirus, the need to work from home and ordering to work from home occurred in case of exceptional circumstances where human life and health or the property of the employer are endangered.

The Employment Relationships Act (ERA-1) stipulates that work from home is work done by an employee at his home or on premises of his choice outside of the employer’s premises. In general, the employer and the employee agree for the work from home with an employment agreement for the whole duration of working time or only for a part of working time. The obligations of the employer in arranging this form of work are the adoption of the appropriate Regulation of work from home, which specifies the conditions for carrying out work from home (number of days, work reporting method, working hours,…), notification to the Labour Inspectorate of the intended organization of work at home and ensuring safe working conditions at home in accordance with the Health and Safety at Work Act.

In addition, the ERA-1 also makes it possible to unilaterally assign work to another location due to exceptional circumstances. In case of natural or other disasters, where such a disaster is expected or in other exceptional circumstances where human life and health or the property of the employer is endangered, the place of work specified in the contract of employment may be temporarily changed without the employee’s consent. The obligation to work from home can therefore only be temporary for as long as exceptional circumstances persist and a change of place of work is urgent and necessary. In this case, the employer is also obliged to regulate the issues of suitability of workplace, working time, provision of work resources, professional secrecy, etc. Also, the employer is obliged inform the Labour Inspectorate of the work from home as soon as possible, and ensure safe and healthy working conditions, according to the with the Health and Safety at Work Act.

The employer should fulfil the obligations when performing work from home in a timely manner, since the law prescribes various fines in case of violations.

Yesterdays the Slovenian Parliament passed a law that will introduce changes to the Slovenian Law of Property Code. This is only the second time that the law is being changed since its adoption 18 years ago. Quite substantial changes are the result of academic discussions that have been going on for some time. Most important changes to be implemented are as follows:

  • Reform of commonhold, co-ownership, non-possessory lien on movable property, quasi-real easement and right of superficies, such that they will be aligned with modern business practice.

 

  • Reform of the register of non-possessory liens on movable property and seized goods, such that it will become a modern property register, enabling fast and effective online access for both the authorities and the public.

 

  • Legal definition of animals as living beings (rather than things).

 

The changes are a welcome refreshment to one of the older Slovenian laws of systemic importance, which will thus – while keeping its basic principles – remain relevant in the modern times.

There probably isn’t anyone who wouldn’t know about coronavirus today. The precautionary measure is clear: people who have stayed in the countries or areas labelled as epicentres of the disease over the past few weeks should stay home for the next 14 days, regardless of their well-being. The University of Ljubljana gave such instructions to its employees, for example, and reassured the students that in the absence of compulsory participation content, they would be able to compensate for this and would not suffer negative consequences due to this self-limitation. How about the other employees?

An employee who is quarantined by a doctor’s order is entitled to a sickness benefit of 90 percent of the basis, which is borne by the Health Insurance Institute of Slovenia, on the basis of the Health Care and Health Insurance Act. In the event of an emergency, part of the financing will also be taken over by the state.

According to the Contagious Diseases Act, the Minister of Health must declare an emergency in the event of an epidemic, which has not occurred to us (yet). Ministry of Labour, Family and Social Affairs is expected to provide more specific guidance shortly on employers’ treatment of employees opting for voluntary quarantine.

To date, there is no confirmed case of coronavirus infection in Slovenia, but it has occurred along the border with Slovenia in Gorizia, Trieste and Udine.

We are proud to announce that Chambers Global guide 2020 awarded Sibinčič Križanec as Recognised Practitioner in Corporate/Commercial law practice area.

Furthermore, our Managing Partner Jan Sibinčič was ranked as Up and Coming Lawyer.

We are grateful to everybody who participated in this research and gave us the opportunity to be ranked among such great law firms. As we strive for excellence, we will do our best to keep providing you with quality legal service.

More on Chambers and Partners official website.

The National Assembly is discussing an amendment of the Industrial Property Act. Its purpose is to harmonize the law with the provisions of the Directive (EU) 2015/2436 of the European Parliament and of the Council of 16 December 2015 to approximate the laws of the Member States relating to trade marks. Due to the coexistence of national marks in EU member states and the EU trade mark itself balancing of these rules is crucial.

The following novelties are of particular importance to trade mark proprietors and persons seeking to register trademarks:

  • in addition to sound marks, it will be possible to register new types of marks such as movement, multimedia and holographic marks;
  • an expanded set of absolute reasons for the Slovenian Intellectual Property Office to refuse registration will now include protected traditional terms for wine, traditional specialties guaranteed and plant variety rights;
  • with respect to relative grounds for refusal of registration based on an opposition, notably the term earlier trade mark is subject to a clearer definition;
  • in the field of property rights in marks, licenses and enforcement and in relation to the transfer of marks;
  • the proprietor of the trade mark will be allowed to prohibit the use of the sign by a third party in comparative advertising, prohibit preparatory acts and prevent the introduction of goods that have not been cleared by customs.

Provided the amendment of the Industrial Property Act will be adopted, it will allow the registration of modern trademarks. At the same time, a person seeking to register his mark will have to be more diligent not to violate the new absolute (or relative) grounds for refusal. For business entities, the disposal of trade marks will be of particular importance. Proprietors of trademarks and those who wish to become so will need to invest greater care before registering a trade mark, while at the same time, will be able to benefit from the improved legal protection and disposal of registered trademarks.

On 31 January 2020, the United Kingdom left the European Union after 47 years, although it will still seem as if this is not true for 11 months. And yet it is. Only an 11-month transition period has begun, in which citizens and companies will not feel the effects of exit, probably hoping that they will, among other things, maintain a “duty free” policy in the future. Will that really be the case? Brussels and London must reach an agreement on future relations by 31 December, which, given the length of past negotiations between the EU and other countries on trade agreements, seems like a mission impossible. After examining all the consequences of exit, it therefore seems as though the United Kingdom has made a mistake by making the decision to exit.

 

And yet, the European Union will not be in a better position either – one of the largest net contributors is leaving the European Union, resulting in an annual budget of 12 to 14 billion EUR, which will have to be covered by the remaining members. However, they are unlikely to feel this difference in the coming years, as the UK has to settle a separation bill, estimated at around 35 EUR billion by British media.

 

So, who’s next for the exit / entry?

The taxpayers are entitled to a reduction of yearly tax base for special tax relief for dependent family members. The dependent family members are children up to the age of 18, all others (e.g. children over 18 years of age, spouses) must comply with special conditions laid down by law. The taxpayers may claim a reduction of tax base for dependent family members in the calculation of personal income tax prepayment (on monthly basis) or indicative personal income tax calculation (on annual basis).

If the taxpayer decides to claim dependent family members during the year in the calculation of personal income tax prepayment, a completed form “Notice on claiming relief for dependent family members in the calculation of personal income tax prepayment” must be submitted to the employer.

The taxpayer who did not claim the relief during the year must submit an application for special relief for dependent family members in the indicative personal income tax calculation by 5 February. The application can be submitted via eDavki mobile application, electronically via eDavki system or personally or by post to the competent Financial Administration.

With February 2020 the use of electronic sick leave notes will be mandatory, which represents a significant innovation for employers and their employees. As of 1 February 2020 the employees will thus no longer be required to submit sick leave notes in paper form, as employers will be obligated to accept electronic sick leave notes.

On 1 January 2020 the Health Insurance Institute of Slovenia (hereinafter »HIIS«), in cooperation with health care providers, introduced the electronic issuing of sick leave notes. Until 31 January 2020 health care providers will be able to issue sick leave notes to insured persons (employees) also in paper form, while as of 1 February 2020, paper sick leave notes will only be available in certain exceptional cases. Namely, employers will be required to accept electronic sick leave notes for their employees through the SPOT system, administered by the Ministry of Public Administration, for all temporary absence from work as of 1 February 2020, and will no longer be able to require employees to provide them with sick leave notes in paper form. The exception applies only to those insured persons, employed by employers that are not registered in the Slovenian Business Register; their physicians will continue to issue them sick leave notes in paper form. The issued electronic sick leave notes can also be accessed by the insured persons (employees), namely on the HIIS’s web portal, with a qualified digital certificate.

Due to the mandatory use of electronic sick leave notes, business entities – employers need to duly arrange new authorizations and grant authority to the person, who will be able to access their employees’ sick leave notes through the SPOT system.

With the new year, a pension law amendment has come into force, which brings many positive changes to the pension system. While the previous news touched on the main purpose of the amendment, which represents an increase or reward for work activity among older workers, we also present some interesting points below.

As stated in the previous regulation, a person can retire at the age of 65, if he or she has at least 15 years of insurance period, or at the age of 60, if he or she has at least 40 years of pension qualifying period. The age limit may, however, be lowered for the insured person due to the care of every child born or adopted (in the first year of the child’s age), to compulsory military service and to enter compulsory pension and disability insurance before the age of 18 years.

The conditions for early retirement, however, do not change with the arrival of year 2020 and thus the pension amendment, which means that a person must be 60 years of age and have 40 years of pension qualifying period. The well-received change represents a higher percentage rate, which will amount to 63.5 % of the pension base for 40 years of the pension qualifying period for women, however, for men it will gradually increase over the six-year period until it is equal to the percentage for women.

Another positive novelty is the possibility of raising the pension for each child by 1.36 %, but not for more than three children, with the mandatory condition that the person exercising the said option does not retire early.

Last but not least, retirement is currently the most favourable for Austrians, Italians, Luxembourgers, Portuguese and Turks – pensions are, on average, only a tenth lower than their salaries. However, the British, Mexican and Lithuanian are the least happy about retirement, with their pensions averaging a third of their income.

With the new year, a pension law amendment has come into force, which brings many positive changes to the pension system. One of the main goals of the amendment is to increase the employment activity of older workers through favourable measures or reward it accordingly. The measures to pursue the stated goal are presented below.

The most prominent and most frequently mentioned measure in the media to reward work activity is that, if the conditions for retirement are fulfilled, the additional three years of employment are valued at three percent annually (or 1.5 percent each 6 months).

The amendment also establishes modified arrangements for combining job status with retirement status by changing the arrangements for receiving a partial pension while extending full-time employment. Persons covered by compulsory insurance for full-time work who qualify for retirement will be able to apply for a 40 percent retirement pension. This part will be paid to them for three years and then the pay-out will drop to 20 percent.

With regard to the above measure, it should be emphasized that persons who qualify for early retirement will no longer be entitled to payment of part of their pension. The exception to this is that only those insured persons who receive part of their pension in accordance with the legislation in force, which provides for special transitional arrangements for them.

To current recipients of a 20 percent retirement pension who choose to continue working, the pension institution will ex officio recalculate a portion of the retirement pension to 40 percent. Additional task of the institution is to verify that the recipients of a partial early retirement pension qualify for a pension of 40 percent of the retirement pension and issue a decision accordingly.

Compared to the previous arrangements, a new feature represents the arrangement, which, in addition to full inclusion in insurance, encourages inclusion in compulsory part-time working or insurance time (at least four hours a day or 20 hours a week). In addition to a partial pension or a proportionate part of the pension, such an individual will also be entitled to the payment of a proportionate part of the 40 percent retirement pension.

The Directive (EU) 2019/790 on copyright in the digital single market has entered into force in mid-2019. It has amended the directives on the legal protection of databases and on copyright in the information society. One of its changes is a controversial provision that imposes obligations to online content-sharing service providers with respect to copyright-protected content uploaded by its users.

According to the directive, information society service providers storing and giving access to a large amount of copyright-protected works, uploaded by its users, for profit-making purposes, will have to obtain an authorisation from the rightholders. Therefore, web providers will no longer be able to rely on the notice and take down process, which has so far relieved them of their responsibility under the “hosting” exception. From now on, they will have to endeavour to obtain an authorization or to make specific works unavailable, and, in any case, expeditiously disable access to, or remove from their websites, the protected works, as well as prevent future violations. They will also need to provide an effective and expeditious online complaint and redress mechanism.

It is undoubtedly in the interest of web service providers hosting large volumes of user uploaded content to implement technical solutions for infringement checks and to regulate licensing by changing the general conditions. The directive is to be implemented by the Republic of Slovenia in national legislation only in 2021. Nevertheless, the obligations do not fully apply to all providers and the sharing of content for specific purposes is sometimes permissible. Therefore, the least that web hosting providers should do now, in order to adapt their businesses in a timely manner, is to check whether or not they are bound by the new copyright rules in the digital single market.

For tax purposes, a part of salary for business performance, Christmas bonus or thirteenth salary are deemed to be an income arising from the employment relationship. Such bonuses are subject to calculation and payment of social security contributions, and in some cases, personal income tax, regardless of whether they are paid as a payment for business performance or any other type of payment. The payment for business performance paid up to 100% of average gross salary in the Republic of Slovenia, is not subject to payment of personal income tax, but only contributions. If an employer pays higher amount, such payment will be charged to tax, but only the part which exceeds the amount of average monthly gross salary.

More favourable tax treatment applies only to payment for business performance which is paid once in a calendar year. If an employer pays a payment business performance without personal income tax in January, it can no longer use such tax benefit until January next year. 

All employees of certain employer must have a right to receive payment for business performance, whereby the right to payment for business performance and the criteria for its payment should be determined in a general act of the employer, or in a collective agreement or other act based on such collective agreement.

Furthermore, all employees of an employer shall be deemed to be entitled to payment for business performance if the conditions for obtaining the right are unified for all employees by a general act of the employer.

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