Expanding your business horizons involves strategic decisions, and one such option gaining prominence is Slovenia, which is located in Europe. With a plethora of advantages, Slovenia proves to be a favourable business destination. Let's delve into the key advantages of registering your company in Slovenia.
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Advantages of Registering Your Company in Slovenia
Slovenia offers many advantages for entrepreneurs. Some of the factors are:
Why Choose Slovenia?
Slovenia's geostrategic location, at the heart of Europe, with good transport connections, is a perfect opportunity for any export-driven company. As part of the EU single market, Slovenia may serve as a springboard for overseas companies wanting to do business in the EU or in the Balkans, including Turkey, or in the countries of Eastern Europe. The location at the crossroads of TEN-T corridors is the ideal entry point for instant access to European countries with more than 700 million customers.
The geostrategic location enables Slovenia to receive cargo from sea (port of Koper), by air (the two biggest airports are present in Ljubljana and Maribor). Furthermore, the port of Koper is in the process of expanding and is well connected with rail transport – which is also in the process of building and updating more rail lines. The rail transport is then connected to all neighbouring countries. The same applies to road transport, as highways go across the country to enable quick and efficient transport of goods.
Additionally, due to the Slovenia location, the workforce is generally fluent at least in English language and/or Italian, Austrian (German), Hungarian or Croatian, which enables good and fluent communication with international companies. Alongside that, Slovenia is known to have a good education system, which enables Slovenia to remain at the forefront in highly competitive markets.
Slovenia maintains economic stability and business-friendly policies, which make it an ideal choice for entrepreneurs and international corporations to set up their companies in Slovenia.
Forming a Slovenian Company
The procedure for forming a company in Slovenia is relatively straightforward and can be completed in a few days. The two most common forms of companies are the limited liability company (družba z omejeno odgovornostjo – d.o.o.) and the joint-stock company (delniška družba – d.d.).
The process of establishing a limited liability company (the most common form of company) with a sole shareholder can be divided into (i) preparatory activities, (ii) procedure of incorporation, and (iii) after the incorporation. It should be noted that all documents in a foreign language must be accompanied by their translation into the Slovenian language, certified by a sworn court interpreter.
The most important preparatory activity for a foreign sole shareholder is the acquiring of a tax number at the Slovenian Tax Authority. The next step typically involves searching for a property in which the company will have a business address and conduct business. If the company is not (already) the owner of the property, it is mandatory to submit a declaration by the owner of the property that the subject of the incorporation permits the business to be carried on in the property at that address. The owner's signature on the declaration must be notarised.
The procedure of incorporation involves the following steps:
(i) drafting and adopting of Articles of incorporation with all necessary information as provided in the Companies Act (ZGD-1),
(ii) providing proof of identity of the founder – if the founder is a natural person: a passport photocopy or, if the founder is a legal entity, an original extract from the business registry (not older than 60 days), (iii) resolution of the shareholders on the appointment of the director and business seat,
(iv) a temporary bank account must be obtained on which a deposit of a minimum of 7,500 EUR must be placed (a minimum of paid-in capital), after which a bank issues a certificate on paid-in capital,
(v) registration of the company in the business register - the application for registration is filed by a notary with the competent registry court,
(vi) once the company is registered, the company’s (permanent) bank account should be opened with the bank (Prevention of Money Laundering and Terrorist Financing Act provides that, in order to open the permanent bank account, the bank must verify the company’s ownership structure).
The use of the stamp is not mandatory in Slovenia, however, certain companies are still using stamps in their business operations to have an additional level of security within legal actions.
After the incorporation, certain companies acquire a qualified digital certificate to ease corporate governance. Prevention of Money Laundering and Terrorist Financing Act requires that all businesses with more than one shareholder or director report the actual owners. This requirement applies to all companies and all types of legal entities. For foreign owners, it is advised to engage accountants who will file required tax applications, keep the business books, calculate salaries (and other remunerations) and conduct other necessary activities. Further, it is advisable to engage a law firm to draft all necessary documents that are needed or mandatory to run a company (help with general assembly and drafting general assembly’s decisions, preparation of draft contracts, etc.).
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Timeframe to Establish
The exact duration may vary due to different factors, such as the company type, the completion of necessary paperwork, and the effectiveness of the relevant institutions and service providers. The timeframe to establish a business in Slovenia varies based on the type of company and the specific requirements.
The registration of a limited liability company takes generally around 8 days for a limited liability company. However, when it comes to foreign entities, acquiring the Slovenian Tax Number normally takes 1-3 business days if all mandatory information is provided. The registration process for a limited liability company typically takes around 2-4 days, with an additional 3-5 business days for the court to issue the registration decision.
Registering a branch office in Slovenia usually takes a maximum of 14 days, with an average duration of about one week.
Additionally, it should be taken into account that all documents in a foreign language must be accompanied by their translation into the Slovenian language, certified by a sworn court interpreter, which could prolong every step of the incorporation for a few business days due to the preparation of translations.
Further, it should be noted that the process of incorporation for third countries for Slovenia (countries outside of the EU) is additionally prolonged if a foreign direct investment (FDI) has to be notified. A foreign direct investment must be notified to the Ministry responsible for the economy if the following three conditions are cumulatively met:
(i) the transaction is by a foreign investor;
(ii) the transaction constitutes an FDI through which the investor acquires at least 10 % of the capital or voting rights in a Slovenian company (including incorporation); and
(iii) the activity of the (target) company relates to one of the risk factors (critical infrastructure, critical technologies, supply of critical resources, access to sensitive information, freedom and pluralism of the media and projects or programmes of interest to the EU).
Future Company Landscape
Slovenia is an attractive investment location for entrepreneurs due to its advantageous location in central Europe, well-established transportation networks, stable investment environment, and modern infrastructure. The country adheres to EU standards in various sectors and provides a business-friendly atmosphere. The government's policy is aimed at developing a favourable tax system and investment tax relief (tax deductions for R&D etc.) as well as striving to make the procedures as simple as possible. The 19% (temporarily 22%) corporate tax rate is among the lowest in the EU, while the effective tax rate after all tax deductions could be much lower.
Starting from July 1, 2023, a new foreign direct investment regime has been introduced, requiring non-EU investors to undergo a screening process. This marks a shift from the previous classification of all non-Slovenian entities as foreign investors. The new regime ensures that foreign investments align with national interests and security. While Slovenia remains an appealing investment destination, foreign entrepreneurs are now subject to a more rigorous FDI screening process. However, according to the OECD, Slovenia is still one of the least restrictive countries.
A corporate culture of transparency and accountability, observance of international technical standards, personal integrity and company loyalty made a foreign manager’s job easy ever since the first big international companies established their operations in Slovenia. Investor confidence thrives on legal and institutional reforms designed to facilitate investment. For example, Slovenia adopted an Investment Promotion Act. Investment incentives are awarded according to known procedures, conditions and criteria, which ensures transparency. An investment incentive can be given in the form of a subsidy, a loan, a guarantee and a subsidized interest rate.
Therefore, Slovenia and its municipalities provide many grants and local incentives for big and strategic investments. Local incentives may further include easy access to industrial sites, utility connections and holidays from local taxes etc.
Corporate Income Tax Rate
For any investment, a favourable tax structure is a business priority. Slovenia boasts a corporate tax structure that is not only favourable but also transparent. The corporate income tax of 19% is considered chiefly reasonable by foreign investors. However, due to recent natural disasters for the years 2024-2028 a higher – 22% corporate income tax applies. In the last years, the average effective tax burden for the whole economy was between 13,12% and 14,84%.
Noted tax reliefs are:
(i) on employment of certain groups of workers (impaired);
(ii) 100% of R&D investments can be claimed for tax reduction up to 63% of the pre-tax profit in the first year, and the remaining difference can be claimed over the next 5 years;
(iii) 40% of the amount invested in digital transformation and a green transition, but not exceeding the amount of the tax base of the given tax period;
(iv) 40% of investments in equipment and intangible long-term assets can be claimed for tax reduction up to 63% of the pre-tax profit in the first year; the remaining difference can be claimed over the next 5 years. If a company incurs a loss in one of the accounting periods, the loss can be carried forward by reducing the amount of the tax base in the next fiscal period.
Company Registration
Choosing the proper structure is fundamental to success, and understanding economic growth and business models ensures alignment with the region's priorities. However, most foreign entrepreneurs and investors opt for limited liability companies in the start as they provide the most flexible corporate governance and no liability (unless there are serious corporate breaches). Additionally, FDI screening is performed for company registration.
Choosing the Right Structure
We advise you to explore the legal forms available and choose the structure that best suits your business objectives. The types of companies that can be established are limited liability companies, sole entrepreneurs, joint stock companies, limited partnerships, and limited partnerships with share capital. Our law firm would gladly advise more information on different types of companies to achieve the best company tailored to the needs of investors.
The board structure of each type of company in Slovenia varies, but typically, each company must have at least one director and one shareholder. Successful companies (regardless of the type) and Joint Stock Companies normally have either (i) a two-tier system with a supervisory board and management or (ii) a one-tier system with executive and non-executive directors.
A minimum share capital requirement applies for Limited Liability Companies (EUR 7,500) and Joint Stock Companies (EUR 25,000). The share capital for Limited Liability Companies and Joint Stock Companies may be alternatively provided in non-monetary contribution(s) (certain limitations apply). On the other hand, Sole Proprietorships and Limited Partnerships do not have a minimum share capital. The liability (unlimited or limited) of the shareholders also varies depending on the type of establishment.
In Slovenia, a company is recognized as a legal entity if it engages in profit-oriented market activities. Diverse business prospects are available in sectors such as finance and services. The local government provides incentives and support to enhance the value of businesses with foreign investment operating in the local market.
Professional Assistance
The cost of professional assistance to set up a business in Slovenia can vary based on the specific services required and the type of company being established. The formation of a limited liability company by a sole founder can be completed online via the government's SPOT portal, and there is no cost associated with this process. However, due to the required translations and language barriers, the specific requirements for online or SPOT company registration are generally not fulfilled. Due to that, the limited liability companies are then registered through a notary public (as described above).
As provided above, for easier governance, for foreign owners it is advised to engage local accountants and a local law firm to provide a complete, transparent, and compliant corporate governance.
Legal/Business Address
The legal address is a crucial rule for establishing a company in Slovenia. When registering, any company must have a business address in Slovenia, typically in the most suitable city for the business. The address can be a residential apartment or house, as long as the business activities do not cause disturbance and under the provision that the premises are dedicated to businesses.
The address must be registered with the Slovenian Business Register, a public register accessible to everyone. Additionally, the address is provided to the Tax Administration and the Health Insurance Institute of Slovenia for mandatory health insurance applications. Some businesses in Slovenia offer virtual offices and Slovenian business address services, which can be advantageous for foreign investors without a physical address in Slovenia.
Temporary Residence Permit
Temporary residence permits are required if a foreign worker works and stays in Slovenia (alongside Tax Number). For management, as it may work from abroad, only acquiring a Tax Number could suffice.
The available types of residence permits are determined by the purpose of residence in Slovenia, such as work, study, or family reunification.
To acquire a temporary residence permit in Slovenia, individuals need:
(i) adequate photography,
(ii) a provable purpose of residence,
(iii) a valid travel document (passport),
(iv) adequate health insurance,
(v) sufficient means of subsistence,
(vi) verified security concerns (police certificate demonstrating a clean criminal record),
(vii) certified and translated evidence, and
(viii) fingerprints.
Further, an individual needs to provide proof of the right to reside at the address he/she is registering (a statement of ownership or co-ownership, a lease or sublet contract, consent of the owner, one co-owner or an accommodation provider – the owner’s consent does not need to be certified, certificate of usufruct, certificate of use or easement of the accommodation, certificate of the right of superficies).
The cost of a temporary residence permit ranges from EUR 50 to EUR 102, and it is valid for up to two years. The process of obtaining it can take up to three months, and the permit must be registered within eight days of issuance. Individuals can typically apply for permanent residency after residing in Slovenia for five years on a temporary residence permit. The individual must obtain permanent residency before applying to become a citizen.
Conclusion
In conclusion, while considering the advantages of registering your company in Slovenia, the country emerges as a promising destination for company formation, offering a blend of its strategic location, favourable taxation structures, and a streamlined registration process. The ever-changing market demands require agility and adaptability, attributes often associated with Slovenia’s business culture.
Whether you are a foreign investor or an entrepreneur seeking growth, Slovenian legislation provides a conducive environment for business opportunities. Slovenia's green, creative and smart economy are the main differentiators and the answers to your question why Slovenia should be on your business radar.
FAQs
What is the Slovenian Business Register?
The Slovenian Business Register is a centralized database with information about all business entities engaged in either profit or non-profit activities. It is a publicly accessible online register.
What are the key investment areas and incentives for foreign investors in Slovenia?
Slovenia presents significant investment prospects in sectors like the automotive industry, electrical engineering, electronics, life sciences, pharmaceuticals, and the chemical industry.
What type of legal framework is required to establish a business in Slovenia?
The legal framework governing establishing businesses in Slovenia by foreign investors is outlined in the Foreign Direct Investment (FDI) Control Rules of Slovenia. These rules do not impose standstill obligations and do not include sector-specific review mechanisms. Foreign investors, who are citizens or legal entities from a third country, are provided incentives and support by the Slovenian government to enhance the value of foreign-capital businesses operating in the local market.
