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Skilled labour across a number of leading industries remains one of the main attractions of foreign direct investment (FDI) in Slovenia, but navigating the complex investment environment can be difficult without local help.
Since the late 1970s, Slovenia’s position as a skilled labour hub has attracted investment from around the world. There are several knowledge-based sectors which make expansion and development a seamless process for growing companies looking to take advantage of Slovenia's strategic location at the heart of Europe. Business-friendly legislation, investment incentives, cuts in the corporate income tax rate until 2015 and investment tax allowances also make Slovenia a good choice as a business destination.
To complement its ideal location, Slovenia has developed excellent transport and ICT infrastructure to allow businesses to penetrate markets beyond its borders. Value chains, industry clusters and centres of excellence also allow organisations to develop and grow internationally, and a corporate culture of transparency and accountability promotes free market functionality without government interference. The World Bank and International Finance Corporation (IFC) rank Slovenia in 35th position in the world for ease of doing business, highlighting the strength of the corporate landscape.
But despite being home to a modern business landscape and a wealth of investment opportunities, international corporates can struggle to grow accustomed to the complex legal, tax and regulatory conditions, which is why having local help on board can be a real asset.
Starting a Business
Newly-formed corporations must pay in 44% of capital in a bank account when starting up and collect a receipt before registering at the electronic one-stop shop E-vem. The procedure should take less than a week to complete.
Dealing with Construction Permits
Businesses constructing new properties have to devise a thorough plan of the proposal before obtaining a building permit from the Administration Unit Ljubljana. A geodesist company must then conduct marking out before and after construction, and the Labor Inspection is to be consulted before connections and registrations can be completed.
Getting Electricity
Electrical connection is arranged by the official agency responsible for the municipality. Applications are sent to the appropriate governing body and they will supply the agreement and conduct external works. A registered company must complete an internal inspection before final connection can be made.
Registering Property
Property registration takes 110 days and requires five procedures to be completed. The Land Registry must be consulted and the land has to be assessed by the Tax Authority. Payment of the real estate transfer tax or VAT tax at the Tax Administration Office is also to be made.
Getting Credit
The World Bank and IFC rank Slovenia in 104th place in the world for ease of getting credit because of low scores across all the major indices. Other than private bureau coverage, the depth of Slovenia’s credit information index is weak and the strength of the legal rights index and public registry coverage are also below par.
Protecting Investors
Investor protection has been improved substantially over the past year in Slovenia, although there are still several areas in which overseas investors remain vulnerable. Seeking local advice about the regulatory environment is advised for those unsure of the level of protection that is afforded.
Paying Taxes
Processing corporate tax payments takes 260 hours of business time a year, with 11 payments to make altogether. Corporate income tax and social security contributions are by far the most labour intensive areas of the tax system, although dealing with VAT and processing levies such as road tax and property tax can also be burdensome.
Trading Across Borders
The cost of trading across borders is extremely cheap in Slovenia, although it can take more than two weeks for shipments to move in either direction. There is also a lot of paperwork to arrange; six when exporting and eight when importing.
Enforcing Contracts and Resolving Insolvency
Enforcing contracts takes more than three and a half years on average, which is more than double the OECD norm. Insolvency cases can also be very time consuming, and the recovery rate is quite low.
Culture
Slovenia has a polycentric culture, which means people will go out of their way to change their natural behaviour to mirror that of the person with whom they are interacting. The business environment is quite informal and the focus should be on being friendly and personable rather than corporate minded.
TMF Group
We have the local knowledge to help you navigate these minefields. Whether you want to set up in Slovenia or just want to streamline your Slovenian operations, talk to us.