Understanding Payroll in Slovenia: What Global Companies Need to Know About Slovenia’s Payroll
Aug 14, 2018
With its mountains, coastlines, and forests, the topography of Slovenia is sure to impress even the most cosmopolitan of travelers. In fact, this small country bordering Italy, Hungary, Croatia, and Austria is home to some of the most famous caves and waterfalls in the world. With just over 2 million people and an annual GDP of around $56 billion, Slovenia’s strong economy is largely dependent on information technology, pharmaceuticals, and auto manufacturing.
Businesses in Slovenia have also expanded into the food industry, chemical processing, and electrical devices. The workforce is educated and tech-savvy, making it a key resource for major companies, and the government is committed to attracting and supporting businesses looking for an international home. It’s important to note that payroll regulations in Slovenia rely on a double-entry bookkeeping system, which can make having a global payroll solution a crucial element for success.
Slovenia is one of the most streamlined places in the world to open up a business, and while officials expect proper documentation, the paperwork is relatively straightforward and easy to complete. Owners will need to apply in person and be ready to provide a VAT number. They'll also need at least €7,500 in founding capital if opening an LLC. Most business owners will be able to finish everything in one stop, though larger businesses may need to use a notary to complete their paperwork. Businesses must establish an in-country bank account and deposit capital within 14 days of registration. Opening up a bank account in Slovenia requires all founders of the company to be present, as well as an established tax number and foreign tax number. As long as you have the necessary documentation, registration will likely take a week or less to complete.
Employment Law & Employee Rights
The workweek in Slovenia is officially eight hours a day, five days a week. However, many people in the private sector are accustomed to working an average of 10 hours a day. Full-time workers are not allowed to work less than 36 hours a week. Overtime is paid in Slovenia for anything over 8 hours daily, with the compensation amount determined by industry sector. In practice, however, workers may be accustomed to working overtime without the expectation of additional compensation. Probationary periods are allowed for employees but cannot exceed six months. Workers must be given an official written contract upon signing. Collective bargaining is heavily practiced in Slovenia, with workers relying on unions to maintain fair working conditions.
Compensation & Severance
The base minimum wage in Slovenia is €842.79 per month, though the minimum amount may vary per industry. There are no required bonuses, but it's not uncommon to give employees a Christmas bonus of one month's wages. Other bonuses are typically determined via standard contract negotiations or through collective bargaining. Terminated employees who are not at fault are entitled to severance pay based on their length of service. Those who have been with the company for between one and 10 years receive a fifth of their yearly wages, those who have worked between 10 and 20 years receive a quarter of their annual wage. The severance calculation is based on the salary paid in the three months prior to termination.
Tax Requirements & Withholding
The corporate tax rate of Slovenia is just 19%, with VAT calculated at 22% for standard transactions and a 9.5% reduced rate for certain industries (e.g., food, certain healthcare sectors, newspapers). Slovenians’ income is taxed on a progressive scale, from 16% to 50%. Employers pay 22.1% of social security contributions, while employees contribute 16.1%. There is no payroll tax in Slovenia, and companies are entitled to up to 100% tax relief for all investments in research and development. Businesses are also able to receive up to 40% tax relief for investment in equipment and other intangible long-term assets.
Time Off & Unpaid Leave
Slovenia celebrates 13 public holidays, with an additional 4 work-free days every year. However, two of these always fall on Sunday, meaning there are effectively 15 work holidays annually, although most private businesses allow just 11 paid days off. Additionally, employees generally receive 20 days of paid holiday each year plus seven personal days, with caretakers, workers over 55 and the disabled granted an extra three days a year (based on collective agreement). Workers who have a verified medical condition are entitled to unlimited sick time, with the employee paying for the first 30 days and the state paying the rest. If the illness is not related to workplace conditions, workers typically receive 80% of their salary. New mothers receive 105 days of maternity leave, starting 28 days before their due date. Maternity compensation is paid as a fraction of her current salary. New fathers can take off up to 30 days, with the first 15 days paid.
A Welcoming Country
With its well-educated and trained workforce, ample tax incentives, and key European location, Slovenia offers an attractive option for global companies looking to expand their international presence. Workers in Slovenia have a strong work ethic and a desire to see their country succeed in an ever-changing economic landscape. And while payroll and taxes are relatively easy to navigate, having an international payroll solution can make it easier to comply with new laws that may affect the state of a company's payroll.