Entry of a foreign person into a Slovenian company

Entry of a foreign person into a Slovenian company

Are you a foreign entrepreneur with the opportunity of doing business in Slovenia? Do you know what your options for starting and doing business in Slovenia are? Are you familiar with the tax obligations? Which steps need to be considered in order to comply with corporate legislation? Do you have to visit Slovenia to open your business here in Slovenia?

There are several ways to start your business in Slovenia. One of them, which will be the focus of this article, is entering the existing limited liability company as an investor by way of increase of the share capital of such existing Slovenian limited liability company (hereinafter referred to as the “Company”). As an investor you may contribute in cash or in-kind. For the purpose of this article, we will focus on a more common way, increase of the share capital with cash contribution.

Companies Act (Zakon o gospodarskih družbah), Court Register Act (Zakon o sodnem registruI) and Decree on the registration of companies and other legal entities in the register of companies (Uredba o vpisu družb in drugih pravnih oseb v sodni register) need to be observed as a legal basis for the aforementioned transaction.

So what steps should be taken?

  1. Power of Attorney

To answer the above question about the need of the physical presence of the investor in Slovenia – there is no need for investor to actually come to Slovenia to sign transaction documentation and/or to close the transaction regarding increase of share capital of the Company. Investor is of course welcomed, but the signing of transaction documents can also be done through an authorised person (proxy) on the basis of Power of Attorney (hereinafter referred to as “POA”). Taking in consideration the specific form required for certain acts comprising aforementioned transaction, POA must be adopted in a form of a notarial deed and apostilled (if necessary).[1] The notarized and apostilled POA shall then be translated to Slovenian language.

  • The entry of a legal person’s data in the Slovenian tax register and obtaining of a tax identification number for the investor (a natural foreign person or a legal person)

A foreign legal person not established in Slovenia is obliged to submit an application (DR-04 form) for entry of a legal person’s data in the Slovenian tax register before taking any activities in Slovenia. Mentioned DR-04 form can be submitted electronically through FURS’s[2] eDavki service as their own document, in person or by post, to any finance office (except to the Special Financial Office and the General Finance Office). A tax identification number shall be assigned on the first entry in the Slovenian tax register.

Natural persons with a permanent or temporary residence in the Republic of Slovenia or who have no permanent or temporary residence in the Republic of Slovenia (foreign individuals) and earn taxable income or own taxable movable or immovable property on Slovenian territory must submit an application (DR-02 form) either:

  • within eight days of the occurrence of change in tax register data that the finance office could not obtain ex officio (such as information about accounts abroad (i. e. accounts not opened in the Republic of Slovenia), residency status, representatives, investments abroad, etc.); or
  • before their first receipt of taxable income or before first acquisition of taxable movable and immovable property if they have not yet been assigned a tax identification number.

Note that changes in data that are contained in the tax register and cannot be obtained by the finance office ex officio should be communicated to the finance office within eight days of their occurrence.

  • Obtaining of the relevant certificates

In addition to all the above requirements, the following documents[3] will have to be presented to the Slovenian Notary Public:

  • if the investor is a foreign company, then notarized and apostilled extract from the register of companies no older than 3 months must be provided; however, if the investor is a foreign natural person, notarized and apostilled copy of identification document must be submitted;
  • original statement by the competent tax authority that the investor has no outstanding tax liabilities, which should not be older than 30 days;
  • original statement (should not be older than 30 days) by the competent tax authority that the investor whose direct or indirect participation in the capital of a company limited by shares is more than 25 percent and this company was not published on a list of companies that have not submitted their declarations in accordance with the Act governing tax procedure in the past 12-month period, or that was not entered on a list of non-payers in accordance with the Act governing tax procedure – to apply by analogy for foreign country;
  • original certificate from the relevant register, competent judicial or administrative authority (not older than 30 days), evidencing that there are no reasons to prohibit an individual or a company from gaining the status of the shareholder in Slovenian company in connection with the requirements of Clause 10.a of the Slovenian Companies act, regarding the persons not eligible to become a founder or a company member. Namely, following restrictions apply and below categories of potential shareholders cannot be entered in the Slovenian court/business register:
  1. a person convicted in a final judgement to serve a prison sentence for committing a criminal offence against the economy, against employment relations and social security, against legal transactions, against property, against the environment, spatial planning and natural resources, and is registered in the criminal record of the Ministry of Justice – to apply by analogy for foreign country of the investor;
  • a person who has been fined in the previous 3-year period in a final decision issued by the Labour Inspectorate (of the Republic of Slovenia) or Financial Administration (of Republic of Slovenia) for an offence relating to payment for work or an offence relating to illegal employment – to apply by analogy for foreign country of the investor.

As the majority of documents related to the investor should not be older than 30 days at the time of submission of the application for increase of the share capital to the Slovenian Court Register, please take into account that requests for emergency treatment for issuance of these certificates will probably have to be sent to the competent authorities in order to obtain necessary documents on time.

It is advisable, to provide at least a scan of the required certificates as soon as possible to ensure timely translations by the court interpreter.  

Anyways, it is suggested that this is also discussed with local lawyers in investor’s country how to get these documents as soon as practicably possible.

  • Signing of relevant transaction documentation and paying of the cash contribution

Once the above formalities are finalized or simultaneously with the above activities of the investor, the existing shareholders of the Company shall adopt a resolution on the increase of the share capital with cash contribution.

After the investor is fully identified by the Notary Public, new Articles of Association of the Company can be executed and signed by all shareholders (including new, foreign shareholder or his proxy).

Usually at the same time and in the form of a notarial deed, investor (or his proxy on a basis of POA in notarial deed) gives a statement on the acquisition of the Company’s new business share in the amount that corresponds to his cash contribution.

Prior to submission of the transaction documents to the Court Register, investor has to pay the agreed amount of the cash contribution to the bank account of the Company within the agreed deadline and the bank holding the Company’s bank account shall issue the confirmation letter confirming that the cash contribution of the investor was received and declaring that the Company is free to dispose of with the payment made by the investor.

The process shall continue with the Notary Public filing an application to entry the increase of the share capital with the new contributions to the Slovenian Court Register.

Commonly within a week, a decision by the court is rendered and investor is registered as new shareholder of the Company.

Should you need any assistance, either legal or tax, please do not hesitate to contact our advisors who will provide you with necessary information and also prepare documentation needed for such transaction.

[1] Convention of 5 October 1961 Abolishing the Requirement of Legalisation for Foreign Public Documents (Hague Convention) determining the use of apostille shall apply, unless if the contracting countries signed biliteral treaties relating the mutual assistance in civil matters (among other issues it is possible that the contracting countries agreed that public documents issued by court or administrative authorities do not need to be additionally legalised for the purpose of their use before the courts of the other contracting country).

[2] FURS – Financial administration of the Republic of Slovenia

[3] For the most of these documents an apostille seal is enough as they are issued from an official authority of foreign country.