Running payroll in Slovenia

Setting up payroll in Slovenia is less difficult than in other European countries as there are only two registration procedures to complete. Rules for tax calculation are pretty straightforward and social security contributions are set at standard rates which apply to all employees. Income tax and social security contributions are reported in one monthly declaration. However, information must be submitted to different authorities with different filing deadlines.

There are two payroll-related registration requirements for employers with employees in Slovenia. Regardless of whether they intend to set up a local branch or legal entity, employers are required to:

• Register for withholding income tax (entry into the national Tax Register) with the Financial Administration of the Republic of Slovenia (FURS) by applying for a tax identification number (TIN)

• Register new employees with the pension, disability, health and unemployment insurance funds

The latter is done by submitting the M-1 form together with the employee’s employment contract to the Institute for Pension and Disability Insurance of Slovenia (ZPIZ). Incorporated entities can file the documents electronically via the statutory online portal e-VEM. The deadline for the registration is the employee’s first working day. Furthermore, occupational accident insurance needs to be taken out by the employer. 

There is no formal requirement to set up a local bank account in Slovenia as payments to employees can also be issued from abroad. 

Tax-related employer obligations in Slovenia are similar to most other European countries and include withholding, reporting and payment duties. The same applies to social security contributions which are made by both employee and employer. 

Tax considerations

Income tax rates in Slovenia are progressive. The lowest rate is 16%. Thereafter, rates increase up to a 50% top rate (reduction to 45% planned in 2022). 

In 2022, the general tax relief for individuals will increase from EUR 3,500 to EUR 4,500 - a further gradual increase up to EUR 7,500 is planned until 2025. Further personal allowances are available to individuals with special personal circumstances (e.g. dependent children, disability). Social security contributions are deductible for tax purposes.

Residents of Slovenia are taxed on their worldwide income while non-residents only pay tax on income sourced in Slovenia. Employees are considered tax residents if they:

• Have their permanent residence in Slovenia

• Their center of vital interests is in Slovenia

• Spend more than 183 days within one tax year in Slovenia

Tax withholding and reporting 

Employers with employees working in Slovenia are required to withhold income tax from salaries and wages and pay the withheld amounts to the competent tax authority once a month - usually within 5 days after the employee receives their pay. A monthly report needs to be filed with the Slovenian Tax Authorities as well as with the Agency of the Republic of Slovenia for Public Legal Records and Related Services (AJPES), which is the national statistical office. 

The report to the Tax Authorities must include details on withheld income tax as well as on social security deductions for each employee (REK-1 form). The filing is done electronically via the eDavki system. The deadline is the employee’s pay day - the report may be filed before the actual payment takes place. For statistics purposes, employers must report the number of employees currently employed, the total amount of salaries and wages paid in the respective month as well as paid holiday allowance (1-ZAP/M form) to the AJPES. This report is due on the last day of the month in which the payment is made.

In the case of resident employees working for a foreign employer, a monthly income tax return must be submitted by the 15th of the month following the payroll run. Based on the information, the Tax Authorities then carry out a monthly tax assessment. For non-resident employees, the deadline for the monthly tax report is the 15th day after the payment. 

In addition, employers are required to provide employees with an annual payments report which should be made available by the end of January of the following year. The tax year is the calendar year. Individuals receive a preliminary tax calculation from the Tax Authorities either in March or May of the year following the respective tax year which they need to validate - or correct if the information is wrong. 

Social security contributions

Social security contributions are borne by both employee and employer. The total employer share is 16.1% and covers pension and disability insurance, health insurance, unemployment insurance, occupational accident insurance as well as payments to the fund for parental care. Employees contribute to the same funds (except for the occupational accident insurance) at a rate of 22.1%.

Employers are free to decide whether they want to set up a voluntary complementary pension scheme for their employees. There is no separate social security declaration as information on paid contributions are included in the monthly payroll reports filed with the FURS and the AJPES.

Employees in Slovenia are entitled to various benefits. These include:

• Annual leave and public holidays: minimum 4 weeks, plus 11 public holidays; additional paid days off are available to senior employees, disabled employees and those with a disabled child

• Maternity leave: 105 days, fully paid via statutory benefits 

• Paternity leave: 30 days, fully paid via statutory benefits (capped at 2.5 times the national average monthly wage)

• Parental leave: 130 days for each parent, i.e. 260 days in total (extendable in case of multiple births)

• Sick leave: 20 days paid by the employer at a rate of 80% (new law from January 2022 reduced employer burden from 30 days to 20 days); thereafter, sickness benefits are paid by the Health Insurance Institute (ZZZS)

For more information on employee benefits and other employment requirements in Brazil (including severance pay and termination procedures), check out our Global Hiring Guide.

In January 2022, the national minimum wage in Slovenia rose to EUR 1,074.43 per month (was EUR 1,025.20 in 2021). Overtime work is permitted but must be remunerated at higher rates which are stipulated in the applicable collective bargaining agreement. Additional pay is also necessary for shift and night work as well as for work on Sundays and public holidays. Rates are also fixed in the collective bargaining agreement.

There is no legal obligation to provide bonuses to employees. However, many companies offer their employees a 13th month salary, a Christmas bonus or a seniority bonus paid out in the form of a jubilee premium after a certain amount of years worked at the company. 

Payroll in Slovenia must be processed at least once a month. The law mandates that wages and salaries must be paid no later than 18 days after the end of the pay period they relate to. Payments are to be made directly to the employee’s bank account and in the local currency (Euro).

The pay date should be fixed in the individual employment agreement. It is mandatory to provide employees with a payslip at the end of each pay period. Payslips can either be issued in paper form or digitally and should contain information on wages and salaries as well as on bonuses and benefits granted to the employee.