Imminent elections, tax framework overhauls, and potential shortages in an otherwise solid economy are the immediate concerns in Slovenia, according to Senica & Partners Partner Janja Ovsenik.
“The current front runner for the upcoming elections is Robert Golob, a businessman with limited political experience,” Ovsenik begins. “He has a very tight lead over Janez Jansa, who has quite a loyal and disciplined voter base and a very concrete political program. I think this could make the elections very, very close.” Ovsenik explains that the “parties on the left side of the political spectrum have been quite vocal about not wanting to be a part of any coalition including Jansa. With over 25% of voters left undecided – it’s hard to predict the outcome – I believe that four or more parties will have to work out an agreement in order to form a government,” she says.
Focusing on recent legislative updates of note, Ovsenik mentions an overhaul of a part of the tax framework. “In addition to corporate income tax changes, which started to be applied as of this year, there have been strong additional incentives put into play for stimulating green economy investments,” she reports. “Also, there have been changes to the personal income tax, which were passed just recently and apply retroactively, from January 1, 2022. The long-awaited updates have led to a higher net salary for every citizen, given that they cut some taxes down,” Ovsenik explains. “Additionally, Slovenia has introduced a number of performance-related payments and other options schemes, in order to attract high-quality specialists from abroad,” she adds. Assessing the tax updates, Ovsenik reports that these were all “very welcome,” although expectations were higher. “Slovenia still has one of the highest levels of social security contributions in all of Europe – there were hopes of introducing a potential cap on these, but it hasn’t happened,” she says.
Further, Ovsenik reports that a “draft law regulating digital currencies is being discussed right now. It is supposed to become effective in 2023, which means that even with the current slowdown of all legislative processes due to the upcoming elections, it is likely we will see it passed this year,” she says.
Speaking of the economy in general, Ovsenik says that the effects of the war in Ukraine are being felt. “There have been some five thousand refugees already registered in Slovenia, and the country is hard at work at integrating them and giving them a safe harbor. The war is impacting agriculture and food products, with the main concern being the potential shortage of energy and mineral fertilizers,” she explains. With the country experiencing 8.1% GDP growth in 2021, it remains to be seen how the war impacts growth in 2022.
Finally, touching on important deals of late, Ovsenik points to the recent sale of Pipistrel, an “aviation pioneer in Europe. Pipistrel has been producing electrically powered airplanes for a while now, and its sale to Textron is a strong indication of the quality and further growth,” she explains. “It is also a good sign that its R&D department will stay in Slovenia, meaning that the economy will only benefit,” Ovsenik concludes.