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Floods and Taxes in Slovenia: A Buzz Interview with Andrej Fatur of Fatur & Menard

Floods and Taxes in Slovenia: A Buzz Interview with Andrej Fatur of Fatur & Menard

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With the aftermath of the devastating floods that hit Slovenia this year still being felt across multiple sectors, the country is also facing legal challenges – from new taxation policies to upheavals in the healthcare system – according to Fatur Menard Partner Andrej Fatur.

“Floods have caused significant damage to Slovenia, with the subsequently emerging legal ripples dominating the legal landscape, particularly in environmental law and insurance claims,” Fatur begins. “The damage to infrastructure has raised questions about liability and compensation, which are complex and will require thorough legal scrutiny.”

In the wake of the floods, the Slovenian government began discussing the possibility of additional taxes being introduced to counteract the damages. Specifically, Fatur mentions a new tax on banks. “This wasn't a public discussion before the floods,” he says. “This move is ongoing and poses a significant challenge for lawyers in banking and finance, dealing with the newly proposed framework as well as the potential constitutional challenges coming out of it.”

Taxes are a bit of a hot ticket in Slovenia, given that, as Fatur puts it, a “more left-wing government, elected last year, promised tax reforms, which usually signals tax increases for the country. There's been a pledge to not introduce additional taxes on natural persons but to foresee taxes on companies, which caused a backlash in the corporate community,” he explains. Such issues come as the country “grapples with the tail-end of COVID-19, the ongoing war, and its effects on energy prices and inflation. These pressures have a sort of domino effect on various sectors, including banking, taxation, and public finance.”

Furthermore, Fatur reports that Slovenia adopted a new FDI mechanism, following suit with the rest of the EU – but not as smoothly as expected. “The new FDI regulations, implemented during the COVID-19 period, have unexpectedly required notifying the authorities even in those cases when the investors were coming from the EU,” he says. “This has since been rectified, and the FDI mechanism now applies to potentially problematic investments from outside the EU – a positive development which not only eases the bureaucratic burden but also makes the business environment a more predictable one, at least for EU companies looking to invest in Slovenia,” Fatur explains.

Turning to issues within the healthcare system, Fatur points out some friction in the field. “Slovenia's healthcare system is primarily financed through a public healthcare fund, with an additional private health insurance fund introduced about three decades ago to avoid surcharges for certain services – the issue was, however, how to integrate this additional insurance into the public system. This seems straightforward but impacts taxes and other areas significantly,” he explains. “Recently, there were moves to increase health insurance fees, but the government abruptly terminated this, leading to significant financial implications for private insurance companies.”

Finally, Fatur reports that, in October, “Slovenia's Supreme Court ruled that certain agreements between banks and customers concerning loans in Swiss francs were null and void. The court found that banks failed to adequately inform customers about the risks,” he says. “This is a significant decision and is likely to be challenged in the constitutional court,” he concludes.

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