Employer of Record in Slovenia

The main difference is that not every employer is allowed to carry out activities that are close to the EoR.  The concept of EoR in Slovenia is very close to that of temporary employment. It should be noted that an activity that de facto constitutes temporary employment and enables the user (i.e. the actual employer) to supervise the employee's daily work and give instructions is only possible under the conditions of the ZUTD. Among other things, this also regulates mandatory registration. Specifically, this means that in Slovenia only companies that fulfil the conditions of the ZUTD are allowed to carry out activities similar to the EoR, namely the provision of temporary workers.

It is also important to note that employees may not be provided to any employer, as the following restrictions apply:

A special licence and entry in a state register are required (in addition to other conditions for carrying out such activities) in order for a creditor to carry out its activities. Failure to comply with the conditions for carrying out such activities, which ultimately lead to the granting of such a licence and entry in the register, or failure to obtain such a licence and entry in the register, may result in fines for the lender, the borrower and the responsible persons.

In addition to fines, recent court practice has established the fiction of an employment relationship with the lender as the employer, which requires the employee to file a complaint. In addition to the conclusion of an employment contract, the employee may also claim any additional payments to which he would be entitled if he had worked for the hirer from the outset.

However, the mere hiring out of workers does not require a licence or permission, although this may be required for certain activities. As a general rule, employment contracts between the worker and the hirer must be concluded for an indefinite period, unless there are legal grounds for concluding a contract for a fixed period. However, there is no provision for a time limit on the use of temporary agency work.

When a worker is hired out, the hirer and the worker must comply with the statutory provisions, the provisions of the collective agreement binding on the employer and the provisions of the employer's internal documents. ZDR-1 explicitly states that this includes the employee's right to use the benefits that the employer makes available to its other (regular) employees. Specifically, this means that internal files and rights that the employer uses or makes available to its employees abroad also apply to the employee in Slovenia. In addition, recent court practice has established that in cases of unauthorised hiring out of employees, the employee may also claim any additional payments to which they would be entitled if they had worked for the hirer as a regular employee from the outset (e.g. additional payment of monthly salary if, according to the employer's internal records, employees would receive a higher monthly salary in comparable jobs abroad).​

In Slovenia, there are no special tax regulations for employees who are hired out as temporary workers. They are treated as normal employees for both corporation tax and income tax purposes.

Despite the lack of court practice, there are higher risks that such an employee would establish a permanent establishment, unless he or she would only carry out preparatory or supporting activities. Such risks arise from statements of the Slovenian tax authority regarding the permanent establishment of a non-resident from July 2021. The tax authority emphasizes less the fact whether a dependent agent works on behalf of a non-resident, but rather whether such dependent agent negotiates or concludes contracts binding for the hirer. The tax authority emphasizes that it is not even important whether the name of such borrower is mentioned in the contract or not, but whether it effectively creates obligations and rights for the borrower.

In face of the lack of special regulations in Slovenian national legislation and in the double taxation agreement with Germany, there are higher risks that such an employee could establish a permanent establishment in Slovenia (provided, of course, that he fulfils the other conditions for establishing a permanent establishment)In Slovenia, there are no special tax regulations for employees who are hired out as temporary workers. They are treated as normal employees for both corporation tax and income tax purposes.

Despite the lack of court practice, there are higher risks that such an employee would establish a permanent establishment, unless he or she would only carry out preparatory or supporting activities. Such risks arise from statements of the Slovenian tax authority regarding the permanent establishment of a non-resident from July 2021. The tax authority emphasizes less the fact whether a dependent agent works on behalf of a non-resident, but rather whether such dependent agent negotiates or concludes contracts binding for the hirer. The tax authority emphasizes that it is not even important whether the name of such borrower is mentioned in the contract or not, but whether it effectively creates obligations and rights for the borrower.

In face of the lack of special regulations in Slovenian national legislation and in the double taxation agreement with Germany, there are higher risks that such an employee could establish a permanent establishment in Slovenia (provided, of course, that he fulfils the other conditions for establishing a permanent establishment).