Slovenian Act on Investment Incentives has come into force

Slovenian Act on Investment Incentives has come into force

The National Assembly has passed the Act on Investment Incentives with which it aims to promote domestic and foreign investment, in the foreground those that will accelerate economic growth, employment, balanced regional development and lowering of greenhouse gas emissions and those that have a higher added value compared to the average in the respective industry or are considered to be innovative.

The intention of the Act is to promote initial investments through investment incentives which will be granted in the form of subventions, loans, guarantees, subsidized interest rates and the option to buy municipal real estate at below market price. To be eligible for incentives the investment must be valued at least EUR 1 Million in the processing industry and at least half Million EUR in the service and developmental-research industry and must create at least 25 new jobs in the processing industry, at least 10 in the service industry and at least 5 in the developmental-research industry. The incentives will be granted through public tender procedures. For investments valued at least EUR 15 Million in the processing industry and at least EUR 3 Million in the service and developmental-research industry that will create at least 50 new jobs in the processing industry, at least 40 in the service industry and at least 20 in the developmental-research industry a public tender procedure will not be necessary. Such investments will be considered to substantively contribute to the development of the Slovenian economy and the incentives for them will be granted by the discretion of the ministry competent for the economy, considering available budget funds. All investments will also have to fulfil other statutorily prescribed conditions such as that they will demonstrate economic, financial, technical, spatial and technological feasibility and justification and that they will have a positive impact on the region, that the building of facilities will be in line with the spatial planning act and similar. The investment incentives will be granted only to those investments that have not yet started at the moment of submission of the application.

For realization of strategic investments the Act also allows for an expropriation of real estate owners for real estate properties that are already precisely specified in the spatial planning act or for which the municipality council adopts a resolution with which it determines that the construction of the facility is vital and for the public benefit. The Act defines strategic investments as those that meet most of the above listed aims as well as additional criteria with regard to size. In the processing and service industry the value of the investment must reach at least EUR 40 Million and create at least 400 new jobs and in the developmental-research industry the value of the investment must reach at least EUR 20 Million and create 200 new jobs. The value of the investment must last for at least 10 years and the new jobs must last at least 5 years.

In addition to the aforementioned the Act also introduces a Register of companies with high added value and a Register of innovative start-up companies. The companies listed on either of these two registers, should the anticipated amendments to the Employment, Self-employment and Work of Foreigners Act be adopted, will be able to employ foreigners more easily. The Act on Investment Incentives will replace the Promotion of Foreign Direct Investment and the Internationalization of Enterprises Act and thus abolish the favoritism of foreign investments towards domestic investments with regard to state and local self-government incentives.

The critics of the Act are warning that the constitutionally prescribed measure of public interest, which is a prerequisite for expropriation, is in cases of private investments just potential at best as any benefit of private investments will only be measurable after some time. Additionally they are warning that the Act allows for expropriation of real estate properties that are not preliminarily defined for such investments in the spatial planning act, which makes it possible for big investors to press for their investments to be on locations that are not adequately spatially planned, coordinated with regard to environmental safety or socially confirmed and can lead to similar controversy that we have witnessed with regard to the investment of the Austrian car parts manufactured Magny Steyr in the Hoče – Slivnica Municipality.

There are EUR 10 Million of budgetary funds planed for investment incentives in 2018 and EUR 14 Million for 2019. The Act came into force on 15 March 2018 and its provisions will apply from 1 July 2018 forward.

The National Assembly has passed the Act on Investment Incentives with which it aims to promote domestic and foreign investment, in the foreground those that will accelerate economic growth, employment, balanced regional development and lowering of greenhouse gas emissions and those that have a higher added value compared to the average in the respective industry or are considered to be innovative.

The intention of the Act is to promote initial investments through investment incentives which will be granted in the form of subventions, loans, guarantees, subsidized interest rates and the option to buy municipal real estate at below market price. To be eligible for incentives the investment must be valued at least EUR 1 Million in the processing industry and at least half Million EUR in the service and developmental-research industry and must create at least 25 new jobs in the processing industry, at least 10 in the service industry and at least 5 in the developmental-research industry. The incentives will be granted through public tender procedures. For investments valued at least EUR 15 Million in the processing industry and at least EUR 3 Million in the service and developmental-research industry that will create at least 50 new jobs in the processing industry, at least 40 in the service industry and at least 20 in the developmental-research industry a public tender procedure will not be necessary. Such investments will be considered to substantively contribute to the development of the Slovenian economy and the incentives for them will be granted by the discretion of the ministry competent for the economy, considering available budget funds. All investments will also have to fulfil other statutorily prescribed conditions such as that they will demonstrate economic, financial, technical, spatial and technological feasibility and justification and that they will have a positive impact on the region, that the building of facilities will be in line with the spatial planning act and similar. The investment incentives will be granted only to those investments that have not yet started at the moment of submission of the application.

For realization of strategic investments the Act also allows for an expropriation of real estate owners for real estate properties that are already precisely specified in the spatial planning act or for which the municipality council adopts a resolution with which it determines that the construction of the facility is vital and for the public benefit. The Act defines strategic investments as those that meet most of the above listed aims as well as additional criteria with regard to size. In the processing and service industry the value of the investment must reach at least EUR 40 Million and create at least 400 new jobs and in the developmental-research industry the value of the investment must reach at least EUR 20 Million and create 200 new jobs. The value of the investment must last for at least 10 years and the new jobs must last at least 5 years.

In addition to the aforementioned the Act also introduces a Register of companies with high added value and a Register of innovative start-up companies. The companies listed on either of these two registers, should the anticipated amendments to the Employment, Self-employment and Work of Foreigners Act be adopted, will be able to employ foreigners more easily. The Act on Investment Incentives will replace the Promotion of Foreign Direct Investment and the Internationalization of Enterprises Act and thus abolish the favoritism of foreign investments towards domestic investments with regard to state and local self-government incentives.

The critics of the Act are warning that the constitutionally prescribed measure of public interest, which is a prerequisite for expropriation, is in cases of private investments just potential at best as any benefit of private investments will only be measurable after some time. Additionally they are warning that the Act allows for expropriation of real estate properties that are not preliminarily defined for such investments in the spatial planning act, which makes it possible for big investors to press for their investments to be on locations that are not adequately spatially planned, coordinated with regard to environmental safety or socially confirmed and can lead to similar controversy that we have witnessed with regard to the investment of the Austrian car parts manufactured Magny Steyr in the Hoče – Slivnica Municipality.

There are EUR 10 Million of budgetary funds planed for investment incentives in 2018 and EUR 14 Million for 2019. The Act came into force on 15 March 2018 and its provisions will apply from 1 July 2018 forward.