Slovenia: Country and Foreign Investment

Slovenia History, Population, Language and Culture

Ancestors to present-day Slovenes settled in the region in the 6th century, and the principality of Carantania was formed in the 7th century. The region fell under foreign rule from the 9th century, including partial control by Bavarian dukes and the Republic of Venice. Slovenia formed part of the Habsburg Empire from the 14th century until 1918, but the region managed to resist German influence and retained its own culture and language.

Slovenia formed part of the Kingdom of Serbs, Croats and Slovenes from 1918, which became the Kingdom of Yugoslavia in 1929. The kingdom fell at the end of World War II, and became a communist state under President Tito. Following Tito’s death in 1980, Slovenia moved towards democracy despite opposition from Yugoslavia’s central government, and declared independence on June 25, 1991. A 10-day war followed, but Yugoslav forces withdrew from Slovenia in the face of stiff resistance.

The population was estimated to be 2,003,136 in July 2010. Slovenes make up around 83% of the population, with around 2% Serbs, 2% Croats and 1% Bosniaks. The remaining 12% includes Hungarians, Montenegrins, Macedonians, Albanians, Italians and Roma.

The official language is Slovenian.

The main religion in Slovenia is Catholicism (approximately 60% of the population); other religions include Islam and the Orthodox Church. Slovenia has a fine cultural history of literature, painting and sculpture. The country is also associated with the renowned Lipizzaner horses – the breed takes its name from an early stud farm established in the village of Lipica.

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Slovenia Government

Slovenia is a parliamentary democracy. It has a bicameral parliament that consists of the National Assembly (Državni zbor) of 90 members elected by popular vote every four years; and the National Council (Državni svet) of 40 members who are indirectly elected by an electoral college.

The President is elected by popular vote for a five-year term; the current President is Danilo Türk, who assumed office on December 23, 2007. The Prime Minister is elected by the National Assembly; the current Prime Minister is Borut Pahor, who assumed office on November 21, 2008.

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Slovenia Economy and Currency

Slovenia benefits from an excellent infrastructure and a well-educated workforce, and is strategically located between the Balkans and Western Europe. However, there has been little privatisation since 2002, and the economy has one of the highest levels of state control in the EU.

Sectors include chemicals, textiles, food products, metal products and transportation equipment. Koper is an important trading port for both Slovenia and landlocked Central European countries – exports in 2009 totalled USD22.58bn, and imports USD23.44bn. Slovenia’s major trading partners are Austria, Croatia, France, Germany, Italy and Russia.

GDP per head in Slovenia is estimated at USD27,700 for 2009. GDP growth fell in 2009 to around -7.8%, compared to 3.5% in 2008 and 6.8% in 2007. The unemployment rate in 2009 was around 9.2%.

The currency is the Euro (EUR); Slovenia was the first of the Central European countries to join the EU to adopt the Euro, on January 1, 2007.

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Slovenia Entry and Residence

Slovenia is part of the EU's Schengen Area, meaning that there is visa-free movement within Schengen of nationals of all those EU Member States belonging to the area. Moreover, citizens of EU Member States and of a number of non-EU countries do not require a visa for visits of up to 90 days within a six-month period from the day of arrival.

Foreigners must obtain a residence permit if they wish to remain in the country for more than 90 days within a six-month period from the day of arrival in Slovenia.

For tax purposes, residency applies to anyone whose permanent place of residence is in Slovenia, or who spends more than 183 days in Slovenia during a year.

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Slovenia Business Environment

Koper, Slovenia’s large freight port, was established in 1957 and lies on the shortest transport route linking commercial centres in Central and Eastern Europe, the Mediterranean and countries along the Suez Canal. The port is being expanded, with a third pier under construction to replace the container and ro-ro terminal at Pier I in order to substantially increase capacity. The entire port has been given Free Trade Zone status – businesses can qualify for tax benefits so long as they export at least 51% of the goods and services they produce; those located in other special economic zones can also benefit from preferential tax treatment.

Slovenia benefits from a well-developed rail network, with good links to neighbouring countries. Telecommunications are also well developed. A 2008 survey found that 58% of Slovenians aged between 10 and 74 are Internet users. Mobile phone use is widespread.

Real estate in Slovenia has suffered from the global recession, with prices falling since 2007, after an average increase of 13% since 2004 until the downturn. In July 2009, the cost of one square metre of real estate was around EUR2,748 to EUR3,133.

The central bank is the Bank of Slovenia, which was established in 1991; there are a number of national banks, including Nova KBM, Abanka and Banka Koper, and a number of foreign bank branches.

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Slovenia Investment Incentives

Businesses operating in Special Economic Zones and in the Koper Free Trade Zone benefit from reduced corporate income tax and other tax incentives, subject to conditions. Investment and pensions funds and venture capital companies can benefit from a special corporate income tax rate of 0%, again subject to certain conditions.

Foreign companies may apply for financial assistance in the form of grants by way of the FDI Cost-sharing Grant Scheme. In particular, grants are available for investments in production (industrial), strategic services, logistics, and research and development. The criteria to qualify for a grant stipulate that the minimum investment is EUR1m and that between 10 and 50 new jobs are created (10 in R&D). The grant may be up to 40% of the sum invested. A key proviso is that the company receiving the grant remains trading in Slovenia for between three and five years, depending on the size of the company.

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