On 2 April 2020, the National Assembly adopted an Act on the intervention measures to mitigate the consequences of the communicable disease SARS-CoV-2 (COVID-19) epidemic for citizens and the economy (Act). The Act entered into force on 11 April 2020, the day after its publication in the Official Gazette of the Republic of Slovenia.
The Act among others provides for the rules regarding (1) deferral of borrower’s payment obligations, (2) employment relationship and payment of social security contributions (3) health and social security, (4) enforcement, insolvency and other financial obligations, and (5) other areas of law. This section is intended for the presentation of a regulation of financial areas such as enforcement, insolvency, tax and payment deadlines.
Enforcement and Personal Bankruptcy
The Act provides that all income received on its basis is to be excluded from the enforcement, tax enforcement and from the bankruptcy estate in the personal bankruptcy procedure.
With the entry into force of the Act, the enforcement of the enforcement orders is (i) postponed in the enforcement proceedings (except for the special circumstances, i.e. when the enforcement concerns claim for legal maintenance and compensation for lost maintenance due to the death of its issuer) or (ii) stayed in the tax enforcement proceedings, respectively.
Financial Management, Insolvency and Compulsory Settlement Proceedings
The Act envisions additional position of insolvency. Thus, entity is considered as continuously insolvent also when it is more than a month late with the payment of wages and contributions to workers, counting from the date of receipt of compensation for wages and contribution on the basis of interventional acts. This additional irrefutable presumption of insolvency remains valid for four months after the expiry of Temporary measures as defined by the Act.
Management is not required to file a petition in bankruptcy or compulsory settlement proceeding if the insolvency occurred as a result of declaration of the epidemic, e.g. if the company performs the activity, for which the performance was prohibited or significantly limited by the public authority. This measure remains valid also for three months after the expiry of Temporary measures as defined by the Act. If the company’s bodies are not able to perform actions and measures such as an increase in the share capital or a concurrent performance of a simplified reduction in share capital as per Articles 36 and 37 of the Financial Operations, Insolvency Proceedings, and Compulsory Dissolution Act (ZFPPIPP) in a timely manner, due to the objective conceqences of the declaration of epidemic, they must start doing so at the latest within one month from the expiry of the Temporary measures as defined by the Act.
Deadlines for the fulfilment of the management’s obligations from Articles 40 and 221.l ZFPPIPP do not run out earlier than one month after the expiry of the Temporary measures as defined by the Act.
If the creditor files the petition in bankruptcy within two months after the expiry of Temporary measures as defined by the Act at the latest, and if the insolvency of the company occurred as a consequence of the declaration of epidemic, then the timeline, for which the court can postpone the deliberation regarding the petition and the timeline within which the debtor can explain its request for postponement, is four months.
The Act provides for the exemption from the payment of (i) instalments of the preliminary prepayment of personal income tax on the income earned as a performance of the activity of natural persons and (ii) instalments of the prepayment of the corporate income tax, for the year 2020, which are due after the entry into force of the Act and until 31 May 2020.
Unpaid instalment of the (preliminary) prepayment of the personal income tax from the previous paragraph are not considered to be calculated.
Public finance and Payment Deadlines
The payment deadline for direct and indirect users of the budget to private entities is shortened from 30 to 8 days.
Payment deadlines are prolonged to 60 days for creditors that are public entities (including legal entities that are predominantly publicly owned). This measure stays in force for one year since declaration of the expiry of the epidemic and does not affect the right to agree on payment deadline longer than 60 days, pursuant to Article 10(2) of the Act on prevention of late payments (ZPreZP-1).
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Law Firm Kavčič, Bračun & Partners, o.p., d.o.o
Ljubljana, 3 April 2020
All information contained herein is based on applicable law or obtained from publicly available data or other sources believed to be reliable. This document is for general information purposes only, may be subject to change and may not be used instead of a legal opinion/advice. KBP does not guarantee the accuracy of the information and shall not be liable for any damages or costs in connection with the use of, or reliance on, the information contained herein.