Employment contract with a foreign employer; the work is performed in Slovenia
Persons who have concluded an employment contract with a foreign employer for the work they perform in Slovenia are socially insured in Slovenia, in accordance with Regulation EC (European Community) 883/2004 on the coordination of social security systems.
An employment contract with a foreign employer is concluded in accordance with Slovenian employment law legislation and the provisions of the Slovenian Employment Relations Act (Uradni list RS 21/2013) on rights and obligations from the employment relationship (dismissal, holiday allowance, meals during work, transportation to and from work, vacation, etc.) apply to the employee.
The foreign employer in Slovenia is not registered in the business register of companies at AJPES and does not have a tax number, therefore the employee is responsible for registering for health and pension insurance at the Slovenian Health Insurance Institute (ZZZS) and paying social contributions.
In practice, this means that a serious foreign employer does not impose the burden of registering for insurance on the employee himself, but authorizes a recognized consulting company in Slovenia to register the employee for insurance and regularly calculates the salary, which is the same as for any Slovenian employee. The consulting company also ensures that the foreign employer is regularly informed about the amount of social contributions and taxes and the deadlines for their payment.
In case that the foreign employer does not pay contributions and taxes, FURS, as the recovery authority, would require the employee to pay all overdue contributions and taxes.
We will write about when a foreign company that has an employee in Slovenia can have a business unit for tax purposes in Slovenia in the June Tax News. à For more information about when a foreign company, that has an employee in Slovenia, can have a business unit for tax purposes in Slovenia click here.
Example:
Franc Novak signs an employment contract with the Austrian employer Fasaden GmbH, which sells facade paints. Franc has a family in Maribor, where he also lives. The work for the company Fasaden GmbH is done from the home office or he mostly works "in the field". His job includes finding buyers for Fasaden GmbH in Slovenia, so he is also entitled to a company car provided by his employer.
When Franc signs an employment contract with the Austrian employer Fasaden GmbH, he must report himself to the regional Institute for Health Insurance of Slovenia (ZZZS) with the employment contract and the M1 form in order to apply for health and pension insurance. At the end of the month, we, as a consulting and accounting company, are usually obliged to calculate his salary according to Slovenian tax and legal regulations and issue a payslip to Franco, and inform Fasaden GmbH of the amount of social contributions and taxes that must be transferred to the payment slips accounts in Slovenia and the net amount of the payment, which they must transfer to Franco on the day of salary payment, when the payroll was also reported to the Slovenian Tax Administration on form REK-1