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Financial Participation

Up to 2008 there were no specific tax regulations for employee financial participation schemes. As minority shareholders, employees generally have only a limited ability to influence the decisions of the general meeting. However, employees do have a relatively strong position in decision-making due to the Slovenian co-determination model.



Share Ownership



The law on workers’ participation what came into force in April 2008 offers strong tax incentives for employee shares and share-based profit-sharing schemes. Employees receive a 70% tax rebate up to a sum of 5,000 euros on shares sold after one year and full tax exemption for shares held for three years. There are no social contributions on profits.



The law lays down that the annual amount of workers’ financial participation may not exceed 20% of company profits and 10% of the employee’s gross annual wage.1 Participation schemes must apply to the whole workforce. Companies can set such shares off against company tax. Interested companies have to register at the finance ministry in order to benefit from tax concessions.2

During privatization, a special form of employee participation was regulated by Art. 168 Company Law (amended in 1990). This Article states that the managing body of socially-owned companies and public companies is authorised to offer the employees the possibility to purchase the assets of the company under the conditions defined in the Articles of Association. Furthermore, the possibility to privatize companies was introduced by the Law on Ownership Transformation (1992), stating that companies and the social capital could be sold to employees or third parties, shaping a particular form of employee participation in social capital. Companies in social ownership were transformed into corporations and shares issued to the amount of the value of the social capital. The shares could be distributed by internal distribution, internal sale and sale to outsiders. The law provided for the mandatory distribution of 40% of the social capital to different funds. In exchange for employee vouchers, the companies were then entitled to distribute up to 20% of ordinary shares amongst its employees. It was stipulated that registered shares acquired by workers were not transferable for a two year period after the date of issue (except transfer via inheritance). In practice, however, employees found ways to sell their shares before the end of this period.3




In the early 1990s employees were supposed to receive a share of company profits if the company was owned by the public or society as a whole. In practice, it was often possible to except employee profit-sharing in the Articles of Association of joint stock companies, limited liability companies or partnerships. In 1993, the new Company Law was adopted by which socially-owned companies were abolished and the restructuring of companies into corporations was introduced. The obligation to share profits with employees was abolished, but employees continued to share in decision-making.

Wilke, Maack and Partner (2014) Country reports on Financial Participation in Europe. Prepared for www.worker-participation.eu. Reports first published in 2007 and fully updated in 2014.