COVID-19 Slovenia Update

Impact of the Second Anti-Corona Act on Lease Agreements

The National Assembly of the Republic of adopted the Act on additional liquidity to the economy to mitigate the effects of the infectious disease epidemic (“Act”) on 28 April 2020, which entered into force on 1 May 2020.

Pursuant to Article 34 of the Act, the tenants of commercial premises owned by the Republic of Slovenia or self-governing local communities (municipalities) that are significantly impeded or incapacitated from pursuing their business activities due to governmental measures connected with the outbreak of the COVID-19 disease, shall not be charged rent or part of the rent for the entire duration of the epidemic, i.e. from and including 13 March 2020, and until the declaration of the epidemic is revoked. The Decree on the revocation of the epidemic of contagious disease SARS-CoV-2 (COVID-19) dated 14 May 2020 (“Decree”) entered into force on 15 May 2020 and will be applicable from 31 May 2020.

Only tenants fulfilling the following conditions under Clause 3.1 of the Temporary Framework for State aid measures to support the economy in the current COVID-19 outbreak (“Temporary Framework”) are exempt from payment:

  • if the tenant is not an ‘undertaking in difficulty’ (within the meaning of the of Article 2, Paragraph 1, lit. 18 of Regulation (EU) No 651/2014) on 31 December 2019;
  • the total amount of public resources granted to the tenant in accordance with Clause 3.1 of the Temporary Framework does not exceed EUR 800,000.00, or EUR 120,000.00 if the tenant is active in the fishery and aquaculture sector, or EUR 100,000.00 if the tenant is active in the primary production of agricultural products. All figures used must be gross, that is, before any deduction of tax or another charge;
  • the total amount of financing of the same eligible costs, which are also financed from other public sources, may not exceed the limits set out in the previous indent;
  • measures under this Act do not preclude the granting of de minimis aid or aid granted under the General Block Exemption Regulation if provisions of relevant acts of the European Commission are respected.

The Act does not regulate lease agreements for commercial premises, which are owned by private companies or individuals. Tenants who were obstructed or impeded in performing business activities due to the emergency measures have remained in uncertainty and were only exempt from rent payment had they reached an agreement with the owner of the premises, or if they had achieved a reduction in rent based on certain legal options arising under the Obligations Code.

During the session of the National Assembly dated 28 April 2020, on which the Act was adopted, several members of the National Assembly have pointed out that the question of private contractual relationships pertaining to the lease of commercial premises remained open and that it could perhaps be subject to the Third Anti-Corona Act. One of the possibilities mentioned was to follow the example of the Austrian Code of Obligations pursuant to which the burden of rent is borne by the owner of the premises in the event of an emergency such as epidemics. The Third Anti-Corona Act is in preparation, however, as the epidemic was revoked with the Decree, the question remains, whether and in what way will it regulate commercial lease relationships.

 

The information in this document does not constitute legal advice on any particular matter and is provided for general informational purposes only.