Overview of retail lease agreements in Slovenia

The matter is regulated by the Obligation Code (hereinafter OZ) and the Value Added Tax Act (hereinafter ZDDV). However, contracts concluded prior to 19th of June 2021 are also regulated by the Business Buildings and Business Premises Act (hereinafter ZPSPP).

There is no minimum duration. The maximum duration is stipulated as indefinite.

According to the OZ, the landlord can terminate the lease agreement without notice period if: 

• The tenant, even after the landlord's warning, uses the premises contrary to the contract or its purpose, or neglects its maintenance, risking substantial damage to the landlord;
• if the tenant does not pay the rent within 15 days of the landlord's request to do so;
• if the tenant subleases the leased property without the landlord's permission when required to do so by law or by contract.

According to the ZPSPP, which applies to contracts concluded before 19th of June 2021, the landlord can terminate the  lease agreement at any time if:

• the tenant uses the premises contrary to the contract provisions or in a manner which causes significant damage;
• the tenant does not pay the rent for two months after the landlord’s reminder to do so;
• the landlord cannot use business premises in which he performs its business activities, is not at fault for that situation, and needs business premises that are leased to the tenant for itself.

The parties can agree on any further reasons for early termination by the landlord in the lease agreement.

According to the OZ, the tenant may withdraw from the contract if the necessary repairs to the leased property interfere with its use to a significant extent and for a prolonged period.

Furthermore, the tenant may withdraw from the contract If the leased property has a defect that cannot be remedied at the time of delivery. He may also withdraw from the contract if, during the lease, the leased property shows any defect or if the leased property does not have a characteristic which it is contractually or customarily supposed to have or if it loses that characteristic during the term of the lease.

According to the ZPSPP, the tenant can terminate the lease agreement if the premises are not released in due time under the conditions laid down in the agreement. The tenant can also terminate the agreement if the landlord does not carry out a repair that is needed in order to achieve the intent of the agreement. The parties can agree on any further reasons for early termination by the tenant in the lease agreement.

ZPSPP stipulates that a notice period cannot expire before one year has elapsed if the lease contract is concluded for an indefinite period. However, OZ does not contain such provision. This means that contracts concluded after the 19th of June 2021 are not subject to this limitation.

According to the OZ, if the tenant continues to use the property after the expiry of the period for which the lease was concluded and the landlord does not object, a new lease is deemed to have been concluded for an indefinite period, with the same conditions as the previous one.

The ZPSPP regulated the extension of the relationship in a similar way.

There is no rent revision procedure as the rent is considered a key element of the lease agreement.

There are no mandatory provisions regarding fitting-out works. The matter is largely left to the parties’ discretion.

In practice, it is usual for the tenant to fit out the premises so that they are suitable for occupation as declared in the lease agreement.

Unless otherwise agreed, the tenant shall return the premises in the same condition in which they were received.

The OZ provides that, unless otherwise agreed in the contract, the tenant may lease the leased property to another (sublease) or otherwise give it to him for his use, but only if he does not thereby cause damage to the landlord. The tenant warrants to the landlord that the sub-tenant will use the property in accordance with the lease agreement.

According to the ZPSPP, the tenant does not have the right to sublease the premises without the landlord’s consent, unless otherwise agreed in the lease agreement.

The lease agreement is binding on the new owner of the premises. The transferor is jointly and severally liable for the obligations of the transferee under the lease.

The tenant has no pre-emption right in the case of the sale of the premises, unless otherwise agreed in the lease agreement.

There are no mandatory rules regarding the form and/or duration of a rental guarantee.

The landlord must hand over the premises to the tenant in such a condition that they can be used for the purpose specified by the agreement and maintained in such a state.

The landlord has an obligation to maintain the premises in a suitable condition and to procure necessary repairs on the outside and inside.

The cost of minor repairs caused by normal use, as well as the cost of the use itself, is borne by the tenant.

According to the ZPSPP, the tenant is obliged to repair the damage to the premises or on the premises that it has caused.

As a general rule, the rent is VAT exempt, unless the parties have opted to charge VAT.

In order to opt for VAT, both parties have to be registered for VAT purposes, the tenant must be entitled to full VAT deduction and the Tax Authority has to be notified about applying VAT (by the end of the month following the conclusion of the lease agreement).

In practice, most of the landlords and tenants opt for taxation with VAT. The VAT rate in that case is 22%.
If service and utility charges are charged separately from the rent, they are taxed with VAT, provided that the supplier is registered for VAT.

If the service and utility charges are included into the rent, the VAT treatment of such charges follows the VAT treatment of the rent (primarily VAT exempt, but there is option for taxation with VAT).

There are no other important legal provisions or practices.