mailingLeitner Slovenia 06/2024

Tax amendments proposal revealed

The Ministry of Finance has published a package of proposed tax amendments for public consultation. If approved by the Parliament as well, the amendments will apply to tax periods starting from 1 January 2025 onwards. Below, you will find an overview of the most important amendments.

1 Corporate income tax (CIT)

The following changes are foreseen in corporate income tax:

• Unutilized tax losses will only be available for use in the next 5 tax periods after they have arisen. Currently, no time limit for the use of unutilized tax losses exists. For losses arising in the periods up to the date of application of the amendment, it is proposed that they can be used in the next 7 tax periods.
• The Thin Capitalisation rule, which limits the tax deductibility of interest from loans between related parties on the basis of the debt-equity ratio, has been abolished. However, under the interest recognition limitation rule of the ATAD Directive (Article 54c of the ITA-2), the absolute amount of excess borrowing costs that can be tax deductible is increased to EUR 3,000,000.
• The unused part of the digital and green investment tax allowance can be carried forward to the next 5 tax periods after the investment period. (Currently no carry-forward is possible). The carry-forward of the unused part of the digital and green investment allowance will be possible only for investments made after the amendment enters into force.
• The special regime for determining the tax base with lump-sum expenses has been abolished.

2 Personal income tax (PIT)

The following changes are foreseen in the area of personal income tax:

2.1 Employment income

• Special tax reduction for foreign professionals. New tax residents of Slovenia will be granted an income tax reduction in the amount of 7 % of the salary received, subject to the following conditions:
  • they have not been tax residents of Slovenia for the last five consecutive tax years prior to the commencement of their employment in Slovenia and have not received taxable income with a source in Slovenia from employment or business income during that period;
  • a salary guaranteed in their employment contract is at least 2 times the last known published average annual salary of employees in Slovenia;
  • they have not yet reached the age of 40 years when they start working in Slovenia.

The income tax reduction will be available for 5 consecutive tax years, the first tax year being the year in which the employee starts work.

• Tax advantage to reward employees in innovative start-ups in the form of shares or stock options in the company in which they are employed. The favourable tax treatment provides for a deferral of the calculation of PIT as well as social security contributions on the benefit. The liability of PIT and social security contributions on the benefit is deferred until one of the following events occurs:
  • the disposal of shares,
  • termination of the employment contract,
  • restructuring or liquidation of the employer
  • the employer is no longer deemed to be a payer of tax in Slovenia,
  • expiration of ten years period since the acquisition of the shares.

The benefits do not apply to employees who have a minimum of 10 % shareholding in the innovative start-up or in its parent company. The benefit applies only to employers who are entered in the register of innovative start-ups under a special law.

• Exemption from the system of income gross-up for calculation of income tax from shares received: Benefits granted in the form of shares may not be increased by a withholding tax coefficient (grossing-up), as otherwise provided in the general rule for benefits in kind, where the income received in cash is insufficient to pay the income tax and compulsory social security contributions on that benefit. The general rule on gross-up may be waived if, at the same time, the special tax advantage for the grant of share options (exemption of 35 % of the value of the benefit in kind) does not apply and if the taxpayer informs the tax authorities in the withholding tax return that no gross-up has been carried out. The withholding tax rate on the benefit in kind that is not subject to gross-up is 25 % without considering tax allowances.
• Benefit in kind for private use of an electric company car. Benefits in kind for the private use of an electric company car should no longer be set at zero, but rather at 0.75 % of the purchase price of the vehicle per month (1.5% for other vehicles), from and including the 2029 tax year. Until then,  the benefit in kind will remain zero (untaxed).
• Additional tax-exempt benefits in kind. The following benefits in kind shall be tax exempt:
  • provision of electricity to an employee to charge the employee’s private vehicle at the employer’s non-commercial charging stations;
  • private use of a bicycle provided by the employer to the employee (with or without electric drive), up to a maximum of one bicycle per employee per five years. Purchase value of the bicycle, including VAT, must not exceed EUR 2,000.
• Benefit in kind for management and supervisory board members liability insurance: A special rule is proposed for the valuation of the benefit in kind granted in the form of group liability insurance for members of  management and supervisory bodies. A flat rate tax base of 1 % of the taxable employment income received in a particular month from the employer; or 2 % of the last known average annual salary of employees in Slovenia is proposed if the member does not receive regular monthly employment income with the employer for the particular month.

2.2 Income from an independent business activity

• Changes referring to the lump-sum taxation scheme

The following changes are proposed in the field of the lump-sum taxation scheme for sole entrepreneurs/individuals with business:

• The conditions for entry into the lump-sum taxation scheme are tightened. To enter the scheme, the turnover from the business activity in the previous tax year shall not exceed 60,000 EUR (currently EUR 50,000/  EUR 100,000 depending on insurances).
• The conditions for compulsory exit from the scheme are tightened. An exit is compulsory if the average of the turnover from the business activity in the two preceding years exceeds EUR 60,000 (currently EUR 150,000).
• Reduction of lump-sum expenses:
  • a) if the taxable person has been subject to compulsory insurance based on full-time self-employment for a continuous period of at least nine months during the tax year (the employment of another person will no longer be decisive)
    

    Turnover in EUR	Lump-sum expenses
    Up to 60,000	80 %
    More than 60,000	0 %

  • b) if the taxable person is not subject to compulsory insurance based on full-time self-employment for a continuous period of at least nine months during the tax year:
    

    Turnover in EUR	Lump-sum expenses
    Up to 12,500	80 %
    From 12,500 to 30,000	40 %
    More than 30,000	0 %

• A liability to disclose and report the amount of income derived from related parties and from a person with whom the taxable person has an employment relationship based on an employment contract in the annual tax return has been added.
• Limiting the carry-forward of unused losses and possibility to use the allowance for investments in digital and green transition. The two measures are identical to those for corporate income tax.

• • c) Other
• One of the conditions for EU/EEA tax residents to claim tax reliefs in Slovenia has been abolished. In the process of claiming tax reliefs, the taxable person will no longer have to fulfil the condition that income earned in Slovenia is exempt or tax-free in the country of residence.
• Civil servants and officials. It is proposed to delete the special tax base for civil servants and officials sent abroad.