Temporary tax measures aimed to finance repairment of damages caused by floods

On 13 December 2023, the Slovenian Parliament adopted the Act on reconstruction, development and provision of financial resources (ZORZFS). ZORZFS establishes a special state fund with aim to finance restoration of damages caused by the floods. The fund will be financed, among other sources, also from the temporarily increased corporate income tax rate and the newly introduced tax on the balance sheet of banks.

1. Increased Corporate Income Tax (CIT) rate
The CIT rate has been temporarily increased from 19 % to 22 % for the following five calendar years (2024 – 2028).

2. Tax on the balance sheet of banks
ZORZFS introduces a temporary tax on the balance sheet sum of banks and savings banks for the period of five years (calendar years 2024 – 2028).

The list of taxpayers include:

• banks and savings banks licensed by the Bank of Slovenia to provide banking services;
• banks and savings banks from EU Member states, which, in accordance with the legislation, are entitled to provide banking and other mutually recognized financial services in the territory of Slovenia through a branch or a permanent establishment according to the Corporate Income Tax Act;
• banks and savings banks from third countries, which have obtained permission from the Bank of Slovenia to establish a Slovenian branch.

The tax period is a calendar year. The taxpayer shall file the tax return by himself at the latest by 31 March for the previous calendar year.

The tax base is the balance sheet, calculated as the average value of balances on each last day of the month in the tax period. The tax rate is 0.2 %.

The tax liability may be reduced by the amount of cash donations, paid by the taxpayer for the purpose of flood and landslide relief during the applicable tax period to the special State budget and by the amount of difference between the CIT levied at the rate of 19 % and the temporarily increased CIT rate of 22 %. The tax liability may also not exceed 30 % of the taxpayer’s profits from ordinary business activities.

Minimum Tax Act

On 13 December 2023, the Slovenian Parliament also adopted the Minimum Tax Act (MTA), which implements the Directive (EU) 2022/2523 on ensuring a global minimum level of taxation for multinational enterprise groups and large-scale domestic groups in the EU. The latter is a consequence of the OECD’s global fight against tax base erosion within the scope of Pillar II.

The MTA shall apply to business years starting with 31 December 2023. The first reporting under the MCD shall be done by 31 March 2026.

1. Liable taxpayers
Only groups of multinational enterprises (MNEs) that have annual revenue in consolidated financial statements exceeding EUR 750 million in at least two of the four fiscal years preceding the tested financial year will be impacted by the minimum tax.

Each MNE group that fulfils the conditions for purposes of the MTA will have to determine and calculate whether it is bound to pay the so-called “top-up tax” for each entity in its MNE group.

2. Relevant items for top-up tax computation
Determining all the elements required to compute the top-up tax is a complex operation and entails:

• identifying entities within the MNE group and determining the threshold;
• calculating the qualified revenue or loss of entities in the MNE group in a specific jurisdiction;
• computing qualified domestic taxes;
• computing the effective tax rate for each tax jurisdiction in which the MNE group is present;
• if the effective tax rate is lower than the minimum tax rate, the top-up tax will be computed for each jurisdiction.

All MNE group members that are part of consolidated financial reports will have to be considered. Moreover, members excluded from consolidation due to their small size, on materiality grounds or on the grounds that they are held for sale, must also be considered.

It is expected that the Financial Administration and the Ministry of Finance will publish more detailed instructions and guidelines on the implementation of the MCD in 2024. It is also expected that sub-legislative acts will be issued in this respect.