Due to the extent of the floods, the Act Determining Intervention Measures for Recovery from the Floods and Landslides of August 2023 was additionally adopted, amending the laws currently in force in Slovenia and introducing specific measures. Below, we summarise the main temporary solutions of both laws in the field of taxation.

Support for the self-employed

A self-employed person in Slovenia who is unable to carry out his/her activity or whose activity significantly decreased as a result of the floods is for the period from August to December 2023 entitled to a support of EUR 1,200/month, provided that the following conditions are met:

• the activity is registered at least from 1 July until 11 August 2023;
• no outstanding liabilities towards the tax authorities at the date of submission of the declaration;
• all withholding tax returns from employment income for the last five years have been submitted;
• revenues in 2023 will decrease by at least 25% compared to 2022.

The self-employed person has to submit the declaration for the support for each month via the tax authorities’ information system (eDavki). The final deadline for submitting the monthly declarations for the entire period from August to December 2023 is 31 January 2024, with the payment on 9 February 2024.

Reimbursement of employees’ wage compensation

If an employer who has received (partial) reimbursement of wage compensation paid to employees as a result of force majeure or waiting time due to a natural disaster, has, as of 3 August 2023, paid out profits, purchased its own shares or stakes, paid management bonuses or paid part of the performance-related remuneration of management in or for the year 2023, the employer must notify the Financial Administration of the Republic of Slovenia within two months of the date of the payment.

The employer will have to return the funds received within 30 days after receipt of the decision, together with statutory interest from the date of receiving the reimbursement until the date of the repay.

Employers who fail to notify the Financial Administration of the Republic of Slovenia of their obligation to repay the funds within the prescribed period may be subject to a penalty of EUR 450 up to EUR 20,000.

One-time solidarity aid

One-time solidarity aid paid to an employee in nature or in cash in 2023 for severe flood and landslide damage is not included in the tax base of employment income up to EUR 10,000 (and not up to EUR 2,000, which is the generally applicable amount).

Before the one-time solidarity aid payment, the employee must provide the employer with appropriate proof of the damage suffered.

Additional tax incentive for donation for 2023

An additional tax incentive for donations is introduced in Slovenia for the full amount of the payments, up to a maximum of the tax base of the tax period for legal entities and natural persons carrying out independent economic activities.

The tax incentive applies to all payments up to 31 December 2023, paid to a bank account of the Republic of Slovenia, specially created for this purpose.

Prohibition to dismiss employees

An employer, who benefits from the measure of reimbursement of wage compensation for the period of waiting at home may not initiate proceedings to terminate an employment contract with an employee for business reasons, even after the measure has ceased to apply, for a period equal to the period of receipt of partial reimbursement of wage compensation.

The only exception is if the redundancy plan has already been adopted before 3 August 2023 and the employer has not claimed the right to partial reimbursement of the redundancy payments for these employees.

Disposal of equipment destroyed in a company

A Slovenian taxpayer who purchased the equipment less than three years ago and utilised the investment tax incentive under Article 55a of Slovenian Corporate Income Tax Act (CITA-2) does not have to return the investment tax incentive for the disposal of this equipment due to destruction in floods and landslides.

Solidarity working Saturday

The employer may designate one Saturday in 2023 and one Saturday in 2024 as a solidarity working Saturday, after consultation with the trade union, works council or employees.

Work performed on a solidarity working Saturday will be contributed by the employee to the Fund for the Reconstruction of Slovenia.

Employees will therefore contribute the amount of their net wage for solidarity Saturday by working on that day, based on a prior written agreement with their employer.  No social security contributions and taxes are due for payment for work on the Solidarity working Saturday.

The contribution will be calculated and paid by the employer on a special form “Calculation of contribution to the Fund for the Reconstruction of Slovenia”, including the following information:

• the employer and individual employees,
• the total amount of contribution of all employees,
• the contribution of each employee for each working Saturday.

The form is available for submission via eDavki.

The tax return will be due in the month following the solidarity working Saturday and the total amount of contributions for payment will be due within ten days of the return being submitted.

The amendments regarding the solidarity working Saturday were just adopted and are awaiting publication in the Official Journal of Slovenia.

Refund of compensation for the use of building land

Municipalities can refund all or part of the Building Land Use Tax paid to taxpayers who have suffered serious damage as a result of floods and landslides, which have endangered health and caused an inappropriate living environment.

The municipality will reimburse part or all of the contribution by decision, based on the application and criteria set by the municipality.

Special reduced VAT rate for firefighting equipment

A special reduced VAT rate of 5% is introduced for supplies of:

• standardised fire-fighting vehicles and
• special protective and rescue equipment for firefighters.

The special reduced rate may only be applied on condition that the purchaser is a public fire service or a voluntary firefighting unit in a fire brigade.

Accommodation for victims of floods and landslides

Free or reduced rent for persons, who have suffered serious damage to their personal property as a result of floods and landslides and have been forced to find new or temporary accommodation will not be treated as income until the end of 2024.

Accommodation costs incurred by a taxable person offering free or reduced rent to flood and landslide victims are tax deductible until the end of 2024.

If you need more information on the tax measures related to floods and landslides in Slovenia or you need help in preparing the written agreement for the solidarity working Saturday at your company, please visit the website of WTS Slovenia and contact the local experts of WTS Global for Slovenia.

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Reverse hybrid discharges

Hybrid inconsistencies were already part of the previous CITA in Slovenia. A hybrid discrepancy arises in the case of a double deduction of the same income, or a deduction without being included in two different countries, which means the income is not included in the tax base in any country. Hybrid mismatches occur often between related persons.

According to the Anti-Tax Avoidance EU Directive II (ATAD II), the amendments to the Slovenian CITA also include reverse hybrid inconsistencies, which now cover a larger circle of participants. The new provisions are a must-read for international groups of cross-border operating companies.

Extension of national list of low-tax-countries

Companies from countries classified on the so called “blacklist” are treated less favourably from a tax point of view. These companies are not eligible for the exemption of dividends and dividend-like income, as well as up to 50% of the exemption from profit from share sales, donation allowances and other tax benefits.

There are two blacklists in Slovenia:

• Slovenian national list, includes countries in which the general or average nominal corporate income tax rate is lower than 12.5%, and

• EU list, countries on the list of non-cooperative tax jurisdictions, published in the Official Journal of the European Union.

Tax base assessment from January 2022

The amendment to the Slovenian CITA stipulates several changes that affect the assessment of the tax base. The changes that apply in 2022 for the first time cover the following areas:

Accruals 

In determining the tax base or in recognising the taxpayer’s income, accruals are recognised as an expense in the total amount charged. However, for the following groups of accruals, only a 50% expense is recognised for tax purposes in the amount charged:

• guarantees given when selling products or providing services,
• accruals for expected losses from dubious contracts,
• pension accruals and
• accruals for anniversary awards and retirement severance payments (exception 2022-2026).

It is important to know that the latest amendments to the Slovenian CITA introduce a transition period for the accruals of pensions, anniversary awards and retirement severance payments from 1 January 2022 to 31 December 2026. In this period these accruals are recognised in the total 100% amount for tax purposes too.

Writing off of receivables

According to the amendments to the Slovenian CITA, writing off receivables is now recognised as a tax expense for all reported and confirmed receivables that were reported by the taxpayer in a timely manner in the compulsory settlement procedure or bankruptcy proceedings. The receivables must be confirmed by the liquidator. This means that the taxpayer will no longer have to wait for the issuance of a final court decision on the completed bankruptcy proceedings or a decision on confirmation of the compulsory settlement to write these off.

Expenses for hospitability and payments to Supervisory Board members

Expenses for business hospitability costs and payments to members of the Supervisory Board are deductible for tax purposes in the 2022 calendar year up to 60%, but from 2023 onwards the deductibility will again be only 50%.

Depreciation of leased assets

For the right to use a leased fixed asset, the highest annual depreciation rate corresponding to the term of the contractual lease of the fixed asset is used for tax purposes.

Employment allowance

In accordance with the latest amendments to the Slovenian CITA, in addition to tax-deductible salary costs, an additional employment allowance of 55% of the employee’s salary in the first 24 months of employment is possible if the employee is under 25 years of age and employed for the first time.

An employment allowance of 45% of the salary is possible for an employee in the first 24 months of employment, who:

• is under 29 years of age, or
• over 55 years of age, or
• performs a job for which there is a shortage of job applicants on the labour market (list from Slovenian Labour Ministry).

The main condition for the employment allowance is an increase in the number of employees in a year.

Please note that to claim the benefit, future employees no longer have to be registered with the Employment Service before employment.

Facilitating investment in digital and green transition

Taxpayers in Slovenia can claim a tax base reduction of 40% of digital transformation and green transition investments in the tax period, in particular for:

• cloud computing, artificial intelligence and big data,
• environmentally friendly technologies,
• cleaner, cheaper and healthier public and private transport,
• decarbonisation of the energy sector, energy efficiency of buildings and
• introduction of other standards for climate neutrality.

Facilitating obligatory internships

The tax allowance for practical work in the professional education of an apprentice or student is increased to 80% of the average monthly salary of employees in Slovenia, and can be claimed for each month of practical work in an obligatory internship.

Donation allowance

• Basis allowance 1%: From 2022, corporate taxpayers can claim the allowance for donations of 1% of taxable income (so far only 0.3%) as an allowance for donations for humanitarian, disability, social welfare, charitable, scientific, educational, health, sports, cultural, ecological, religious and generally useful purposes, which are performed not only by such organisations in Slovenia but also in the EU.

• Additional allowance of 0.2% and 3.8%: In addition, 0.2% of the corporate taxpayer’s taxable income in the tax period may be claimed for payments in cash and in kind for cultural and sports purposes and for payments to voluntary associations established to protect against natural and other disasters and acting for those purposes in the public interest. The donation of 8% of the taxpayer’s taxable income for payments in cash and in kind also goes to providers of top sports programmes for investments in top sports.

• Donation beneficiaries: All described donations can be given to an organisation based in Slovenia or in the EU.

Higher deduction for expense reimbursements for employees

The amendments to the Slovenian CITA introduce the following maximum daily allowances for business trips within Slovenia from 1 January 2023:

• over 12 and up to 24 hours: EUR 27.81
• over 8 and up to 12 hours: EUR 13.88
• over 6 and up to 8 hours: EUR 9.69

The mileage allowance for transport costs incurred on a business trip is EUR 0.43 per kilometre.

The business trip surcharge for an employee who works and spends the night away from his usual place of dwelling and the employer’s registered office for at least two consecutive days is set at EUR 5.84 per day.

From 1 January 2023, the anniversary bonus will be determined as a percentage of the last known average annual salary of employees in Slovenia, broken down to one month, and for January 2023 will be as follows:

Compensation for retirement is 300% of the last known average annual salary in Slovenia, calculated per month (January 2023 set at EUR 5,908.77).

Solidarity assistance in the case of death of an employee or their family member is tax-exempt up to the amount of EUR 5,000.

Solidarity allowance in the case of a severe disability or long-term illness of the employee as well as natural disasters or fire incidents affecting the employee are tax-exempt up to the amount of EUR 2,000.

Remuneration for students for obligatory internships is not included in the tax base up to an amount of 15% of the last known average annual salary of employees in Slovenia, broken down into months (for January 2023 set at EUR 295.44).

The meal allowance for employees is tax-exempt in the amount of EUR 7.96/working day (valid from 1 September 2022).

The employee’s commuting costs to and from work are tax-exempt at the rate of EUR 0.21/kilometre (valid from 1 July 2022).

If you need more information on amendments to the Slovenian CITA or other tax news in Slovenia, please visit the website of WTS Slovenia and contact the local experts of WTS Global for Slovenia.

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Personal allowances in 2023

Basic personal tax allowance 

The amount of the total basic personal tax allowance is determined by total income in 2023. In the case of total annual income up to EUR 16,000, the annual basic tax allowance is EUR 5,000 plus 18,761.40 – 1.17259 x total income. If the total annual income exceeds EUR 16,000, the annual basic tax allowance is EUR 5,000.

If the employee presents a written request to the employer that the increased tax base should not be taken into account when calculating the income tax from the employment relationship, the monthly allowance amounts to EUR 416.67.

Personal tax allowances

According to the amendments to the Slovenian Personal Income Tax Act, a special tax allowance for young people up to the age of 29 has been introduced for 2023 and later. The tax allowance for people under 29 amounts to EUR 1,300 per year.

The special tax allowance for people with a valid student or scholar status amounts to EUR 3,500 annually.

The tax allowance for voluntary additional pension insurance is capped at EUR 2,903.66 annually, or up to 5.844% of an employee’s annual gross salary.

In 2023, the annual tax allowance in Slovenia for a disabled taxpayer with a 100% physical disability is EUR 18,188.61, while the monthly allowance amounts to EUR 1,515.72. Taxpayers over the age of 70 years are entitled to a EUR 1,500 annual or a EUR 125 monthly senior allowance. Taxpayers involved in civil defence or rescue tasks on a voluntary and non-professional basis for at least ten years without interruption are entitled to the same amount of tax allowance.

Special tax allowance for supported family members

In accordance with the amendments to the Slovenian Personal Income Tax Act, the tax allowance for 2023 only increased for supported family members, as follows:

Minimum wages 2023 

The gross minimum monthly salary for work performed after 1 January 2023 amounts to EUR 1,203.36.

Income tax scale 2023

Due to amendments to the Slovenian Personal Income Tax Act, the tax rate in the 5^th tax bracket has been increased from 45% to 50%. Accordingly, the income tax is:

• 16% if the annual tax base is EUR 8,755 or less;
• EUR 1,400.80 + 26% on the part of the tax base exceeding EUR 8,755, if the annual tax base is between EUR 8,755 and EUR 25,750;
• EUR 5,819.50 + 33% on the part of the tax base exceeding EUR 25,750, if the annual tax base is between EUR 25,750 and EUR 51,500;
• EUR 14,317 + 39% on the part of the tax base exceeding EUR 51,500, if the annual tax base is between EUR 51,500 and EUR 74,160;
• and EUR 23,154.40 + 50% on the part of the tax base exceeding EUR 74,160, if the annual tax base is over EUR 74,160.

Donations up to 1% of income tax

With a special note, taxpayers can request that 1% of their annual income tax is used as a donation to certain beneficiaries (non-governmental organisations, political parties, representative trade unions, registered churches and other religious communities, school- and child-care funds).

Taxation of capital gains

The amendments to the Slovenian Personal Income Tax Act left tax rates on capital gains from property sales or the sale of shares unchanged. The tax rates are:

• 25% if the ownership period is 5 years or less;
• 20% if the ownership period is between 5 and 10 years;
• 15% if the ownership period is between 10 and 15 years;
• and 0% if the ownership period is over 15 years.

Income from rentals

The tax rate for renting out property is 25% again, not 15% as in the year 2022.

Furthermore, in 2022 it was possible to choose between flat or progressive taxation of rental income. According to the amendments to the Slovenian Personal Income Tax Act, this option no longer exists in 2023. If we compare the tax assessment on rental income in accordance with the income tax scale for 2022, while taking into account a pension of EUR 800/month, the gap in taxation for 2023 is almost twice as high as in 2022.

Taxation on share sales to the company: acquisition of own shares

From this year onwards, acquiring own shares is not considered a disposal of capital anymore. The taxation is the same as the taxation for dividend payments, i.e. a rate of 25%. One exception is the acquisition of own shares listed on an organised stock market.

The tax base is the revenue reduced by the purchase value of the sold shares.

Income taxation of full-time self-employed entrepreneur

The lump-sum expenses in the case of a full-time insured self-employed entrepreneur (s.p.) or a full-time employee in 2023 are as follows:

• 80% of the total income, if the annual income is EUR 50,000 or less;
• 40% between EUR 50,000 and EUR 100,000;
• and 0% over EUR 100,000.

It means, for example, that in the case of annual income of EUR 95,000, the annual income tax will almost double: in 2022 the tax was EUR 3,800 and in 2023 the tax amounts to EUR 7,400.

Income taxation of part-time self-employed entrepreneur

The amendments to the Slovenian Personal Income Tax Act have also changed the income tax on business activities by sole entrepreneurs who determine their tax base based on lump-sum costs and are socially insured based on their employment relationship (i.e. “afternoon s.p.”). In their case, the lump-sum expenses amount to:

• 80% of the total income, if the annual income is EUR 12,500 or less;
• 40% between EUR 12,500 and EUR 50,000;
• and 0% over EUR 50,000.

This means, for example, that in the case of annual income of a part-time entrepreneur totalling EUR 20,000, the annual income tax increases by 75%: in 2022 the tax was EUR 800, and in 2023 the tax will amount to EUR 1,400.

Deadline of advance tax payments

According to the amendments to the Slovenian Personal Income Tax Act, from 2023, advance income tax payments for sole entrepreneurs must be paid by the 20^th of the following month.

Legal entities, which have to make advance payments of corporate income tax must do so by the 20^th of the following month as well, and no longer by the 10^th of the following month.

If you need more information on amendments to the Slovenian Personal Income Tax Act or other tax news in Slovenia, please visit the website of WTS Slovenia and contact the local experts of WTS Global for Slovenia.

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