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.

The post Amendments to the Slovenian Personal Income Tax Act for 2023 appeared first on WTS Klient | adótanácsadás | könyvelés | bérszámfejtés | HR szolgáltatások | digitális megoldások | állami támogatások.

The Slovenian tax package adopted in October 2019 includes amendments to the Personal Income Tax Act (ZDoh-2V), the Corporate Income Tax Act (ZDDPO-2R), the Act on Tax on Profit from the Disposal of Financial Derivatives (ZDDOIFI-A) and the Tax Procedure Act (ZDavP-2M). The amended and new provisions will apply from 1 January 2020, with the exception of the provisions on the depreciation of assets from operating leases, which have been in force since 1 January 2019.

Taxation of companies according to new Slovenian tax package

Although Slovenia had proposed to increase the general corporate tax rate (DDPO) from 19% to 20% in February, according to the adopted Slovenian tax package this tax rate will remain at 19%, as in 2019, and will not change in 2020.

While the rate remains unchanged, all companies in Slovenia will have to pay corporate income tax from 2020. If a legal entity generates taxable income, any tax exemptions and tax losses from previous tax periods can be used up to a maximum of 63% of the taxable base. This means that companies generating profits for tax purposes and who previously reduced their tax base to zero due to high research and development (R&D) investments, investments in fixed and intangible assets, for employing certain categories of worker (disabled people), as well as for investing in voluntary supplementary pension insurance and for donations, will from now on always have to pay corporate income tax.

The tax allowances for R&D and equipment, as well as in fixed and tangible assets may be carried forward for a limited period of five tax years, while other allowances reduce the tax base only in the year they originated, which further limits the actual application of tax allowances. The same provisions also apply to sole entrepreneurs who determine income tax on the basis of actual expenses. 

Example:
A company generates a profit before corporate tax of EUR 1,000,000 and has invested EUR 1,500,000 in R&D in 2020. In 2020 the company can only consider a tax exemption for the R&D investment amounting to EUR 630,000, and then the difference over the next five years. 

Corporate income tax base: EUR 1 Mio x (1 – 0.63) = EUR 370,000
Corporate income tax calculation: EUR 370,000 x 19% = EUR 70,300 

Irrespective of the high level of investment or previous tax losses, the company will have to pay corporate income tax of EUR 70,300, which represents 7.03% of the profit. 

The changes to depreciation of assets in operating leases are the most important amendments that apply retroactively, i.e. from 1 January 2019. This means that by incorporating the operating lease into fixed and intangible assets in accordance with international and also Slovenian accounting standards, the legislator set the depreciation at the highest annual rate possible, which corresponds to the actual depreciation period of the asset, i.e. the asset’s useful life in operating leases. This provision already applies to the preparation of the corporate income tax self-assessment for 2019 and the determination of income tax for sole entrepreneurs for 2019.

Taxation of capital owners 

In 2019, taxpayers still have to pay 25% of the final tax on investment income (interest, dividends, capital gains and gains on the sale of derivative financial instruments). From 2020, capital gains will be taxed at the rate of 27.5%.

For capital gains realised in 2019, we present the comparable tax rates that will apply from 2020:

To close the legal discrepancy and avoid abuse, income of a shareholder from the sale of shares to the company (purchase of own shares) or company shares from non-regulated market are taxed as a dividend at the total amount paid.For income from real estate leasing, taxpayers can take into account standardised costs of 15% (only 10% in 2019), but the income tax rate for income from real estate leasing increases to 27.5% as well (in 2019 the tax rate is 25%). 

The transferor may inform the taxpayer in writing about the acquisition value of the shares or units sold prior to the tax settlement. 

Taxation of employees

From 4 May 2019 the annual holiday payment is completely exempt from social security contributions as well as income tax. This means that the employer’s costs are equal to the employee’s net payment, which corresponds to the average gross salary in Slovenia, amounting to EUR 1,726 in August 2019. 

Example:
A company pays out the holiday payment at a gross amount of EUR 1,700. It actually has personnel costs of EUR 1,700 and the employee receives a net amount of EUR 1,700 to his or her bank account. 

The Slovenian tax package for 2020 is also intended to change the income tax categories in terms of reducing income from employment of the middle tax brackets.

From 2020 the following income tax categories apply:

Also, the common tax allowance will increase and from 2020 should be the following:

This means that the common tax allowance for all taxpayers will rise at least from the current EUR 3,302 to EUR 3,500.

To apply and recognise a special allowance for supported family members (adult and unemployed children, parents or adoptive parents), the significant change is that such a person must have the same permanent residence as the taxpayer who declares that family member as a supported family member. This does not apply to children under 18 years.

To promote the purchase and use of electric vehicles, the Slovenian tax package reduces the benefit in kind when purchasing company vehicles used by employees for private purposes. The monthly benefit in kind for the private use of a small electric vehicle will only amount to 0.3% of the purchase price of the vehicle, if the purchase cost of the vehicle including VAT does not exceed EUR 60,000. The benefit in kind for private use of company vehicles for conventional petrol and diesel vehicles, as well as for larger electric vehicles (only for a surplus over EUR 60,000), remains at 1.5% of the initial cost in the first year.

According to the new Slovenian tax package the taxation of part of the salary for business success (so-called 14^th salary or Christmas bonus) currently remains unchanged for the coming years. The 14^th salary can be paid without income tax, and only bears the obligatory social security contribution deduction of 38.2%. In 2019, the tax-exempt part of the Christmas bonus can be paid out up to approximately EUR 1,700.

If you would like to find out more detailed information about the adopted Slovenian tax package, please visit the website of WTS Slovenia and contact the local experts of WTS Global for Slovenia.

The post Slovenian tax package adopted for 2020 appeared first on WTS Klient | adótanácsadás | könyvelés | bérszámfejtés | HR szolgáltatások | digitális megoldások | állami támogatások.