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Income Tax in Slovenia



Personal Income Tax

Tax Return

31 July. From 2008 on, the tax authorities are obliged to generate an annual tax assessment from their own information, to assess the tax and submit the assessment to the taxpayer. If the tax assessment has not been submitted to the taxpayer by 15 June of the current year, the taxpayer is obliged to file an annual income tax return for the previous year by the end of July of the current year. The tax liability of the taxpayer will be calculated by the tax authorities (the tax assessment shall be issued by 31 October of the same year).

The tax year ends on 31st December.

Tax Rates
Tax rates for both residents and nonresidents are same:

Taxable base (EUR)
Tax on Column 1
Tax on Excess (%)
From
To
0
8,021.34
0.00
16
8,021.34
20,400.00
1,283.41
27
20,400.00
48,000.00
4,625.65
34
48,000.00
70,907.20
14,009.65
39
Above 70,907.20
22,943.46
50

Note that capital gains, interest, dividends, and rental income are taxed at a flat rate of 25%. The tax rate on capital gains is decreased according to the length of the holding period.

Taxable Income

PIT is levied on six different sources of income:
· Personal income (i.e. salary, salary compensation, incentives, benefits and other income derived from employment, pensions, and income earned on the basis of a temporary service contract or some other basis).
· Income from business activity.
· Income from agriculture and forestry.
· Income from letting property and transfer of property rights.
· Income from capital (i.e. interest, dividends, and capital gains).
· Other income (e.g. rewards, gifts, prize contest winnings, scholarships).

Capital gains and investment income

Capital gains, interest, dividends, and rental income are taxed at a flat rate of 25%. The tax rate on capital gains is decreased according to the length of the holding period: the tax rate is 25% for a holding period of up to five years, 15% for a holding period from five to ten years, 10% for a holding period from ten to 15 years, 5% for a holding period from 15 to 20 years, and 0% for a holding period greater than 20 years. The tax is treated as a final tax for residents and non-residents alike.

Interest derived from bank deposits with banks or savings banks registered in Slovenia or elsewhere in the European Union is not subject to taxation up to the amount of EUR 1,000.

Exempt Income

Severance payments received by a taxpayer upon retirement or terminations on account of business reason or due to incapability as defined by the labor legislation are tax-exempt up to the limit/amount determined in the governmental decree or in the law.
Jubilee awards and solidarity help payments are also tax-exempt up to the limit/amount determined in the governmental decree.

Reimbursements of costs in connection with employment are tax-exempt if they are paid up to the certain amount, which is determined by the governmental decree. Such costs include among others:
· meal allowances during the work
· costs of transport to and from work
· daily allowances in relation to business trips
· costs of transport, accommodation and meal on business trips
· separate living compensation (separation allowance).

Severance payments

Severance payment at retirement: EUR4,063.
Severance payment because of the cancellation of the employment contract due to business reasons or due to incapability: depends on the employee's average salary and years of service before termination, at most 10 average Slovenian monthly salaries, i.e. EUR 17,569.50 (average Slovenian monthly gross salary for November 2017: EUR 1.756,95).
Severance payment for termination of the fixed-term employment contract: at most 3 average Slovenian monthly salaries, i.e. EUR 5,270.85 (average Slovenian monthly gross salary for November 2017: EUR 1.756,95 ).

Jubilee bonus and solidarity help

Jubilee awards
· For 10 years of service: EUR460.
· For 20 years of service: EUR689.
· For 30 years of service: EUR919.
· For 40 years of service: EUR919.

Solidarity help
· Death of the employee or his family member: EUR3,443.
· Disabled persons, longer illness, elementary accident and fire: EUR1,252.

Meal allowances
· EUR6.12 per day (if the employee is present at work at least four hours).
· Additionally, EUR0.76 per hour from eight hours of work (if employee is present at work at least ten hours).

Costs of transportation
· Costs of public transport or EUR 0.18 per full kilometre (if the employee cannot use public transport due to justifiable reasons).

Daily allowances

For business trips in Slovenia, the following daily allowances apply.
· Six to eight hours: EUR7.45.
· Eight to twelve hours: EUR 10.68 (if breakfast included, the allowance is reduced for 15 percent).
· Twelve to twentyfour hours: EUR 21.39 (if breakfast included, the allowance is reduced for 10 percent).

For business trips abroad (allowances are determined in a separate regulation for each country), the following daily allowances apply.
· Six to eight hours: 25 percent of the allowance.
· Eight to fourteen hours: 75 percent of the allowance (if breakfast included, 75 percent minus 15 percent).
· Fourteen to twenty four hours: 100 percent of the allowance (if breakfast included, 100 percent minus 10 percent).

Costs of transportation and accommodations on business trips
· Transportation: refund of costs raised based on the invoice or EUR 0.37 per kilometer for the use of own car for business purposes.
· Accommodation: refund of costs raised based on the invoice.

Separate living compensation

EUR334 per month.
Taxable income is income exceeding the above stated figures.



Corporate Income Tax

Corporate income tax. In general, all companies resident in Slovenia are subject to tax on their worldwide income (but see Foreign tax relief). A company is resident in Slovenia if it has its legal seat or effective place of management in Slovenia. Nonresident companies are subject to tax on their Slovenian-source income only (income derived from or through a permanent establishment and other Slovenian-source income subject to withholding tax).
The definition of a “permanent establishment” of a nonresident company in Slovenia generally follows the definition in the Organisation for Economic Co-operation and Development (OECD) Model Tax Convention on Income and Capital 2010.

Rates of corporate income tax. The standard corporate income tax rate is 19%.
The corporate income tax rate for qualified venture capital companies is 0%, subject to specific conditions.

Investment funds that distribute 90% of their operating profits for the preceding tax year by 30 November of the current tax year are taxed at a rate of 0%.
Pension funds established in accordance with the Pension and Disability Insurance Act are taxed at a rate of 0%.

Insurance undertakings that are authorized to implement the pension scheme in accordance with the act regulating pension and disability insurance must pay tax with respect to the activities relating to such implementation at a rate of 0% of the tax base if a separate tax calculation is compiled only for this pension scheme.



Capital gains. Fifty percent of a capital gain from the disposal of shares is exempt from tax if certain conditions are met. The other 50% is treated as ordinary business income and is subject to tax at the regular corporate rate. However, in such circumstances, the expenses of a taxpayer are decreased by 5% of the exempt amount of capital gains. The same principle applies to capital losses (only 50% of a capital loss is deductible for tax purposes).

If a capital gain is realized from disposal of shares acquired with respect to venture capital investments in a venture capital company that is established in accordance with the act regulating venture capital companies, the total amount of such gain may be exempt from tax if the company had the status of a venture capital company for the entire tax period and if the company had the status of venture capital company for the entire period of the holding of the shares by the taxpayer. Losses incurred on the transfer of shares acquired under a venture capital scheme are not deductible for tax purposes.

Administration. The tax year is the calendar year. However, a company may select its financial year as its tax year if the selected year does not exceed a period of 12 months and if it informs the tax authorities regarding its selection of the tax year. The selected tax year may not be changed for a period of three years.

Annual tax returns must be filed within three months after the end of the tax year.

Companies must make advance payments of corporate income tax. Monthly advance payments of corporate income tax are required if the total amount of the advance payments exceeds EUR400, based on the tax calculated in the tax return for the preceding tax year. Companies must make quarterly advance payments if the total amount of the advance payments is less than EUR400, based on the tax calculated in the tax return for the preceding tax year. Advance payments of corporate income tax are due on the 10th day of the month following the period to which the advance tax payment relates. The balance of tax due must be paid within 30 days after the annual tax return is filed with the tax authorities. If the total amount of advance payments of corporate income tax exceeds the amount of tax due for the year, the overpaid tax is refunded to the company.

Dividends. In principle, dividends paid to residents and nonresidents are subject to withholding tax at a rate of 15%. The tax does not apply to dividends paid to a resident or to a permanent establishment of a nonresident if the dividend recipient informs the dividend payer of its tax number.

Measures implementing the EU Parent-Subsidiary Directive are in effect in Slovenia. Under these measures, dividend distributions are exempt from withholding tax if all of the following conditions are satisfied:
· The recipient of the dividends owns at least 10% of the equity capital or voting power of the payer of the dividends.
· The duration of the recipient’s ownership in the payer is at least two years.
· The recipient of dividends is a taxable company that has one of the prescribed legal forms, is a resident of an EU member state and is a taxpayer for one of the taxes for which the common system of taxation applies.

If, at the time of payment of a dividend, the duration of ownership of the recipient is shorter than two years and all other requirements are met, a withholding tax exemption is still possible if the payer or its agent provides an appropriate bank guarantee to the tax authorities.

Dividends paid to EU/European Economic Area (EEA) residents are exempt from withholding tax if a tax credit is not available in the country of residence of the recipient.

Dividends and interest paid to EU/EEA resident pension funds, investment funds and insurance companies performing pension plans are exempt from withholding tax if a tax credit is not available in the country of residence of the recipient and if the recipient of such income is not a Slovenian branch of such persons.

Dividends received by Slovenian taxable persons are generally subject to a full participation exemption.

Expenses of an amount equal to 5% of the dividends received are not deductible for tax purposes because they are deemed to be expenses incurred with respect to the exempt dividend income.

Foreign tax relief. Income tax paid abroad can be credited against the final tax liability of a company if the income on which the tax has been paid abroad is included in the tax base. The foreign tax credit may not exceed the lower of the amount of foreign tax on foreign income that was paid or the amount of tax that would have been paid under Slovenian law on the foreign income if the credit had not been granted. To claim the tax credit, the taxpayer must submit appropriate documentation together with the tax return.







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Note: Information placed here in above is only for general perception. This may not reflect the latest status on law and may have changed in recent time. Please seek our professional opinion before applying the provision. Thanks.

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This blog is Created by CA Anil Kumar Jain.