Applicable changes in tax legislation
Foreigners who wish to establish a company in Slovenia will be faced with new requirements
The amended Companies Act (ZGD-1K) was published on February 9, 2021 in the Offcial Gazette of the Republic of Slovenia. The amended provisions of the Companies Act are valid from 24th February 2021, but not all amendments shall apply the same day. In the Article 71 of ZGD-1 is stated that an transitional period from 3 months to 3 years may apply for some amendments.
Based on the changes to the amendment of the Companies Act (ZGD-1K), new companies must also state the company's electronic address in the Business Register of Slovenia, which is public information and will be published on the AJPES website. Existing companies must enter the e-mail address in the register by 24 February 2022. The obligation applies to capital and private companies, branches of foreign companies and economic interest groups. The obligation does not apply to sole proprietors.
For companies who have been registered in the last twelve months on the list of taxpayers whose identification for VAT purposes has been terminated due to suspicion of misuse of VAT identification or due to the finding by the tax authority that the taxable person used the VAT identification in a manner which has enabled another person unjustifiable VAT deduction new restrictions will apply and will enter into force on 24th February 2022.
Limited liability companies, which are public-interest entities, are after the amendments in ZGD1-K required to form a supervisory board and an audit committee.
Requests for refund of excise duty in electronic form
From 1 January 2022, persons performing an activity and claiming a refund of excise duty are required to submit applications for a refund of excise duty via the information system of the tax authority in electronic form. Claims submitted after 1 January 2022 must also be submitted electronically, even if they refer to the tax periods in 2021.
New double taxation convention with Sweden
On 12 May 2021, a new Convention was concluded in Brussels, between the Republic of Slovenia and the Kingdom of Sweden on the elimination of double taxation with regard to taxes on income and capital and the prevention of tax evasion. The new Convention will be published in the Official Gazette of the Republic of Slovenia 162/2021 and is effective as of 23.10.2021. The substantive part of the previous Convention remains the same, with the right to taxation in the country of the payer at 5% for a beneficial owner with at least a 25% shareholding, or in other cases at 15%, but the part on interest taxation is changed, where the right to 5% will also belong to the country of the payer (except for the exceptions listed above).
Amendment to the Rules on the recognized rate of interest
From 28 July 2021 onwards, a new amended version of the Rules on the recognized interest rate came into force, which makes it easier for companies to use the credit rating, as a company that does not have its own credit rating can use the credit rating of the group to which it belongs. The policy appendix contains credit rating methodologies that can be individually translated into Standard & Poor's ratings.
As of 1 January 2022, some other changes of the Rules on the recognized interest rate came into force, namely changes to the variable part of the interest rate for certain currencies and the use of a financial platform that publishes interest rates.
Incoterms – VAT Implications for Cross-Border Trade
Cross-border businesses must ensure VAT compliance to meet the requirements for each country. The complexity of international VAT affects different elements of the supply chain. The Ex Works and DDP Incoterms affects the VAT in the EU.
With Ex Works, transport obligations, costs and risks are the responsibility of the buyer. The risk transfers from seller to buyer before the transport journey starts. The buyer agrees a collection point for the goods, which becomes the delivery point. With DDP, the transport obligations, costs and risks are the responsibility of the seller. The destination point the seller or carrier will transport goods to is the same as the delivery point.
Intrastat changes from 1 January 2022
From 1 January 2022, new elements in the Intrastat declaration for exports and dispatches must be reported. The country of origin of the goods and the identification number assigned to the partner operator in the Member State of destination must now be reported. There are also changes to the definition of the type of transaction.
Amendment to the Corporate Income Tax Act
Amendment to the Corporate Income Tax Act (ZDDPO-2S) will apply to tax periods beginning on or after 1 January 2022 and it contains the following amendments:
- In addition to the list of countries with a tax rate below 12.5%, the taxpayer now have to follow the EU list of jurisdictions that are not willing to cooperate for tax purposes.
- Depreciated receivables are recognized as an expense for all recognized receivables declared by the liable party in the compulsory settlement procedure or bankruptcy procedure. So far, they have been recognized based of a final court decision on the completed bankruptcy proceedings or a final decision on the confirmation of compulsory settlement.
- Costs of representation and the supervisory board are tax deductible at 60% instead of 50%.
- For the right to use the leased asset, for tax purposes, the highest annual depreciation rate is applied, which corresponds to the contractual lease of the asset and no longer according to the depreciation period of the asset.
- Employment in occupations for which there is a shortage of labour on the market is accompanied by a 45% relief for the employment of a person under 29 or over 55. In the case of the first employment of a person under the age of 25, a relief in the amount of 55% of the salary is granted.
- Relief of 40% of investments in digital and green transition. Examples: cloud computing, artificial intelligence and big data, environmentally friendly technologies, energy efficiency of buildings, etc. It is necessary to wait for the MF Rules.
- Instead of 20%, the relief for practical work in education is increased to 80% of the average monthly salary of employees in the Republic of Slovenia.
- There are also changes in the donation relief: the general relief increased from 0.3% to 1% of taxable income; there is additional relief for donations for sports purposes in the amount of 0.2%; a relief of 3.8% of taxable income for investments in top sports was also introduced.
- Formed reservations for pensions, jubilee awards and severance pay upon retirement are 100% recognized as an expense in calculated amounts in the period 2022-2026.
Amendments to the Rules on the implementation of the VAT Act-1
On 1 January 2022, amendments to the Rules on the implementation of the VAT Act-1 came into force. Article 8 of the Rules is amended to make it clear that in order for the transfer of a company or part of a company to another taxable person - the transferee - to be treated as a supply of goods, the transferee must also be identified for VAT purposes. Article 107 is also amended. Article 107 provides that, in order to exercise the right to deduct VAT, a taxable person liable to pay VAT as an intra-community acquirer of goods must, by the deadline for submitting the VAT return, hold an invoice or other document containing the information necessary to ensure that the VAT return is correct, and must state in the VAT return the amount of VAT which he is liable to pay. In Article 141, a third paragraph is added to clarify that the provisions of paragraphs 1 and 2 of this Article shall also apply to a taxable person who is identified for VAT purposes only on the basis of Article 129(5) and/or (6) of this Rules, in respect of the part of his transactions for which he is not identified for VAT purposes.
Amendments to the Value Added Tax Act
On 22 January 2022, amendments to the Value Added Tax Act entered into force, as follows:
- The threshold for compulsory entry of farmers into VAT is abolished (as of 1 July 2022).
- Abolition of the submission of additional documentation when submitting the VAT return for the first time.
- Abolition of the obligation to identify for VAT purposes a taxable person without a seat in Slovenia, where he only makes supplies for which VAT is payable by the recipient of the goods or services.
- Traders and other issuers are allowed to issue paper invoices only at the explicit request of the customer (the invoice will still be issued, but only in the taxable person's information system).
- For the purchase of company cars, companies are able to claim a VAT deduction if the vehicle is CO2 emission-free and the price of the vehicle, including tax, does not exceed €80,000.
Sickness absence cover to reduce the employer's burden
The National Assembly has approved amendments to the Labour Relations Act and the Health Care and Health Insurance Act which reduce the burden of covering sickness absences on employers. As of 1 March 2022, employers will cover 20 days of sick leave for employees. The same will apply to self-employed entrepreneurs, who are currently not entitled to sickness absence benefits from the Health Insurance Fund of Slovenia.
Cover the cost of employer's rapid tests from the national budget
The last anti-corona law adopted last year, with measures to mitigate the effects of the epidemic of covida-19, set the reimbursement rate for the period from 8 November at €92.50 per worker who has to self-test. The Government subsequently extended the measure by one month, until 28 February. The payment for February is €30 per worker.
Proposal for amendments to tax legislation
New proposal to the taxation of virtual currencies
The Ministry of Finance has sent a new proposal of tax of virtual currencies for public consultation. The proposal only applies to natural persons who are tax residents of the Republic of Slovenia and not to legal persons. A natural person who buys and sells virtual currency in his own name and on his own account would not be considered to be carrying on a business activity, regardless of the number of transactions carried out.
Tax would be payable on the amount of virtual currency redeemed in one of the currencies at the rate of 10% or on the amount spent to purchase the item.
A tax exemption is also proposed, which would apply to a maximum of €10,000 of the total amount of virtual currency withdrawals in a single calendar year. The tax base would then be determined by deducting the amount of the exemption from the sum of the value of all virtual currency withdrawals in a calendar year. The resulting positive difference would then be reduced by normalised costs equal to 50 % of this difference.
Proposed amendment to the Personal Income Tax Act (ZDoh-2AB)
Reason for the proposed changes and amendments is to help recover from the COVID-19 pandemic, as well as administrative relief. It introduces the following changes:
- In the case of income from activities, the solutions set out in the amendments to ZDDPO-2 apply
- Tax relief in the field of income from work includes: gradual increase of the general relief from EUR 3,500 to EUR 7,500; reduction of the tax rate in the fifth income tax bracket from 50% to 45%; annual adjustment of the amount of reliefs and net annual tax bases linked to the coefficient of price growth; payment for business performance under the law governing employment relationships is no longer considered as part of the salary, the amount of payment that is tax-free also changes.
- Tax relief in the field of capital income: reduction of the tax rate to 25%; after 15 years of owning share capital, personal income tax on capital gains is not paid; however, there is also the possibility of deciding on the inclusion of capital income in the annual tax base.
- Tax relief in the area of rental income: tax rate reduced to 15%, standardized expenses reduced to 10%; offered the option of deciding on the inclusion of rental income in the annual tax base.
- Other solutions: Senior relief in the amount of EUR 1,500 for residents over the age of 70; abolition of the bonus for personal electric motor vehicles for private purposes.
Revision and simplification of REK forms
Last year, the Financial Administration launched a redesign of the REK forms, which will see the abolition of several existing REK forms (REK-1, REK-1a, REK-2 and PNiPD) and the ZAP/M form, and the introduction of a single REK-O form. Simplifications will also be introduced in the area of proposing corrections to REK forms and proposing forms on the basis of self-registration. The foreseen date of entry into force of the new REK form is 1 September 2022.