TAXATION IN SLOVENIA
INTRODUCTION
This publication provides concise general information about the current Slovenian tax system with the
most up-to-date information as of 1 February 2009. Its purpose is to answer some of the questions
relating to taxes and to help readers gain a better and more thorough understanding of the Slovenian
tax system. As such, it deals mainly with a general overview and not with specifics.
The publication includes five sections: Section I contains a summary of all existing taxes, with a
detailed explanation in Section II; Section III is devoted to Slovenian double taxation conventions; and
Section IV summarizes forthcoming tax system reforms.
At the end of the text there is an appendix describing the concept of special economic zones and the
relevant tax treatment.
1. SUMMARY
The tax system consists of three main categories of taxes: i) direct taxes on income; ii) direct taxes on
property; and iii) indirect taxes.
The Tax Administration of the Republic of Slovenia collects all taxes, except for customs duties,
excise duties and value added tax on imports, which are collected by the Customs Administration of
the Republic of Slovenia.
Corporate Income Tax
Corporate income tax is levied on the taxable profit of private companies at a rate of 21% for the year
2009 (for the year 2010 and beyond, the corporate profit tax rate is set at 20%), with a reduced rate of
not less than 10% applying to corporations established in special economic zones and a special rate of
0% for investment funds, pension funds and insurance undertakings for pension plans, under certain
conditions. The special rate of 0% applies also for venture capital companies which were set up by the
Venture Capital Companies Act and prepare a separate tax statement just for that part of their activity.
A general research and development (R&D) investment incentive is represented as a deduction from
the tax base of 20% of the amount invested in internal R&D activities and purchase of R&D services,
but not exceeding the amount of the taxable base. The amount of additional deduction can be increased
to 30% or 40% depending on the regional relief scheme. There is also a tax incentive – a deduction
from the tax base of 30% of the amount invested in equipment and intangibles, but not exceeding the
amount of EUR 30,000 and only up to the amount of the taxable base. There are also further general
tax incentives under certain conditions for entities that provide work for trainees or disabled persons,
as well as relief for donations and voluntary supplementary pension insurance.
Dividends
A company paying dividends withholds tax at a rate of 15% on each distributed dividend to residents
and non-residents of Slovenia. If international treaties on the avoidance of double taxation stipulate a
tax rate other than 15%, the tax rate from the treaty applies. No withholding tax is paid for dividends
distributed to persons to whom a common system of taxation applicable in the case of parent
companies and subsidiaries applies under certain conditions (at least 10% equity, with shares held for
at least 24 months).
There is no withholding tax on dividends paid to a non-resident who is a resident of the EU or EEA
(excluding the Principality of Liechtenstein), if the recipient of the dividend is not able to set off the
applicable Slovenian withholding tax in his/her country of residence. Similar applies to payments of
dividends and interest paid from Slovenia to EU and EEA (excluding the Principality of Liechtenstein)
investment and pension funds.
The Directive on a common system of taxation applicable in the case of parent companies and
subsidiaries of different Member States has been implemented. A participation exemption of revenues
from profit participation has been introduced under certain conditions.
Tonnage Tax
A tonnage tax regime, as an alternative to normal corporate income tax, is available to resident
shipping companies in respect of their income from the operation of ships in international traffic. Each
shipping company that is a taxpayer under corporate income tax may elect for the tonnage tax regime,
provided that:
It operates in maritime transport in international shipping; and
The ships referred to in the preceding section are being strategically and commercially operated from
the Republic of Slovenia.
The tonnage tax regime has been in use from 1 January 2008; the election term lasts for 10 years and
is renewable.
The tax base for a particular ship in a tax period is calculated by multiplying the daily tax base with
the number of days a ship is operating within the given tax accounting period. The tax base is the sum
of tax bases for the tax accounting period of the ships that are included in the tonnage tax regime.
Personal Income Tax
Personal income tax applies to an individual’s income. There are six categories of income: income
from employment, business income, income from basic agriculture and forestry, income from rental
income and royalties, income from capital (interest, dividends and capital gains) and other income.
Dividends, interest and capital gains are taxed at a flat rate. The tax rate for dividends and interest
income is 20%. The tax rate for capital gains depends on the holding period: 20% for a holding period
of up to 5 years, 15% for a holding period from 5 to 10 years, 10% for a holding period from 10 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.
Income tax on other categories of income (income from employment, business income, income from
basic agriculture and forestry, rental income, royalties and other income, hereinafter referred to as
active income) is paid during the tax year in the form of advance tax payments. Advance tax payments
are determined according to special tax rate schedules or fixed tax rates, as the case may be.
The annual active income tax liability of a resident is computed in such a manner that the taxable bases
of different sources of income earned in a calendar year are computed separately and then aggregated.
The annual taxable base is computed after compulsory social security contributions and certain
allowances are deducted. Net active income is taxed according to a progressive tax rate. There are
three tax brackets in the annual tax schedule for active income. The progressive tax rates are: 16%,
27% and 41%. Advance tax payments paid during the tax period are deductible from the final tax
liability, and any difference is collected upon receipt of an assessment from the tax authorities. When
the total sum of advance payments exceeds the tax payable, a refund is provided.
Derivative Instruments Gains Tax
The derivative instruments gains tax was introduced in July 2008.
The tax is payable by resident individuals and is levied on the difference between the value of
the derivative instrument upon disposal and its acquisition value. It is levied at degressive
rates depending on the period of holding (from 20% to 0% when the period of holding is
longer than 20 years). Gains realized from short-term contracts are taxed at 40%.
Contractual Work Tax
This tax is levied on gross payments made to individuals performing temporary contractual work, at a
rate of 25%. Payments for certain types of contractual work are exempted.
Social Security Contributions
Besides personal income tax, individuals must pay compulsory social contributions. Both employer
and employee must pay contributions, with the contributions withheld by the employer. Self-employed
persons must pay social security contributions on their own. There are four types of contributions paid
to two social security schemes and to the state budget, as follows:
- for pension and disability insurance, paid to the Pension Fund;
- for medical care and sickness leave, paid to the Health Fund;
- for unemployment insurance, paid to the state budget; and
- for maternity leave, paid to the state budget.
Taxation of Winnings from Conventional Games of Chance
Winnings from lotteries, raffles, scratch lotteries, bingo, betting and similar games of chance
organized in Slovenia are subject to a 15% tax if the prize exceeds EUR 300. In the taxation of
winnings the gross principle is used. No deductions are allowed. The tax is withheld by the gaming
operator.
Gambling Tax and Concession Fee
Gambling tax and concession fees are levied on the gross gaming revenue (GGR) of an operator of
games of chance. Two tax rates on gambling of 5% and 18% apply, depending on the type of game.
Additionally, operators of games of chance are subject to a 5–45% concession fee on GGR.
Inheritance and Gift Tax
This tax is paid by the recipient, an individual or legal person of private law. It is levied on inherited
property or gifts at market value. Progressive tax rates apply, which depend on the value and the
relationship with the testamentary in the case of inheritance, and with the donor in the case of gifts.
Property Tax
In the Slovenian system there are two types of duties on possession of real property. One is a duty,
called “charge”, for the use of building land and other property tax. Charge is levied on vacant and
constructed building land possessed by legal persons and individuals. Charge is set by local
communities for vacant building land based on the area of the building land planned for building, and
for constructed building land based on the useful area of the residential house or business premises
thereon. Property tax is a tax on buildings possessed by individuals. The tax is levied at different rates
depending on the type and value of the premises.
Water Vessel Tax
The tax is levied on vessels longer than five metres registered in Slovenia or registered in other
countries but owned by Slovenian residents. The taxpayers are the owners. The tax is levied for the
calendar year, based on the length of the vessel and its engine capacity.
Motor Vehicle Tax
The motor vehicle tax is paid for passenger motor vehicles which are put into circulation in
Slovenia for the first time. Imports and acquisitions from other EU Member States are also
taxed. The tax rate is 1–13% of the selling price of the vehicle. This tax is also charged on
every transfer of used passenger cars.
Circulation Tax
Circulation tax is defined as an annual fee on the use of motor vehicles and is imposed on vehicles
registered in Slovenia. The rates are set according to different categories of vehicles, and the
outstanding amount is calculated in proportion to the duration of the registration period.
Value Added Tax
Value added tax (VAT) is a general consumption tax on a net basis included in the price consumers
pay for goods and services. Consumers pay this tax indirectly, and a taxable company or person
engaging in commercial activity must remit the tax to the Tax Administration office. All companies
pay VAT except those carrying out certain defined activities, small businesses and farmers with a
turnover and income below defined thresholds, and in cases dealing with products intended for export
and international transport. There are two VAT rates:
- a standard rate of 20%; and
- a reduced rate of 8.5%.
Excise Duties
Excise duties are levied on alcohol and alcoholic beverages, oil, gas and tobacco products. Those
liable to pay excise duties are manufacturers, importers of such products and persons to whom the
liability may be transferred. Products intended for export are exempted.
Tax on Insurance Services
This tax is levied on insurance premiums and paid by insurance companies. The tax rate is 6.5%.
Tax on Transfer of Immoveable Property
This tax is levied on the selling price of real property at a rate of 2%, if VAT on the transaction was
not charged. The tax is payable by the seller unless agreed otherwise. There are exemptions for certain
types of immoveable property.
Customs Duties
Customs duties are levied on goods upon importation into the Community customs territory from third
countries not belonging to that territory. The rates of duties are laid down in the Common Customs
Tariff of the Community and are applied in accordance with the common customs legislation of the EU.
DIRECT TAXES ON INCOME
Corporate Income Tax
All legal persons carrying out commercial activities and having their head offices or place of effective
management in Slovenia (partnerships and other corporate forms, investment funds, banks, insurance
companies, cooperative enterprises, public enterprises and other legal persons) are subject to corporate
income tax (taxation on worldwide income). Non-residents (legal persons who do not have their
headquarters in Slovenia or their place of effective management in Slovenia) are subject to corporate
income tax only if the income has its source in Slovenia.
There are a limited number of legal persons who are exempt from corporate tax for non-profit activities, for example: institutes, societies, foundations, religious communities, political parties, chambers or representative trade unions.
The Bank of Slovenia does not assess and pay corporate income tax.
The general corporate profit tax rate for the year 2009 is 21% (for the year 2010 and beyond the
corporate profit tax rate is set at 20%), although a reduced tax rate of not less than 10% applies under
certain conditions to companies performing business activities in special economic zones. There is
also a special rate of 0% which applies to investment funds, pension funds and insurance undertakings
for pension plans under certain conditions. The special rate of 0% also applies for venture capital
companies which were set up by the Venture Capital Companies Act and prepare a separate tax
statement just for that part of their activity.
There is also a tonnage tax regime, as an alternative to normal corporate income tax, available to
resident shipping companies in respect of their income from the operation of ships in international
traffic. The regime has been in place since 1 January 2008; the election term lasts for 10 years and is
renewable. The tax base for a particular ship in a tax period is calculated by multiplying the daily tax
base with the number of days a ship operates within the given tax accounting period. The tax base is
the sum of tax bases for the tax accounting period of the ships included in the tonnage tax regime.
The taxable base is profit determined as the surplus of revenues over expenses recognized in the
income statement according to accounting standards, unless otherwise stipulated by the Corporate
Income Tax Act. Taxable income includes revenues, which are determined according to accounting
standards. This generally includes all income received and capital gains realized. Recognized expenses
according to the Corporate Income Tax Act are those expenses required to acquire taxable revenue.
Expenses that are not required to acquire revenue are expenses for which it follows that: they are not
directly linked with performing activities and are not a consequence of performing activities; they are
of a private nature; and they do not conform to normal business practice. Non-recognized expenses
are, inter alia, income similar to dividends, including payment of hidden profit distribution, expenses
covering losses from previous years, costs relating to private life including the pertaining VAT, costs
for forcible collection of taxes or other levies, penalties, taxes, deductible VAT from previous years,
interest paid on taxes or other levies not paid on time, interest paid on loans received from persons
whose principal office or place of residence is in a country outside the EU with a nominal level of tax
on profits less than 12.5%, donations and bribes.
Adjustments or limitations imposed on recognized expenses:
Entertainment costs (including gifts with or without logo) and supervisory board costs are limited to
50% of their total amount.
Reimbursement for annual leave, long-service bonuses, severance pay at retirement, solidarity aid,
reimbursement of work-related expenses such as the cost of meals during work and for transport to
and from work, field allowances, separate living allowances and reimbursement of expenses for workrelated
travel (per diem allowances, reimbursement of transport costs, reimbursement of
accommodation costs) are fully recognized.
The write-off of a receivable is recognized as an expense when the write-off of the receivable is
recorded in the business accounts; however, the amount written off must not exceed the lower of the
following two amounts: the arithmetical average of the actual write-off of the last three years or the
amount representing 1% of taxable revenues in the tax period.
An instrument of “thin capitalization” is in force. Except in the case of loan recipients that are banks or
insurance undertakings, the interest paid on loans received from a shareholder or partner who at any
time during the tax period directly or indirectly owned at least 25% of the shares in the equity capital
or voting rights of the taxpayer are not recognized as an expense, if at any time during the tax period
the loans exceed four times the amount of the shareholder’s taxpayer equity capital (loan surplus).
In determining the taxable base and recognizing revenues and expenses, the creation of provisions is
limited to 50% of their total amount. Recognized expenses for provisions are provisions given for
warranties at the sale of products or services, provisions for reorganization, provisions for expected
losses from delicate contracts, provisions for pensions, long-service bonuses and severance paid at
retirement. Special provisions that banks create in accordance with the act regulating banks and
technical insurance reserves that insurance undertakings create in accordance with the act regulating
insurance are recognized as applicable.
Depreciation may not exceed the level arrived at using straight-line depreciation and the maximum
annual depreciation rates.
The taxpayer may change the method of valuing inventories. Expenses from revaluation for
impairment in goodwill are recognized up to the amount of 20% of the original value of the goodwill.
Loss is calculated as the surplus of expenses over revenues as defined by the Corporate Income Tax
Act. Losses may be offset against taxable profits in the following years. Losses may be carried
forward undefined, but the carry-back of losses is not permitted.
Capital gains from regular income are subject to tax.
The Directive on the common system of taxation applicable to mergers, divisions, transfers of assets
and exchanges of shares concerning companies of different Member States has been implemented.
A general R&D investment incentive is represented as a deduction from the tax base of 20% of the
amount invested in internal R&D activities and purchase of R&D services, but not exceeding the
amount of the taxable base. The amount of the additional deduction can be increased to 30% or 40%,
depending on the regional relief scheme.
There is also a tax incentive (deduction) from the tax base of 30% of the amount invested in
equipment and intangibles, but not exceeding the amount of EUR 30,000 and only up to the amount of
the taxable base. Equipment does not include furniture and office equipment and motor vehicles,
except cars and buses on hybrid or electrical drive, and trucks meeting the EURO V (for the years
2008, 2009 and 2010) and EURO VI emission requirements, as well as buses meeting the EURO IV
(for the years 2008, 2009 and 2010) emission requirements.
There are further general tax incentives under certain conditions for entities that provide work for
apprentices or disabled persons. A taxpayer that employs disabled persons under the Act regulating the
vocational rehabilitation and employment of disabled persons may claim a reduction in the taxable
base in the amount of 50% of the salaries of such persons, but not exceeding the amount of the taxable
base, whilst a taxpayer that employs disabled persons with 100% physical disability or deaf persons
may claim a reduction in the taxable base in the amount of 70% of the salaries of such persons, but not
exceeding the amount of the taxable base. A taxpayer that employs disabled persons above the
prescribed quota, their disability not being the consequence of a workplace injury or occupational
disease at the same employer, may claim a reduction in the taxable base in the amount of 70% of the
salaries of such persons, but not exceeding the amount of the taxable base.
If a taxpayer under a teaching agreement employs an apprentice or student for performing practical
work in professional education, the taxpayer may claim a reduction in the taxable base in the amount
of the salary paid, but not exceeding 20% of the average monthly salary in Slovenia for each month of
performing practical work and each individual person who takes part in such professional education.
Furthermore, there is tax relief for donations. A taxpayer may claim a reduction in the taxable base for
amounts paid in cash and in kind for humanitarian, disabled, charitable, scientific, educational,
medical, sports, cultural, ecological and religious purposes, for payments made to residents of
Slovenia or residents of Member States of the EU or EEA (excluding the Principality of Liechtenstein)
who are established under special regulations for the performance of such activities and up to an
amount equivalent to 0.3% of the taxpayer’s taxable revenue in the current tax period. A taxpayer may
also claim a reduction in the taxable base for amounts paid in cash and in kind to political parties up to
an amount equivalent to three times the average monthly salary per employee of the taxpayer in the
current tax period. The cumulative amount of relief granted may not exceed the amount of the taxable
base. An additional reduction of 0.2% of the taxpayer’s taxable revenue is granted for amounts paid in
cash and in kind for cultural purposes and voluntary societies incorporated for protection from natural
and other disasters who work in the public interest and are residents of Slovenia or residents of
Member States of the EU or EEA (excluding the Principality of Liechtenstein) and are established
under special regulations for the performance of such activities.
Relief for voluntary supplementary pension insurance up to 24% of the compulsory contributions for
pension and disability insurance for an insured employee, but no more than EUR 2,390 annually per
employee, may apply under certain conditions.
Business organizations established in special economic zones are entitled to additional tax incentives,
including a lower corporate income tax rate (of no less than 10%) and a reduction in the tax base for
the amount invested in new assets situated in an economic zone, but not exceeding 50% of the amount
invested in such assets in the calendar year. This reduction is not applicable to small and mediumsized
enterprises and takeovers. Furthermore, there is also a reduction in the tax base for the amount of
total wages and salaries paid out to apprentices and other employees recruited in the course of the
calendar year who had been registered for at least six months with the Employment Service before the
conclusion of the employment contract; however, the reduction may not exceed 50% of the salaries
paid out to those employees (see details in the section on special economic zones).
Corporate income tax is payable for the tax period corresponding to the calendar year; however,
corporate taxpayers may choose their tax period to be the same as their business year, which does not
necessarily correspond to the calendar year. In that case the taxpayer must notify the tax authority of
its choice and keep in mind that the tax period chosen may not exceed a period of 12 months. The
taxpayer may not change the tax period for three years.
Tax payments must be made in advance (on a monthly or quarterly basis). If the limit of EUR 400 is
exceeded, the taxpayer pays the instalment on a monthly basis; if the limit of EUR 400 is not
exceeded, the instalment is paid on a quarterly basis. Tax returns must be submitted to the tax
authorities by 31 March for the preceding calendar year if the calendar year is the same as the tax year.
If the calendar year is not the same as the tax (business) year, tax returns must be submitted to the tax
authorities within three months of the current business year for the preceding business year.
Dividends
Companies paying dividends withhold tax at a rate of 15% on each dividend distributed to residents
and non-residents of Slovenia. If international treaties on the avoidance of double taxation stipulate a
tax rate different from 15%, the tax rate from the treaty applies. There is no withholding tax if a
resident taxpayer notifies the payer of its tax number and if the non-resident taxpayer for activities in a
business unit in Slovenia notifies the payer of its tax number. No tax is withheld for payments of
dividends and income similar to dividends distributed to persons to whom a common system of
taxation, applicable in the case of parent companies and subsidiaries, applies under certain conditions
(at least 10% equity and shares held for at least 24 months). The Directive on a common system of
taxation applicable in the case of parent companies and subsidiaries of different Member States has
been implemented.
There is no withholding tax on dividends paid to a non-resident who is a resident of the EU or EEA
(excluding the Principality of Liechtenstein) if the recipient of the dividend is not able to set off the
applicable Slovenian withholding tax in his/her country of residence. Similar applies to payments of
dividends and interest paid from Slovenia to EU and EEA (excluding the Principality of Liechtenstein)
investment and pension funds.
When calculating the tax base, the taxpayer may exempt received dividends and other similar income,
except hidden reserves, if the payer is:
- liable to pay tax by the Corporate Income Tax Act; or
- is a resident of an EU Member State for tax purposes in accordance with the law of such Member
State and is not deemed a resident outside the EU in accordance with an international treaty on the
avoidance of double taxation concluded with a non-member state, and is a taxpayer subject to one of
the taxes in connection with which the common system of taxation applying to parent companies and subsidiaries from different EU Member States, whereby a company that is exempt from tax or that has the possibility of a choice of taxation shall not be deemed to be a taxpayer;
- liable to pay tax comparable to the tax according to this Act and is not a resident of a country – or in
the case of a business unit, not situated in a country – in which the general average nominal level of
tax on corporate profits is less than 12.5%.
The aforementioned provisions also apply to a non-resident recipient if the recipient’s participation in
the equity capital or management of the person distributing profits is connected with business
activities performed by the non-resident in or through a permanent establishment in Slovenia.
When a taxpayer makes a capital gain from expropriation in holdings in legal entities, he/she may
claim an exemption in the amount of 50% of the realized capital gain from the taxable base if the
taxpayer participated in stock or management in such way that he/she is the owner of shares, stock or
voting rights in the amount of at least 8% and for at least six months, and has at least one person
employed on a full-time basis. The loss of expropriation in holdings from the previous paragraph is
not recognized in the amount of 50% of its loss.
In determining the taxable base under the aforementioned regime of exemption of capital gains and
dividends, expenses relating to participation are not recognized in the amount which is equal to 5% of
the received dividends and capital gains in that tax period.
The taxpayer (resident or non-resident who performs activity or business in or through a permanent
establishment in Slovenia) is allowed to exclude all the profit from expropriation of capital holdings
acquired by investing in a venture capital company if:
the venture capital company has been set up in accordance with the Venture Capital Companies Act;
and the status of the venture capital company did not change throughout the period of ownership of the
aforementioned capital holdings.
The loss from the aforementioned expropriation is not recognized.
Interest and Royalties
Withholding tax at a rate of 15% applies to interest, with the exception of interest on loans raised and
securities issued by the government of Slovenia, and interest paid by banks.
Withholding tax at a rate of 15% applies to royalties. There is no withholding tax if a resident taxpayer
notifies the payer of its tax number and if a non-resident taxpayer for activities in a business unit in
Slovenia notifies the payer of its tax number.
The Directive on the common system of taxation applicable to interest and royalty payments made
between associated companies of different Member States has been implemented.
No withholding tax is paid on interest payments and royalties payments if at the time of the payment:
- the interest and payments for the use of property rights are paid to the legitimate owner, which is a
company member of an EU country other than Slovenia, or a branch of a company which is an EU
member and is situated in a different EU Member State;
- the payer and the eligible owner are linked such that:
the payer directly holds a share of at least 25% in the eligible owner’s equity capital; or
the eligible owner directly holds a share of at least 25% in the payer’s equity capital;
the same company directly holds a share of at least 25% in the equity capital of both the payer and the
eligible owner;
the aforementioned payer and eligible owner are participating companies of an EU Member State;
- the minimum share is held for at least 24 months; and
- the payer or eligible owner:
is a company that has one of the forms to which the common system of taxation in connection with
interest payments and payments for the use of property rights applying to linked companies from
different EU Member States applies;
is a resident of an EU Member State for tax purposes in accordance with the law of that country; and
is a taxpayer subject to one of the taxes in connection with which the common system of taxation
regarding interest payments and payments for the use of property rights applying to linked companies
from different EU Member States applies.
Eligibility under the aforementioned provisions is recognized on the basis of permission in advance
from the tax authorities if the conditions from those provisions are fulfilled.
Personal Income Tax
The Personal Income Tax Act distinguishes between six categories of income: income from
employment, business income, income from basic agriculture and forestry, income from rents and
royalties, income from capital, and other income accruing to persons liable to tax in the Republic of
Slovenia.
Residents are liable to income tax on their worldwide income (i.e. income derived in Slovenia as well
as abroad). Non-residents are liable to income tax on income derived in Slovenia.
An individual, regardless of his/her nationality, is a resident in Slovenia for personal income tax
purposes if he/she has a formal residential tie with Slovenia (i.e. has permanent residence in Slovenia,
is a Slovenian public employee employed abroad or was a Slovenian resident but is currently
employed in an EU institution) or actual residential tie with Slovenia (has a habitual abode or centre of
personal and economic interests or is present more than 183 days in a taxable year in Slovenia).
Each individual is treated as a separate taxpayer. There is no taxation of spouses or a family as a
whole. The tax year is the calendar year.
Tax on income from capital (on interest, dividends and capital gains) is paid according to a flat income
tax rate. Any such tax payment is treated as a final tax for residents and non-residents alike. Tax rates
are the following:
-Interest: 20%;
-Dividends: 20%;
-Capital gains: 20% for a holding period of up to 5 years, 15% for a holding period from 5 to 10 years,
10% for a holding period from 10 to 15 years, 5% for a holding period from 15 to 20 years and 0% for
a holding period greater than 20 years.
Income tax on other categories of income (income from employment, business income, income from
basic agriculture and forestry, rental income, royalties and other income, hereinafter referred to as
active income) is paid during the tax year in the form of advance tax payments. The rate for advance
tax payment is prescribed by the Personal Income Tax Act. Any such advance tax payment of a nonresident
is treated as a final tax, whilst in the case of a resident it is treated as a prepayment of tax.
When the payer of income is a domestic legal person, a body of persons without legal personality, an
individual who operates a business or a permanent establishment of a non-resident, the payer is bound
to calculate and pay withholding tax for the taxpayer. Tax payments in all other cases (i.e. when there
is no payer of income) are to be made by the taxpayer in due time, as determined by the Tax Procedure
Act.
The annual active income tax liability of a resident is computed in such a manner that the taxable bases
of different sources of income earned in a calendar year are computed separately and then aggregated.
The annual taxable base is computed after compulsory social security contributions and certain
allowances are deducted. The net amount is taxed at progressive rates. The annual tax rate schedule is
fixed and applies to the following year. It is adjusted on a yearly basis according to the growth of the
consumer price index in Slovenia. This enables the taxpayer to determine his/her active income tax
liability during the tax year.
Advance tax payments are deductible from the annual active income tax liability of a resident, and any
difference is collected upon receipt of an assessment from the tax authorities.
Residents of Slovenia are obliged to submit an annual tax return for active income in the prescribed
form to the tax authorities, except for the following individuals:
- taxpayers whose annual taxable base does not exceed the amount of the general allowance
(EUR 3,051.35 in 2009); and
- taxpayers whose only source of income is a pension, who during the taxable year have not
paid an advance tax and have not claimed an allowance for dependent family members, and have
additional income of less than EUR 80.
From 2008 (for the fiscal year 2007) on, the Tax Administration is obliged to generate an annual tax
return from its own information, to assess the tax and submit the return to the taxpayer. If the taxpayer
does not dispute the tax assessment, the tax will be due (the difference between the total tax payable
and the total amount of tax paid in advance) within 45 days of the day the tax assessment is submitted.
When the total sum of advance payments exceeds the annual tax payable, a refund will be provided
within the same time limit. If the tax assessment has not been submitted to the taxpayer by the end of
May, then the taxpayer is obliged to file an annual income tax return by the end of June. Then the tax
liability of the taxpayer will be calculated by the Tax Administration. The Tax Administration is
obliged to issue a written order before 31 October of the same year. The tax due (the difference
between the total tax payable and the total amount of tax paid in advance) must be paid within 30 days
of the day the written order is submitted. When the total sum of advance payments exceeds the annual
tax payable, a refund is provided within the same time limit.
Taxpayers who are liable to tax on business income are obliged to submit their income tax declarations
on business income to the local Tax Administration office by 31 March of the following year.
All taxpayers (except for basic agricultural and forestry activity) must keep records of their income.
They are obliged to keep records for at least five years from the year they relate to.
To avoid double taxation of income, Slovenia has concluded a considerable number of double taxation
conventions (see Section III).
Taxable income
According to the Personal Income Tax Act, income is classified into six categories: income from
employment, business income, income from basic agriculture and forestry, income from rents and
royalties, income from capital and other income. The taxable base for each category of income is
clearly defined by the Personal Income Tax Act.
The first category of income includes income from employment (i.e. salaries or wages, including
fringe benefits [compensation for work-related expenses are exempt from the tax base up to a certain
level, as determined by government regulations], pensions, income earned under contract for
temporary work or for the execution of services and jobs on any other basis, and other income from
dependent activities, including services and the jobs of directors, procurators and other nominated,
appointed or elected persons).
In principle, all fringe benefits given by employers or other persons to their employees or family
members of employees in connection with employment, such as the private use of company cars,
rental benefits, zero-interest loans, discounts on products and services, gifts and share options, are
taxed.
The second category, business income, refers to income derived by an individual who independently
performs an activity such as entrepreneurship, agricultural or forestry activity and connected activities,
professional activities or other independent activities. The profit is determined by deducting
expenditures from income for a given calendar year.
Taxpayers deriving business income may claim a deduction of 20% of the amount invested in internal
R&D activities and purchase of R&D services, but not exceeding the amount of the taxable base. The
amount of additional deduction can be increased to 30% or 40%, depending on the regional relief
scheme.
Next to the mentioned investment incentive, taxpayers deriving business income may claim a
deduction of 30% of the amount invested in equipment and intangibles.
The third category of income covers income from basic agriculture and forestry, i.e. agricultural and
forestry based on the use of agricultural and forest land. The tax base is determined according to the
presumptive estimation of the income, which also includes other income from agricultural and forestry
such as subsidies and other income from state aid. Subsidies are, in principle, treated as taxable
income. For agriculture and forestry the presumptive income is generally set by cadastral income, with
the exception of apiculture, for which income is set by presumptive estimation of income from
beehives. Individuals who are subject to tax are those who have the right to use farmland, woodland or
beehives. This includes owners, holders of the rights to use, or the beneficial owners of plots of land or
beehives.
The fourth category refers to rental income and income from royalties.
The taxable base for rental income is in general reduced by the actual or standard expenses incurred.
Allowable deductions from income derived from renting are maintenance expenses (i.e. expenses
incurred for keeping a property in good operating condition). Standard expenses may be claimed as a
deduction in the amount of 40% of the rental income (except in the case of renting farmland or
woodland).
The taxable base for royalties (i.e. income from the transfer of property rights – copyrights, inventions,
trademarks and technical innovations, plans, formulas, procedures and similar rights or similar
property and information regarding industrial, commercial or scientific experience, regardless of
whether they are protected by relevant legislation, personal name or image) is income received, in
general reduced by a standard deduction in the amount of 10% of the income.
The fifth category refers to income from capital, which consists of interest, dividends and capital
gains.
The taxable base for interest (i.e. interest on loans, debt securities, bank deposits and other similar
financial claims, financial leasing, life insurance and interest income derived from mutual funds, etc.)
is equal to the interest derived. The tax rate on interest is 20%. This tax is a final tax.
There is a tax-exempt amount of interest on bank deposits with Slovenian or other EU banks. There is
no advance tax payment on such interest received by residents and non-residents residing in Member
States of the EU. Instead, residents are obliged to submit a special annual tax return for such interest to
the local tax administration office by 28 February of the following year, except when the amount of
such interest does not exceed the tax-exempt amount of such interest (EUR 1,000).
Capital gains include income derived from the disposal of real estate, equity securities and other shares
in companies, cooperatives or other organizational forms. The taxable base is the difference between
the value of capital upon disposal and the acquisition value of the capital, taking into account certain
expenses incurred upon acquisition or disposal of the capital. The tax rate for capital gains depends on
the holding period: 20% for a holding period of up to 5 years, 15% for a holding period from 5 to 10
years, 10% for a holding period from 10 to 15 years, 5% for a holding period from 15 to 20 years and
0% for a holding period greater than 20 years. This tax is a final tax.
The sixth category, other income, includes income not included in the first five categories of income
(i.e. prizes, gifts, contest prizes, certain scholarships, etc.). The taxable base for other income is
income received.
The taxable base for dividends (i.e. any income derived on the basis of shares owned in a company,
cooperative or other organizational form, including income of silent partners and income from other
ownership investments in any type of organization with a predominantly equity nature) is income
received. The tax rate on dividends is 20%. This tax is a final tax.
