Local taxes in Slovenia/EU – news for companies and individuals

Local taxes in Slovenia are changing. The government approved the proposals of the Ministry of Finance and along with it also the changes to the Personal Income Tax Law, the Corporate Income Tax Law and the Value Added Tax Law.

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Local taxes – the taxes for individuals

The Personal Income Tax Law will have the most changes.

The ministry says the main objectives of the bill are to increase the general tax relief. The amendments are as follows:

• Gradual increase in the total relief from the current 3,500 EUR to 7,500 EUR by 2025,
• Seniority allowance for people over 70 years old will amount to 1,433 EUR,
• Adjustment of the fifth income tax class from 50% to 45%,
• Decrease in taxation of interest income and capital gains from 27.5% to 25%,
• Possibility to choose the method of taxation of capital gains; one-time or according to the annual scale of personal income tax,
• The capital gains will no longer be taxed after 15 years (currently this only happens after 20 years),
• The exclusion from reliefs for the use of cars without carbon dioxide emissions,
• Renting out of real estate will now be taxed at a rate of 15%, instead of 27.5%. It will take into account 10% of standard expenses, not than 15% as it was until now.

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Local taxes for businesses and sole traders

For the companies and the sole traders, all three major taxes on doing business are changing. These are: the personal income tax, corporate income tax and VAT. Most of the amendments will enter into force on January 1, 2022. Only the amendments to the Value Added Tax Law will enter into force on July 1, 2021.

Amendments to the Corporate Income Tax Act

The approved bill on amendments and additions to the Corporate Tax Law will  make it possible to introduce more favorable tax measures than the current ones. The latter leads to the new tax incentive. They will be for employment, investments in digital transformation and the transition to “green business”. This also simplifies and allows for more favorable recognition of some expenses for the tax base. Local taxes will change in these cases:

• Employment tax incentives are now also available for people with deficitary occupations, namely 45% for the first 24 months,
• Increase in tax incentives for the employment of persons under 26 years of age by 10 percentage points; from 45% to 55% in the first 24 months,
• Additional opportunities for digitization and so-called green investments,
• Increase the subsidy to 1%; currently it is at 0.3% of income,
• Recognition of spending on entertainment and gifts for business partners (expenses to represent the company) in the amount of 60% (now 50%).

The approved draft of the law also includes an article of the EU directive. It will have the definition of the rules against the practice of tax evasion. This will also directly affect the functioning of the internal market.

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Local taxes on sales – VAT

The Law on Amendments to the Value Added Tax Law will simplify the value added tax and simplify the administrative procedures.

The changes are as follows:

• The sale of goods via the Internet – the tax threshold for the sale in another country is the same, 10,000 EUR,
• Goods purchased outside the EU for up to € 22 will no longer be exempt from VAT,
• End consumers will no longer receive an invoice upon purchase unless they specifically request it.
• Farmers will no longer be compulsory taxpayers, regardless of cadastral income.

In the near future, we will also present the individual changes. Out legal experts will also present a comparison of how the local taxes will affect the activities of companies and the lives of residents.

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Do you plan to start a business in Slovenia? Do you also want to learn more about the local taxes?  Send us an email to [email protected]. You can also call us on +386 1 6006 270/+386 1 6006 274 (our landline). You can also use our Viber/Whatsapp +386 40 530 718/+386 64 173 023. We are also available on skype data.business7. Also, you can follow us on Facebook and Instagram. You can attend our webinar on company registration in Slovenia.