Sole proprietor is one of the forms through which you can do a business in Slovenia as an individual. Being a sole proprietor with normalized expenses is a tax status unique to Slovenia. It means that the tax base for the business is determined by taking into account normalized expenses. But who can be a sole proprietor in Slovenia and what are the benefits of normalized expenses?
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Who can be a sole proprietor in Slovenia?
A sole proprietor (s.p.) is a form of doing business in Slovenia as an individual. Here, the particular natural person who is sole proprietor also holds all liability for the business conduct with all personal assets. To compare it to LTD, the comapny is only liable for the amount of share capital. But not everyone can immediately become a sole proprietor in Slovenia. Without prior residence in Slovenia, only EU citizens can open sole proprietorship. Non-EU citizen can become sole proprietors after living in Slovenia at least 1 year.
The registration as sole proprietor requires you to present: Slovenian tax number, Slovenian personal number (EMŠO), valid passport and a business address in Slovenia. The registration of sole proprietor is possible at any VEM point in Slovenia. This is also a service that the VEM point DATA provides free-of-charge. Registration as sole proprietor requires no share capital deposit as the individual is liable for business conduct with personal assets.
A sole proprietor can either register as »full s.p.« or »afternoon s.p.«. The difference is that with full s.p., the sole proprietor pays full monthly social contributions and is self-employed. The afternoon or half s.p. is possible for those entrepreneurs who are already employed for full time in the EU and conduct the business activity as sole proprietor only as a side activity. They pay lower social contributions as their salary from employer already cover social contributions.
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Taxation with normalized expenses is subjected to only 4% tax!
The majority of sole proprietors register under the status »normiranec«. It means that their tax base for business is determined by taking into account normalized expenses. This type of business is very popular with those entrepreneurs that do not generate much expenses with their business. It means that 80% of their income falls under expenses, while only the remaining 20% of income becomes the subject of tax. To simplify – the flat-rate taxation is 4% on all income, which is a uniquely low taxation comparing it to other EU countries. This type of taxation is possible both for full s.p.
Sole proprietors can use the taxation based on normalized expenses if:
- the income from business does not surpass 50.000€ (for »afternoon s.p.«)
- the income from business does not surpass 100.000€ (for »full s.p.«)
Once sole proprietors are already conducting business, they have to be cautious of another condition. If they want to remain in the taxation system for normalized expenses, they cannot surpass 300.000€ income in two consecutive tax years (so 150.000€ per year).
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The amount of normalized expenses for sole proprietors
The sole proprietor can claim normalized expenses in the amount of 80% of income, but there are some limits:
- »afternoon s.p.« can claim a maximum of 40.000€,
- »full s.p.« can claim a maximum of 80.000€.
Example: if an »afternoon s.p.« claims normalized expenses and has 80.000€ yearly income, 80% of this amount means 64.000€. Because of the limit the calculation is the following:
Income 80.000€ – normalized expenses 40.000€ = tax base 40.000€ x tax rate 20% = tax 8.000€.
The calculation of tax is for the previous tax year and then you make advance payments for the following year, based on the result of the previous year. It is also possible to change the tax base from normalized to actual expenses. The sole proprietor can notify it in the tax return that you submit in March for the previous year.
Are you an EU citizen or have lived in Slovenia at least 1 year? Take advantage of this unique opportunity and become a sole proprietor! DATA can offer full support.
Do not miss the unique opportunity to learn about company registration, costs and business immigration to Slovenia. DATA can offer full support to foreign citizens in the consultation and the company registration. Also, you can contact us for more information. Send us an email to data@data.si. You can also call us on +386 1 6006 270, Viber/Whatsapp +386 40 530 718 or skype data.business7.
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