Slovenia: Tax Reform 2020

11. March 2020 | Reading Time: 3 Min

Steuer Highlights - Slowenien 2019

With effect from 1.1.2020 numerous tax laws in Slovenia have been changed.

On 5.11.2019 amendments and/or changes to the most important tax laws were announced in the Official Journal of the Republic of Slovenia Nr. 66/2019. Relevant changes to the most important laws are listed briefly below:

1. Corporation Tax Act

  • Loss carry-forwards and tax benefits (for example, investment tax credits) may lower the taxable base overall by 63% at the most. Previously the taxable base could also be reduced to zero with investment tax credits.
  • With the amendment to the Corporation Tax Act, rules on the disposal and/or neutralization of hybrid entities resulting from cross border entities are codified. In addition, regulations regarding exits are standardised.
  • From 1.1.2019 IFRS 16, which relates to the accounting of leasing relationships, is to be applied in Slovenia for companies that are mandatorily subject to audit. It has now been clarified that with regards to tax the maximum period of depreciation for the leased assets is to be used for the tax write-off of the capitalized assets.

2. Income Tax Act 2020

  • Alleviation of earned income by increasing of the tax brackets and raising of the general deductible amount

The new limits for income tax rates:

For an annual net tax base (in EUR) Income Tax Rate (in EUR)
From To
8,500.00 16%
8,500.00 25,000.00 1,360.00 + 26 % of the amount that exceeds 8,500.00
25,000.00 50,000.00 5,650.00 + 33 % of the amount that exceeds 25,000.00
50,000.00 72,000.00 13,900.00 + 39 % of the amount that exceeds 50,000.00
72,000.00 22,480.00 + 50 % of the amount that exceeds 72,000.00

 

  • Increase in the income tax rate on capital income and income on rentals of assets from 2.5% to 27.5%. The following are classed as capital income: income from interest and dividends, and also “speculative income”. Speculative gains are profits from both the disposal of property and of company shares. The tax rate on speculative income is reduced by the duration of ownership.

Comparison between the speculative taxation from 1.1.2020 and the previous rules:

Duration of  the capital ownership until 2019   from 2020
 < 5 years 25% 27.50%
5 – 10 years 15% 20%
10 – 15 years 10% 15%
15 – 20 years 5% 10%
> 20 years Tax-exempt Tax-exempt

 

Gains from the disposal of a property purchased prior to 1.1.2002 is still tax-exempt. In the case of income from the rental of assets, the flat-rate expenses are raised from 10% to 15%.

  • The non-monetary remuneration value for electric vehicles with acquisition costs of up to EUR 60,000.00 is reduced from 1.5% to 0.3%.
  • From 1.1.2020 there is a reclassification of certain speculative income into dividends, whereby there is no longer any reduction of the tax rate by the retention period. It remains at 27.5%. This applies in the case of shareholder grants being returned to people, who did not provide the grants, of performance-related purchase price adjustments regarding the disposal of property and company shares, and of permitted disposals of corporation shares to the company.
  • Loopholes in connection with capital guarantees in the case of asset management and in connection with gains from defaulted purchased receivables through returns via the acquisition costs are to be closed. The benefits are to be taxed as income interest at 27.5%.

3. Law on taxation of gains from the disposal of derivative financial instruments

  • The tax on the gains from the disposal of derivative financial instruments is to be raised to 27.5%. In the case of a disposal within 12 months, the tax rate is to be 40%. As with the speculative income, an incremental reduction of the tax rate is intended.

 

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