TPA tax experts from Slovenia on the latest and most important tax news: What investors and entrepreneurs should know!
1. Advanced Pricing Agreements
In 2014 the conditions were set out in the local legislation which allow agreements between the tax authorities and the taxpayers regarding transfer prices and thus the principles and rules when it comes to business relations between related companies.
In cooperation with TPA svetovanje do.o.o. the Slovenian Tax Authorities have concluded the first Advanced Pricing Agreement (APA) in December 2018.
2. Value Added Tax 2019 in Slovenia
A clarification regarding the tax liability when issuing vouchers was provided. Furthermore, a significant administrative relief connected with real estate transactions was communicated.
Real Estate Revenues
Tax-exempt real estate revenues can be optionally treated as taxable in Slovenia. Until December 31,st 2018 it was necessary to file a joint statement (by the tenant and landlord or by the purchaser and seller) regarding the taxation option via the online tax portal. As of January 1,st 2019 it is sufficient that this joint statement is available in written form. Since this joint statement is usually included in a rental or purchase contract, there is no longer need for filing the joint statement via the online tax portal. However, it is expected that the contracting parties will furthermore prepare a separate joint statement including the plot numbers of the underlying transaction.
In the case of telecommunication services provided to private persons in Slovenia, a registration in Slovenia will not be necessary if the revenue of one year does not exceed the amount of EUR 10,000. As of 2019 it is sufficient for tax payers, who are only entitled to partly deduct input tax, to keep records. A separate report about the proportion of non-deductible input tax is no longer required.
In case of corrected returns late payment interest at 3 % is calculated (e.g. non filing of tax declaration or tax evasion). The payments regarding the amount due including the late payment interest have to be executed and have to be received by the Financial Authorities the same day when filing the corrected returns.
3. Corporate Income Tax (CIT)
The amendments in the CIT law refer to the implementation of BEPS (Base erosion and profit shifting) measures. To avoid aggressive international tax planning activities it is determined that a purely tax-motivated arrangement (or a series of such arrangements) which have been put into effect for the main purpose of obtaining a tax advantage and without stating any other credible economic reason for this arrangement is not accepted. The definition of such tax-motivated arrangements should be widely interpreted.
Controlled Foreign Company
The term “controlled foreign company” is introduced (CFC). According to law a controlled foreign company refers to a corporation in which the Slovene company holds direct or indirect participation of more than 50 % of the voting rights or more than 50 % of the capital. In addition, the actual corporate income tax paid by this foreign entity is lower than half of the corporate income tax that entity would be obliged to pay in Slovenia. Certain parts of the income of the controlled foreign company (i.e. interest, dividends, rental income, licences, financial services, etc.) are included in the Slovenian tax base in regard to the taxpayers’ participation in case the foreign entity is not supported with human and technical resources (no substance verification).
Exemptions from the CFC rules apply in case one third or less of the income of the foreign entity consist of the aforementioned passive income. The losses of a CFC shall not be included in the tax base in Slovenia. The tax paid abroad on such income can be credited in Slovenia.