Tax News - April 2024

Changes in tax legislation

i. Income tax

First batch of informative income tax calculations

On 29 March 2024, FURS sent out the first batch of the 2023 informative tax calculations, which taxpayers received at the beginning of April. Those who received an informative tax calculation as part of the first batch can lodge an objection until 29 April 2024. In the event of an underpayment of income tax, taxpayers have to make a payment until 29 May 2024, on the other hand, overpaid tax will be transferred to the individual's bank account by the same date.

The second batch of informative income tax calculations will be sent out by FURS on 31 May 2024.

ii. Wages

Approaching deadline for payment of annual leave allowance

Please be informed that the statutory deadline for payment of annual leave allowance is approaching, which employers must meet by 1 July 2024 at the latest. Employers are obliged to pay at least the minimum wage, which this year is EUR 1,253.90. If an employee is not employed for the whole calendar year, he/she is entitled to a pro-rata share of the allowance, as well as part-time employees.

Failure to pay annual leave allowance is an offence punishable by fines ranging from EUR 450 to EUR 20,000.

Possible new developments on performance-related bonuses

The Supreme Court of the Republic of Slovenia, in its Decision VIII DoR 219/2023-6, allowed a review on the question of possible discrimination in the payment of performance-related bonuses in the event of an employee's long absence due to illness or injury.

There is no defined case law about this question. Prior to 2023, the case law of the Administrative Court of the Republic of Slovenia held the position that an employee who is legitimately absent from work would be discriminated if he/she would not get the performance bonus. Last year, however, the Higher Labour and Social Court took a new position that the performance of work is a key condition for the payment of all parts of the salary, including performance-related bonuses.

The Supreme Court's decision is expected in the second half of this year.

iii. VAT

Tax Authority (FURS) clarification about simplification for triangular transactions

On 20 March 2024, FURS issued a clarification on the possibility of applying the simplification for triangular transactions in connection with the EU Court of Justice ruling C-247/21.

FURS clarification follows an EU judgment in which the Court ruled that the final transferee in a triangular transaction was not validly determined to be liable for VAT where the invoice issued by the intermediate transferee did not contain a "Reverse Charge" clause. The special arrangement for triangular transactions is a simplification for the parties involved, in particular for the second party in the chain, who decides whether or not to use the simplification. If the second party in the chain decides to use the simplification, it must also indicate this on the invoice by means of a "Reverse Charge" clause. This is to inform the recipient of the supply (the third party in the chain) that he is in turn the person liable for VAT.

Without such a clause on the invoice, the intermediate supplier is deemed not to have made use of the right of simplification and the person to whom the supply is made is not designated as the person liable for VAT. Nor can the omission of the "Reverse Charge" clause be corrected or supplemented subsequently by an indication that the invoice relates to a triangular intra-Union transaction and that the tax liability has been passed on to the recipient.

FURS explains that for transactions carried out before the publication of this Explanatory Memorandum, where the third party in the chain is a taxable person with a Slovenian VAT identification number and the invoice did not bear the indication "Reverse Charge", it is clear from the accompanying documents and/or the conduct of the third party in the chain - the consignee of the goods that the invoice does not bear the indication "Reverse Charge", that he is aware that the simplification for triangular transactions has been applied and that the tax liability has been transferred to him (he as the third party in the chain has charged the VAT), or there is no serious indication that fraud has been committed, the conditions for a triangular transaction are deemed to have been fulfilled, despite the incomplete information on the invoice.

However, for transactions carried out after the publication of the clarification, it should be noted that, according to the judgment of the CJEU, the omission of the reference to "Reverse Charge" on the invoice is considered as not fulfilling the conditions for a three-way transaction.

Case law – Reclaiming incorrectly accounted VAT in the UK

The recent case of Metatron d.o.o. against His Majesty`s Revenue and Customs (HMRC) [2024] on UK First Tier Tribunal (FFT) has highlighted the issues with businesses in EU countries seeking reimbursement of incorrectly charged UK VAT, and the issue of the recourse in general should a supplier incorrectly charge VAT.

Metatron d.o.o. (‘the Appellant’) is a business established and registered for VAT in Slovenia, operating a computer facilities management and management consultancy business, which is, among others, buying goods from UK suppliers. These supplies should have been zero-rated as the supplies qualified as intracommunity supplies, but the Appellant was incorrectly charged VAT.

Metatron made a claim of GBP 1,138.32 of UK VAT paid in the period between 1 January 2019 to 31 December 2019, and a second claim for GBP 179.46 for the period between 1 January 2020 to 31 December 2020. These claims were made through the EU electronic VAT refund application process, before the UK left the European Union.

These claims were rejected by HMRC on the basis that there is no right for an EU (but non-UK) established business to claim a refund of UK VAT, where the supply on which VAT was charged should have been zero rated as an intracommunity supply of goods.

The Appellant relied on the case of Reemtsma Cigarettenfabriken GmbH (C-35/05)(‘Reemtsma’), in which the CJEU determined that there are limited circumstances in which tax authorities of an EU Member State may be required to make a direct repayment to a customer where VAT has been incorrectly charged.

Reemtsma was a German company who engaged with an Italian company to provide advertising and marketing services. It had no permanent establishment in Italy. VAT was charged in error and Reemtsma sought reimbursement. It’s a case often relied on when a VAT refund becomes impossible or excessively difficult.

HMRC applied for both Metatron claims to be struck out by the FTT on the basis that the Reemtsma precedent was no longer valid due to the European Union (Withdrawal) Act 2018; HMRC argued that the FTT had no jurisdiction to consider the two claims on Reemtsma grounds.

The FTT agreed to strike the claim on the basis that due to Brexit it is no longer obliged to follow CJEU practice. 

iv. Other changes

Digitalization of ATA Carnet

Slovenia has become the first country in the EU and the second in the world to successfully implement the electronic or digital ATA Carnet, which enables easy implementation of the temporary import procedure with full exemption from customs duties. This is the result of a successful cooperation between the Chamber of Commerce and Industry of Slovenia (GZS), Customs administration and the Financial Administration (FURS).

The novelty includes the possibility of electronic issuance and authentication of digital ATA Carnets, which further facilitates and speeds up customs procedures related to temporary import or export of goods. Under the international ATA Convention, such goods are exempt from all import duties.

Proposed Act amending Employment, Self-employment and Work of Foreigners Act

Ministry of Labour, Family, Social Affairs and Equal Opportunities has published a proposed Act amending Employment, Self-employment, and Work of Foreigners Act. Below we highlight some of the most important changes:

• For a foreigner to obtain an EU Blue Card, a contract of employment for at least six months is required for a highly skilled job (at least one year under current law). Instead of the current 1.5 times the average annual gross salary, the future salary of an EU Blue Card holder should be at least as much as the average Slovenian annual gross salary.
• People with international protection status and seasonal workers shall also be eligible for an EU Blue Card. At the same time, recognition of professional/work experience as proof of high professional qualifications is planned to be introduced. Until now, only formally acquired qualifications in the form of diplomas and other certificates of successful completion of a university course have been recognized.
• After a one-year stay in the first EU country based on a Blue Card, one will have the right to enter, stay and work in another EU country, with the purpose of employment based on an EU Blue Card, which can be obtain in the other EU country under a simplified and faster procedure.
• Third-country nationals who will be working remotely for a business outside Slovenia that is not entered in the business register, will be able to apply for a temporary residence permit as digital nomads. The permit will be valid for one year and cannot be renewed. The conditions for obtaining the permit will include a valid travel document, adequate health insurance and sufficient monthly financial means (2 times the average net salary each month).

Changes to excise duties

In a Decree published in Official Gazette of the Republic of Slovenia No 20/24 of 11.3.2024, the Government raised excise duties on energy products and electricity by:

• Unleaded petrol (less than 98 octane) – EUR 458.24 / 1000l (before EUR 460.51 / 1000l).
• Unleaded petrol (98 octane and above) – EUR 458.24 / 1000l (before EUR 460.51 / 1000l).
• Gas oil for motor fuel – EUR 425.38 / 1000l (before EUR 425.38 / 1000l).
• Gas oil for heating fuel – EUR 150.85 / 1000l (before EUR 150.85 / 1000l).

Updated list of countries at risk of money laundering or terrorist financing

The Office for the Prevention of Money Laundering has updated the list of countries at high risk of money laundering or terrorist financing.

Antigua and Barbuda have been added to the list of third countries that do not cooperate with the European Union on tax standards, while the Bahamas, the British Virgin Islands, Costa Rica, the Marshall Islands and the Turks and Caicos Islands have been removed.

The deadline for the annual leave decision expired

On the 31 March 2024 the deadline for the annual leave decision expired. Your employer may have given you the decision in writing or sent it to you by email, to the employee's work email address.

If your employer does not issue the decision, it is an offence punishable by a fine of between EUR 750 and EUR 2,000.

Form REK-neOZP

On 10 April 2024, FURS published a form for employers to notify the Tax Authority of their inability to deduct the compulsory health insurance contribution (CIC). The following are cases in which it is not possible to deduct the CIC due to the insured person's income being too low:

• Payment of up to EUR 45 in salary and wage compensation.
• An employee takes a whole month of unpaid leave and is not paid for that month.
• A person is covered by employment insurance for only 1 day in a month, which is a non-working day, and the employer does not have to pay the wages.

The employer will now be able to use the new form to notify FURS of the inability to deduct the CIC for the previous months as well.

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