Tax News - February 2023

Applicable changes in tax legislation

I. INCOME TAX ACT

Amendment to the Income Tax Act

On the 1^st of January 2023, an amendment to the Income Tax Act came into force, bringing several new features:

• The general allowance has increased from the current EUR 4,500 to EUR 5,000, and further gradual increases until 2025 are abolished. The total income up to which a resident is entitled to an additional general allowance on top of the general allowance has also been increased (from EUR 13,716.33 to EUR 16,000).
• With the new law, the tax brackets remain unchanged, but the tax rate of the last (5th) income tax bracket reverts back to 50% (shown in bold in the table below) as it was before March 2022.

• the special allowance for dependants will increase by around 7.5% in 2023 and 2024.

• The paid-up value of shares will again be taxed if they are disposed of in the context of an acquisition of own shares; owners will pay a dividend tax of 25% on the sale of the share.
• A youth allowance will also be introduced, where the tax base on employment income for taxable persons up to the age of 29 will be reduced by EUR 1,300 in a tax year.
• Performance-related income is exempted from the tax base but limited to an amount equal to 100% of the average salary of employees in Slovenia (previously, 100% of the employee's average salary was recognised if this was more favourable to the employee). A condition is added that part of the salary for performance is not subject to taxation if it is paid no more than twice in a calendar year.
• For taxable persons who are included in the normalised expenditure scheme, the recognised expenditure is reduced from 80% to 40% of the amount of revenue:
  • If condition of full-time compulsory insurance for a period of at least 9 months is fulfilled.

• • if they do not meet the condition of full-time compulsory insurance for a period of at least 9 months but have an income of more than EUR 12,500.

• the rate for calculating income tax on rental income is increased from 15% to 25%. The amount of normalised expenses recognised is not changing, however with amendments taxpayers will be deprived of the choice to include such income in the tax base (previously they had this option).
• the relief for voluntary supplementary pension insurance will be granted up to the amount of the premium, but not more than EUR 2,903.66.

Amendments to the Regulation on the tax treatment of reimbursements of expenses and other work arising out of the employment relationship

On 22 December 2022, after increasing the tax-free amount of commuting, meal and travel allowances, the government also increased the tax-free amount of daily subsistence allowances for business trips within Slovenia, field allowance, separation allowance, jubilee bonus, retirement gratuities and payments to apprentices, pupils and students.

• The daily subsistence allowance is tax-free up to EUR 9.69 for business trips within Slovenia lasting between 6 and 8 hours, up to EUR 13.88 for business trips lasting between 8 and 12 hours and up to EUR 27.81 for business trips lasting between 12 and 24 hours.
• The fieldwork allowance is not included in the tax base up to EUR 5.84 per day (previously EUR 4.49) in the case of meals and accommodation provided by the employer.
• The separation allowance up to EUR 434 per month is not included in the tax base (previously EUR 334).
• The severance payment on retirement is now tax-free up to 300% of the last known average annual salary of employees in Slovenia, calculated on a monthly basis, which amounts to EUR 5,908.77 (previously EUR 4,063.00).
• Payments to students and apprentices are not taxed up to 15% of the last known average annual salary of employees in Slovenia, calculated per month, which amounts to EUR 295.44 (previously EUR 172).

The Regulation also provides that up to EUR 5,000 of solidarity grants in the event of the death of an employee or a family member (previously EUR 3,443) and up to EUR 2,000 of solidarity grants in the event of serious disability, prolonged illness of the employee or if he/she suffers from an elementary accident or fire (previously EUR1,252) are not taxable.

The changes for daily subsistence allowances, the field allowance, the separation allowance and payments to pupils and students for compulsory practical work apply to payments relating to the accounting period after 1 January 2023, and for jubilee bonuses, retirement gratuities and solidarity grants to payments after 31 December 2022.

Jubilee bonuses paid from 1.1.2023 onwards will not be included in the tax base at a fixed percentage of the employees' last average annual salary calculated per month (previously a fixed amount). The last known average annual salary calculated per month is for the year 2021 and is EUR 1,969.59. The changes are shown in bold in the table below.

*AS (average annual salary in Slovenia)

Payment of the income tax advance

Until now, sole traders and physical persons with a business activity had to pay income tax advance and social security contributions separately, with the advance payment due date by the 10^th of the month and the contributions by the 20^th of the month. As from 2023, the deadlines are aligned since the deadline for income tax advance is now the 20^th of the month.

II. PAYROLL

Introducing of compulsory electronic filing of claims for reimbursement of salary compensations

On 1 January 2023, an amendment to the Rules of compulsory health insurance came into force, making it compulsory to submit claims for wage compensations reimbursement electronically – paper claims can no longer be submitted.

In case of incomplete documentation during submission of electronic claims in January 2023, they can be submitted later, within 3-year period.

Raising the minimum wage

According to a Ministerial Decision published in the Official Gazette on 13 January 2023, the gross minimum wage for work performed after 1 January 2023 is increased by 12% to EUR 1,203.36. Based on the new gross amount, the net minimum wage in the case of a single person without children is EUR 878.48.

On the basis of the increase in the minimum wage, the minimum gross hourly wage for pupils, students and pensioners was adjusted accordingly, rising from EUR 6.17 to EUR 6.92 on 20 January 2023, as published in The Official Gazette of the Republic of Slovenia (No 7/2023).

Draft to the Cross-border Service Act   

Ministry of Labour, Family, Social Affairs and Equal Opportunities prepared a draft to the Cross-border Service Act, which was approved by the Government at the correspondence meeting on the 27^th of December 2022. Goal of the draft is to comprehensively address the situation of posted workers when providing cross-border services, in particular in the area of labour law and adequate social security. The proposal transposes the new Directive (EU) 2020/1057 for posting drivers in the road transport sector, which is part of EU Mobility Package, and includes:

• Exemption from the general posting rules applicable to cabotage (transport of passenger or goods by a foreign carrier between places in Slovenian territory) and international transport, with the exception of transit and bilateral transport services,
• penalties in the event of breach of the obligations of carriers and posted drivers.

Draft also includes removal provision from The Act would Pension and Disability Insurance Act, under which posted workers currently pay contributions on a lower tax base, would be removed. Currently, for workers posted to other EU member states, employers can use the salary that the worker would receive in Slovenia for the same work as the basis for social security contributions, rather than the actual salary. This means less contributions for the fiscal budget and lower pension for workers.

The proposal is planned to come into force in 2024. In the meantime, an option for subsidizing affected companies is being considered.

New REK-O form implemented for payments from 1 January 2023

As of 1 January 2023, the new REK-O came into force and is replacing previous forms. In addition to the legal basis, additional documents detailing the procedures for submission, content and instructions for formatting and reporting of the REK-O form have been published on the Slovenian Tax Authority website. 

Changes to labour and social security records

On 12 January 2023, an amendment to the law on labour and social security records was approved. In order to curb breaches of working time provisions, the amendment makes the introduction of electronic working time records compulsory for companies fined for breaches of labour law. There will be no change for other enterprises. The number of hours worked, which was the only information required until now, is extended by the new amendment to include the recording of arrivals and departures of workers, the extent of lunch breaks, hours worked in special conditions, etc. Also, amendment new are the employer's obligations to send written notifications for workers and, in case of infringement, updated fines and sanctions.

III. VALUE ADDED TAX

VAT rate for rapid antigen tests

As of 1^st of January 2023, the Intervention Measures Act, which was adopted to mitigate the effects of the second wave of the epidemic and which classified supplies of rapid antigen tests as exempt, expired. As a result of the expiry, the Slovenian Tax Authority issued a clarification stating that rapid antigen tests are classified as diagnostic reagents under CN code 3822 19 00 and are therefore taxed at the lower VAT rate of 9.5 % as from 1 January 2023. 

IV. INTRASTAT REPORTING

Changes to the Intrastat reporting threshold amount in 2023

As of 2023, the threshold for starting Intrastat reporting has changed. The table below shows the amounts representing the threshold for Intrastat reporting in 2022 and 2023.

Notwithstanding the increase in the amount in 2023 as compared to 2022, the reporting obligation continues until receipt of the notification of cessation of reporting.

V. TAX PROCEDURE

DAC7

The Law on Amendments and Additions to the Tax Procedure Act, published in the Official Gazette No 163/2022 on 27.12.2022, stipulates that from 1.1.2023 onwards, the operators of digital platforms shall report to the Tax Authority information regarding the business activity of sellers operating on these platforms. They are obliged to report for the rental of real estate, personal services, the sale of goods and the rental of various modes of transport.

The new obligation is thus to provide taxable persons with tax information such as full name, registration and tax number and income from digital platforms. The first information on reporting operators, for periods from 1 January 2023 onwards, must be reported to the Slovenian Tax Authority by 31 January 2024.

Reporting is mandatory for operators in the EU and from third countries, with exceptions only for smaller operators from the latter who have lower-risk transactions. The EU-wide tax reporting rules are in line with the DAC7 Directive and the OECD model.

Advance payments on the corporate income tax and business activity

Among other things, the provisions of Article 298(4) and Article 371(3) are amended to extend the time limit for the payment of business activity tax and corporation tax advances. This is now the 20th day of the month for the previous month or quarter (previously the 10th day of the month).

Claiming actual costs of rental income

When claiming the actual costs of rental income, the taxable person was previously required to submit a written claim by 15 January of the current year in respect of the previous year, whereas under Tax Procedure Act, the written claim is submitted by 28 February of the current year in respect of the previous year.

Serving documents eTaxes

Also new are the provisions stating that taxpayers no longer need a qualified digital certificate when collecting documents on the eTax portal and that, where the taxpayer is obliged to self-declare income from employment, the income tax return is no longer limited to one tax year. Changes also include a rule on the order of payment of real estate turnover tax, inheritance and gift tax or motor vehicle tax, changes to the issuance of a decision in the case of a guarantee and the possibility to pay tax obligations with a single payment order.

V. EXCISE DUTIES ACT

Amendments to the Excise Duties Act

With the amendments to the Excise Duty Act1, the country aims to mitigate the effects of high energy prices. Eligible persons will be farmers who were registered as agricultural holders, forestry land users or persons in the apiary register by 30 June. For identification purposes, an 11-digit identification number will be issued by the Tax Authority, allowing the purchase of specially marked fuel from the 1^st of January 2023. As from the new year, the reduced excise duty is immediately applicable when purchasing fuel and, as the refund claims were being abolished. 

VI. OTHER AMENDMENTS AFTER 1 Jan 2023

Prescribed default interest rate

The statutory default interest rate applicable for the six-month period starting on 1.1.2023 is 10.5% (8% before).

Translation of Slovenian Accounting Standards and Rules into English

On 29 December 2022, the Slovenian Institute of Auditors published an English translation of the Slovenian Accounting Standards and Rules.

Supreme Court ruling: IPS workers vs. Luka Koper

In December 2022, the Supreme Court upheld the enforcement of the employment relationship following appeals by external workers of the Port of Koper. The workers, employed by "port service providers" (IPS) were in fact performing work for the Port of Koper (under their supervision, involved in the work process on their premises and using their equipment). The work was carried out in this way over a long period of time, during which the workers worked continuously, in longer shifts, while receiving minimum wages.

The Supreme Court found the way of working unlawful, as IPS did not fulfil the conditions for the secondment of workers under the Labour Relations Act (LRA) and the Labour Market Regulation Act (LMRA). Given that the work of a seconded worker, under the LMRA and LRA, is of a temporary nature only, the workers would have been entitled to the same wages and conditions as the workers of Port of Koper.

The Court ruled that there was a disguised employment relationship. In the light of the above, the Court ruled that, for the duration of their contract with IPS, Luka Koper should reimburse the workers the difference between the remuneration amount, that is in accordance with the law, and the remuneration which they actually received.

Pension base for men and women will be equal in 2023

In 2023, the retirement conditions are being changed to equalize the vesting percentages for calculating the pension base for men and women.

Last year's pension amendment shortened the transition period for men in the gradual equalization of the vesting scale with women, so that from 1 January 2023 they will be subject to the same vesting percentage as women. For 40 years of pensionable service, the rate is 63.5%, for 15 years 29.5%, for each year 1.36% and for half a year 0.68%.

It will also be possible to take early retirement at the age of 60 with a pensionable period of 40 years. It differs from the old-age pension, which requires 40 years of pensionable service without any top-up, in that it also includes the years that the insured persons have built up.

Introduction of SINCTS5

From 1 February 2023 on, Slovenian Tax Authority is introducing the new SINCTS5 system, which is bringing the NCTS system into line with the new requirements of the EU Customs Code and the Common Transit Convention. The transit declaration has to be lodged before the goods are presented and the changes include a reduction of the data set. In addition to the above, SINCTS5 introduces the registration of "en-route" events, the electronic exchange of messages with the automated export system and a new data set.

*****

Want to stay updated via email?

Subscribe to our free Tax News newsletter.

Subscribe here