In this article, we highlight the most relevant changes to Slovenia’s tax laws, from the perspective of corporate income tax, VAT, personal income tax and tax procedure that enter into force on 1 January 2025.
1. Changes in the Corporate Income Tax Act
Carry forward of tax losses
The ability to carry forward tax losses is no longer unlimited. The amendment introduces a time limitation on the possibility of utilising tax losses to 5 tax periods, with a transitional period of 5 tax periods for claiming unused losses from tax periods that began before the adopted act’s application.
Tax relief for investments in digital and green transition
Companies and entrepreneurs will be able to claim the digital and green transition allowance in five tax periods following the investment period, instead of only in the current year. The new rule will apply to investments made after 1 January 2025.
Limitation rule on deductibility of interest
The thin capitalisation rule, which defines interest on excess loans exceeding a capital-to-debt ratio of 1:4 as non-tax deductible, is abolished. For tax purposes, interest expenses are limited to 30% of EBITDA or to an absolute threshold for recognising excess borrowing costs, which the amendment increases to EUR 3 million.
2. Changes in the Tax Procedure Act
Expanding the obligations of the employer as the payer of tax
The amendment also defines the employer of the recipient of employment income as the taxpayer under the law governing employment relationships, even if the employer is not charged with the employment income, provided that the person charged with the income is not a taxpayer and the income tax is calculated by means of withholding tax in accordance with the law governing tax procedure or the law o
It is provided that a non-resident of the Republic of Slovenia who, in accordance with the law on taxation, has a non-resident establishment in the Republic of Slovenia or, in accordance with the regulations governing the establishment and operation of a business in the Republic of Slovenia, has a branch in the Republic of Slovenia, shall also be deemed to be an employer under the same conditions under this point.
Meaning, the amendment of the law determines that entities that formally employ an employee will have to report to the tax authority all earnings that the worker would receive in the context of employment (also, for example, income from a foreign company), in the tax withholding calculation.
Automatic data provision in cases of innovative start-up companies
Employers of innovative start-up companies will have to submit to the tax authority, on an annual basis, the data necessary for the collection of tax from the income of employees who have received options to purchase shares or interests or income in the form of shares or interests.
Provisions on the limitation period
The provisions on the limitation period are amended. In the case of tax assessment on the basis of a return, the limitation period begins with respect to the day on which the tax should have been declared. The limitation period of the right to a refund of VAT surplus is set at five years from the submission of the VAT return in which the VAT surplus was established.
Issue binding information
A shorter time limit is set for the tax authority to issue binding information, i.e. within three months of receipt of a complete application.
Deadline for submitting comments on the minutes
The deadline for submitting comments on the minutes of the tax authorities issued after the tax audit procedure is completed is extended to 30 days from the date of service of the minutes of the tax audit.
3. Changes in the Value Added Tax Act
Reporting and accounting
The obligation to keep records in the taxable persons accounting on the charged VAT and the record of deducted VAT is introduced and the obligation to report the information from both records to the tax authority.
The carry-forward of VAT surplus to the next tax periods and the possibility to claim a refund of VAT surplus will be limited to a period of 5 years from the date of submission of the VAT return.
Special scheme for small businesses
The amendment implements provisions of the 2020/285/EU Directive regarding special arrangements for small taxable persons. It increases the annual turnover threshold for small taxable persons for compulsory VAT identification in Slovenia from EUR 50,000 to EUR 60,000. It applies to small businesses in the EU territory.
According to the amendment, the right to exemption from VAT is enforced on cross-border supplies of goods and services in another EU member state, which in its national VAT regulations allows exemption for small businesses. Eligibility for the exemption is provided if the turnover does not exceed the amount determined by that Member State, with the absolute threshold set at EUR 100,000.
Adjustment of taxation on sugary drinks
Instead of a lower VAT rate of 9.5%, sugary drinks will be subject to the standard VAT rate of 22%.
VAT Grouping
Introduction of VAT groups of related members seated in Slovenia or having headquarters and fixed establishment in Slovenia, meaning that several entities within the group could have one VAT number.
The scheme is expected to apply from 1 January 2026.
Issuance of invoices at vending machines
Exemption from invoice issuing obligation for all types of vending machines. Issuing the invoice will not be mandatory anymore, but data on sales will still have to be reported to the tax authority.
4. Changes in the Personal Income Tax Act
New allowance for new tax residents
The new allowance allows them to qualify for a 7% reduction in income tax on the salary they receive. The reduction is allowed for a maximum period of five consecutive tax years.
The conditions that must be met are:
- they are a tax resident of Slovenia
- prior to starting work in Slovenia, this person was not a tax resident of Slovenia and did not receive employment or business income from a source in Slovenia,
- not yet 40 years of age at the start of the work in Slovenia,
- the salary guaranteed in the employment contract is at least 2 times the last known average annual salary of employed persons in Slovenia
- is employed in Slovenia for at least 10 months in a tax year with an employer who is a tax resident of Slovenia or a non-resident (which has a non-resident business unit in Slovenia in accordance with the laws on taxation or has a branch in Slovenia), if the salary is considered a deductible item in the calculation of the employer’s tax base in Slovenia
Benefit in kind from equity plans
For income received from shares of a company, the general rule of grossing up income may be waived, if the beneficial treatment from paragraphs 6, 7 and 8 of Article 43 of the Personal Income Tax Act is not applied and if the employer properly notifies the Tax authorities through a payroll tax return.
The ownership structure of innovative start-up companies
For income of the employees of the start-up companies received from benefits in the form of shares of the company, the taxable point is changed to the moment of disposal of these shares or other events (e.g. termination of the employment contract, restructuring of the employer). For the purpose of determining the amount of this income, the principle of “averaging” will be considered.
Benefits for the private use of the company’s electric car
The benefit for private use of a company electric motor vehicle is set at 0.75% of the purchase value of the vehicle per month, with a transitional period of zero benefit until the end of 2029.
Benefit in the form of bikes or e-bikes and electric charging
The provision of electricity to the employee to charge the employee’s personal vehicle at the employer’s non-commercial charging stations and the use of employer-owned bicycles (whether electric or not) will no longer be considered an employee benefit.
Standardized sole proprietors
The highest allowed limit for participation in the system for full standardised sole proprietors is reduced from EUR 100,000 to EUR 60,000 of annual income if that taxable person was compulsorily insured on the basis of self-employment for full-time uninterrupted at least nine months. For afternoon sole proprietors, this limit is reduced from EUR 50,000 to EUR 30,000.
Standardised sole proprietors will be able to claim 80% standardised expenses for revenues up to EUR 60,000, while for afternoon sole proprietors, up to EUR 12,500 will be recognised at 80%, and from EUR 12,500 to EUR 30,000 at 40%.
The sole proprietor will be required to exit from standardised expenses scheme if, the average of the two consecutive years’ revenue of EUR 60 000 or EUR 30 000 is exceeded, depending on the condition of the taxable person’s inclusion in insurance. A transitional period until the end of 2026 applies to the implementation of the changes.
The carry-forward of tax losses in the future tax periods (which is unlimited under the current system) is limited to the next five tax periods.
An unused portion of the digital and green transition investment allowance can be carried forward to the next five tax periods.
The information in this document does not constitute legal advice on any particular matter and is provided for general informational purposes only.
By Igor Angelovski, Partner, and Marusa Pozvek, Tax Law Expert, Ketler & Partners, member of Karanovic & Partners