Tax Alert, August 2023

Intervention measures after flooding

We have summed up key novelties and changes in legislation, which mainly relate to the assistance and benefits available to companies in eliminating or mitigating the consequences of the floods that have affected Slovenia in early August.

1. Ordinance on the temporary measures for the preventing the effects of floods that affected the Republic of Slovenia in august 2023 in administrative matters

On 5 August 2023, the Government of the Republic of Slovenia adopted the Ordinance on the temporary measures for the preventing the effects of the floods that affected the Republic of Slovenia in august 2023 in administrative matters, which entered into force on 6 August 2023 and will be valid for one month.

With the ordinance, the Government established temporary measures to secure the position of parties in administrative matters and decision-making by authorities in administrative matters due to the consequences of the floods. Among other things, during the validity of the decree, applications can be submitted electronically without a secure electronic signature with a qualified certificate. Likewise, the deadlines for the enforcement of procedural rights and the fulfillment of procedural obligations, except in urgent matters, do not run for seven days from the entry into force of this decree (up to and including 12 August 2023), and the authority may, at the request of the party, extend the deadline for the fulfillment of obligations by means of a decision, if the party cannot fulfill them on time due to a valid reason related to the floods.

2. Act on Amendments to the Natural Disaster Recovery Act

On 9 August 2023, the National Assembly adopted an amendment to Natural Disaster Recovery Act, the fundamental goal of which is to ensure the possibility of quick and effective elimination of the consequences of natural disasters.

The key changes stipulated by the law are:

• Inability to work due to force majeure: Employees, who are unable to work during floods due to force majeure are eligible for salary compensation in the amount of 80 percent of the salary received for the last three months of work (not lower than the minimum wage) as long the force majeure circumstances justifying the absence last (the measure is valid until 31 December 2023). Funds are reimbursed to employers by the state based on employer's application to the Employment Agency of the Republic of Slovenia.
• Employees on furlough (i.e., waiting for work): There is a possibility for implementing furlough for employees whose employers (certain exemptions exist) cannot guarantee work due to the consequences of floods. This measure can be used until 31 October 2023, with the possibility for extension by a government resolution. Employees on furlough due to consequences of floods are eligible for salary compensation in the amount of 80 percent of the salary received for the last three months of work (not lower than the minimum wage). Funds are partially reimbursed to employers (up to 80% of the average salary in the Republic of Slovenia in the month of May, which includes taxes and contributions, i.e., gross 2) based on employer's application to the Employment Agency of the Republic of Slovenia.
• Assistance for self-employed: Assistance for the self-employed for the months from August to December, who are unable to carry out their activity due to the consequences of the floods or who are carrying it out to a significantly reduced extent, in the amount of EUR 1,200 per month, which will be exempt from all taxes and contributions;
• Tax relief for donations: Additional relief for donations or reduction of the tax base for the entire donated amount for companies and self-employed persons (in addition to the existing tax relief for donations under the Corporate Income Tax Act (CITA-2) or Personal Income Tax Act (PITA-2)) who will, for the purpose of rehabilitating flood damage, donate until 31 December 2023 to a special account opened by the state (up to the amount of the tax base);
• Paid leave for volunteers: Paid leave for volunteers who participate in the rehabilitation of the consequences of floods, up to 7 working days, which will be fully reimbursed by the state to employers;
• Non-working day: 14 August 2023 is defined as solidarity day and a non-working day. Nevertheless, based on an order of the commander of Civil protection adopted on 11 August 2023, all critical infrastructure stipulated by the law will be operational on Monday – solidarity day i.e., energy sector, transport sector, food sector, drinking water supply sector, finance sector, healthcare sector, environmental protection sector and information and communication networks and systems sector. In addition to the above, the order includes also employees in public health institutions and concessionaires, employees in social work centers, employees in the veterinary field and in insurance companies. 

The employer asserts the right to the reimbursements mentioned above, i.e. wage compensation due to force majeure and wage compensation in the case of furlough, with an application submitted electronically to the Employment Agency of the Republic of Slovenia within 15 days of the start of the employee's absence due to force majeure, or within 15 days of the employee being sent to temporarily wait for work. In the event that the employer asserts the right to reimbursement of wage compensation due to force majeure for the time before the amendment of the law came into force, the application must be submitted within 15 days of the law coming into force, i.e., no later than 26 August 2023.

3. General approach in making aid transfers to those affected by floods

When transferring or receiving financial aid or aid in goods or services, it is necessary to pay special attention to the tax treatment of such transactions. Namely, different types of transactions involving legal or natural persons, entrepreneurs, NGOs, and state authorities or municipalities may be subject to different tax rules, which may result in different tax implications, depending on the conditions under which each transaction is executed.

Due to the wide range of tax rules that can affect an individual transaction and to avoid adverse consequences, we recommend you consult with experts before carrying out the planned transaction.