Tax Alert July 2021 #2

SLOVENIAN PARLIAMENT ADDOPTED ACT ON INTERVENTION MEASRUES TO ASIST THE ECONOMIY AND TOURISM SECTOR

On 7 July 2021 the Slovenian Parliament confirmed the New Act on intervention measures to assist the economy and tourism sector (“Act”).

The Act enters into force as of 14 July 2021 after being published the National Gazette of Republic Slovenia.

The main provisions in the field of labor law and taxation can be found below.

Identity Card Act

An identity card whose validity expired on 29 March 2020 may be used by a citizen of the Republic of Slovenia until 31 December 2021 as a public document for proving identity and citizenship, provided that he has not changed his personal name, permanent residence or other personal data during that time, which is entered on the identity card.

Subsidizing of part-time work

Employers entitled to reimbursement of part-time pay are:

• a legal or natural person who was entered in the Business Register of Slovenia before 31 December 2020 and employs workers on the basis of a full-time employment contract or a natural person who performs agricultural activity and was no later than on 31 December 2020 entered in the Register of Agricultural Holdings, and
• according to the person’s estimate, at least 10% of employees cannot work for at least 90% of work per month and
• he is restricted or prevented from performing economic activity by a government regulation.

Entitlement to subsidy is limited for the period from 1 July 2021 to 30 September 2021. However, the Government may, by decision, once extend the period for a maximum of three months, but not longer than until 31 December 2021.

The employer exercises the right to a partial reimbursement of salary compensation by submitting an application in electronic form to the Employment Service of Slovenia within fifteen days of the ordered part-time work.

The amount of partial reimbursement of salary compensation is 80 percent of salary compensation and is limited by half of the average monthly salary in the Republic of Slovenia for 2020. The 80 percent of salary compensation covered by the Republic of Slovenia includes salary compensation with all taxes and employer contributions (gross II).

Financing holiday allowance for tourism

Beneficiary of aid to finance holiday allowance for 2021 is a legal or natural person who:

• was registered for carrying out an activity or ancillary activity on a farm by 31 May 2021 at the latest,
• on the day of entry into force of the Act, it performs as its main activity according to the Standard Classification of Activities of the Decree on Standard Classification of Activities (Official Gazette of the Republic of Slovenia, no. 69/07 and 17/08) perform or performs it to a significantly reduced extent,
• has at least one employee who, on the day of entry into force of this Act, was included into compulsory pension and disability insurance based on Article 14 of the Pension and Disability Insurance Act,
• as of 31 December 2019, the company is in difficulty in accordance with the regulations.

Due to the COVID-19 epidemic, the beneficiary is considered unable to carry out the activity or perform the activity to a significantly reduced extent if the beneficiary's revenues in 2021 drop by more than 20 percent compared to 2019 or 2020 respectively due to the consequences of the COVID-19 epidemic. For year 2019, the data from the financial statements submitted by 31 May 2020 are taken into account. For 2021, the beneficiary estimates the sales revenues. If the person did not conduct business in the entire year 2019, 2020 or 2021, the beneficiary whose average monthly income in 2021 will decrease by more than 20 percent compared to the average monthly income in 2019, 2020 or 2021 is also entitled to subsidy. If he has not been active in 2019 and 2020, the beneficiary whose average monthly income in 2021 will decrease by more than 20 percent compared to the average monthly income in 2021 until 31 May 2021 is also entitled to assistance.

If the above conditions are not met, the beneficiary will have to repay all the aid from the financing of the holiday allowance.

The amount of aid to finance holiday allowance is limited to EUR 1,024 per employee. The amount of assistance is determined in the proportional part of the amount if the employee is entitled to holiday allowance in the proportional part.

Value Added Tax

The Act provides for a temporary VAT exemption with the right to deduct input VAT on supplies of protective and medical equipment, including intra-EU acquisitions of goods, intended for free distribution to those affected by the epidemic, exposed to or dealing with it, for use by healthcare professionals in relation to the healthcare of those affected by the epidemic. Such supplies are usually made by state bodies or organizations, local community bodies or other bodies governed by public law. The exemption, which applies to the equipment from the list of the Government of the Republic of Slovenia, is temporarily valid in the period from 1 May 2021 to 31 December 2021, whereby the following conditions have to be cumulatively met:

a) the goods are intended for:

• free distribution to persons affected by the epidemic, exposed to or coping with the outbreak, by the authorities and organizations referred to in point (b), or
• free use for persons affected by, dealing with or dealing with the outbreak, provided that the goods remain the property of the authorities and organizations referred to in point (b);

b) the goods are supplied to a state body or organization, a local authority, another body governed by public law or another organization which is considered a charitable organization or the goods are supplied on behalf of those bodies or organizations or the goods are obtained from another EU Member State person on behalf of these bodies and organizations.

The Act stipulates the obligation to account for VAT and the taxpayer if the above conditions are not met (e.g. goods are used for other purposes or are disposed of).

If the supplier claims the exemption, he is obliged to submit a special report. Further, on the invoice he must refer to the article of this Act, which determines the exemption from VAT and dispose with a statement from the buyer that the goods are intended to be used as set out in point (a) above.