Tax News, December 2023

In December edition of tax news, we inform you about the planned changes in tax legislation based on the adopted Act on the Reconstruction, Development and Provision of Financial Funds, about the acceptance of Minimum Tax Act, about the recent developments linked to CBAM and about the planned Slovenian Accounting Standards 2024.

ACT ON THE RECONSTRUCTION, DEVELOPMENT AND PROVISION OF FINANCIAL RESOURCES

In this issue of tax news, we inform you about the changes in tax legislation imposed by the Act on the Reconstruction, Development and Provision of Financial Funds, adopted by National Assembly on 13 December 2023. The following summary of the amendments was prepared on the basis of the proposal of the Act, as the final text of the adopted law has not yet been published in the Official Gazette of the Republic of Slovenia.

1.      Increase of the corporate income tax rate: The act introduces a temporary increase in the corporate income tax rate to 22%. The new regime will enter into force on 1 January 2024 and expire on 31 December 2028.

2.      Balance sheet tax for banks and savings banks: Balance sheet tax for banks and savings banks is introduced for the same period, which will amount to 0.2% and will be an income of the dedicated budget fund, set up by the Act. Similarly, the net balance sheet profit of the Slovenian Sovereign Holding will also become revenue of the dedicated budget fund over a period of five financial years following the year of entry into force of the law.

3.      Taxation of interest of natural persons: The act also amends the Personal Income Tax Act (ZDoh-2), namely the field of taxation of investments of natural persons into securities issued by the Republic of Slovenia and issued in 2024, 2025 or 2026. In the exemption provision in Article 133 of ZDoh-2, the sum of tax bases on interest on such securities, as well as from interest on cash deposits in banks and savings banks, is reduced by EUR 1000. Personal income tax on interest on cash deposits and on securities issued in 2024, 2025 or 2026 will be calculated and paid on annual basis.

The Act also regulates certain other areas not related to taxation.

ACCEPTANCE OF THE MINIMUM TAX LAW

The National Assembly of the Republic of Slovenia approved the Minimum Tax Law (“MTL”), which introduces new taxation for large domestic groups and international groups of companies established in the Republic of Slovenia. The minimal effective taxation rate of 15% will apply to multinational groups of companies with revenues exceeding EUR 750 million for financial years starting from 31 December 2023 onwards. We already discussed about MTL in June and November issues of Tax News when the Proposal of the Act was prepared and was sent into consideration to the Government of the Republic of Slovenia on 30 October 2023.

At an urgent meeting, held on 11 December 2023, the Committee on Finance considered the amended Proposal of the Act, EPA 1190-IX, submitted by the Government to the National Assembly for consideration and adoption. The Committee adopted the amended Proposal of the Act incorporating the slightly modified or newly submitted amendments to Articles 3, 48, 65, 66, 70, 73 and 76.

According to Articles 65 and 66 of the ZMD, an entity in composition, located in Slovenia must submit an informative form for the calculation of top-up tax to the competent tax authority within 15 months after the end of the reporting financial year (unless such form has already been submitted by the ultimate parent entity or another designated filing entity). Within 30 days after the expiry of the deadline for submitting the informative form, the entity in the composition must also submit a return of top-up tax. The tax must be paid within 30 days from the submission of the tax return.

The MTL will enter into force on the day following its publication in the Official Gazette of the Republic of Slovenia (not published yet) and will apply to financial years beginning on 31 December 2023 and later (with the exception of the provisions of Articles 15 and 16, which will apply to financial years beginning on 31 December 2024).

First CBAM report due 31 January 2024

As reported in previous editions of Tax News, 1 October 2023 marked the start of transitional period for Carbon Border Adjustment Mechanism (»CBAM«). During the transitional period, between 1 October 2023 and 31 December 2025, importers of covered goods (steel and iron (incl. some downstream products), aluminium, cement, fertilisers, electricity and hydrogen) will need to submit quarterly reports and obtain CBAM import authorization. In this edition of Tax News, we are answering some common questions on CBAM, arising in the run up to first reporting deadline.

Who is responsible for CBAM reporting?

If a company imports good subject to CBAM regulation, reporting declarant (i.e. either company itself or its indirect customs representative) are responsible for submission of CBAM reports and correctness of reported data.

When do I need to submit the first CBAM report?

The first quarterly CBAM report is due by 31 January 2024 and will cover the period 1 October to 31 December 2023.

What information do I need to disclose the report?

In addition to information on importer, customs representative, customs procedure applied etc., the following information shall be reported:

• The total quantity of each type of CBAM goods
• The actual total embedded emissions
• The total indirect emissions
• The carbon price due in a country of origin for the embedded emissions in the imported goods (including its relevant precursors where applicable), taking into account any rebate or other form of compensation available

Our company only imports CBAM covered goods occasionally and in low values. Do I still need to submit CAM report?

Certain small quantities of imported CBAM covered goods may be exempt from CBAM Regulation. Namely, de minimis exemption applies to any consignment of covered goods not exceeding EUR 150.

My supplier is not aware of the CBAM Regulation and is not providing me with information of embedded emissions. What should I do?

Good cooperation with suppliers and timely preparation for CBAM reporting is crucial. Ultimately, reporting declarant is responsible for CBAM reporting and may suffer penalties in case of non-compliance. However, understanding that gathering data on embedded emissions from suppliers may be challenging in the beginning, for imports until 31 July 2024, the Regulation allows for use of so-called default values published by the EU Commission.

What are possible consequences if we do not submit CBAM report (timely) or report incorrect / incomplete data?

Reporting on emissions embedded in CBAM covered goods is mandatory as of 1 October 2023. Non-compliance with CBAM Regulation, i.e. non-reporting (incl. late reporting) and reporting of incorrect or incomplete data, may be subject to penalties between EUR 10 and EUR 50 per ton of embedded emissions in imported goods.

SLOVENIAN ACCOUNTING STANDARDS 2024 

On 15 November 2023, the Experts Council of the Slovenian Institute of Auditors adopted the new Slovenian Accounting Standards (SAS 2024), on the proposal of the SAS Commission, and sent them to the Ministry of Finance and the Ministry of Economy, Tourism and Sport for their consent.

The SAS Commission decided to amend the standards to make them easier to read and understand and in certain places, to make them more consistent with the International Financial Reporting Standards (IFRS), as the Companies Act (ZGD-1) does not allow Slovenian standards to contradict IFRS.

In drafting the new standards, the SAS Commission considered that Slovenian standards are mainly aimed at smaller organizations and therefore they included more simplifications in disclosures, as well as they added guidance and explanatory notes to facilitate the understanding and application of the standards.

Of all the changes, the most impactful is the new SAS 3 - Financial Investments, which has been completely rewritten due to major changes. The new standard changes the measurement and classification of other investments, the measurement of finance leases with lessors and certain wording changes to the way investments are recognized and derecognized. The new SAS 3 also includes a provision for the measurement of investments in precious metals, cryptocurrencies and other similar value-preserving assets. These specific types of investments can only be measured using the cost model or fair value through profit or loss after initial recognition. Once a valuation method has been selected, an entity should not change its accounting policy for these investments.