Tax News, January 2024

In January edition of Tax news, we inform you about the changes in tax legislation brought by Act on Intervention Measures in the Field of Health, Labour and Social Affairs and Health-Related Content, about changes to the tax base for social security contributions on income from other contractual relationships, about customs procedures 42, about BEPS 2.0 and Pillar Two implementation developments, about the adopted Act on reconstruction, development and the provision of financial resources and about the upcoming deadlines in 2024.

ACT ON INTERVENTION MEASURES IN THE FIELD OF HEALTH, LABOUR AND SOCIAL AFFAIRS AND HEALTH-RELATED CONTENT (ZIUZDS) ADOPTED BY NATIONAL ASSEMBLY

On 14 December 2023, the National Assembly of the Republic of Slovenia adopted an Act in the field of healthcare, which provides the legal basis for the introduction of a compulsory health levy to ensure the stability of the healthcare budget. The law establishes the procedure and legal basis for the exchange of data related to the contributions and includes the categories of insured persons.

The measures are also extending the period for receiving sickness benefits at the expense of the employer from 20 to 30 days. They also limit the maximum sickness reimbursement to 2.5 times the average gross monthly salary.

The ZIUZDS more precisely defines the basis for wage compensation during temporary absence from work in burden of the compulsory health insurance which is as of now the insured person’s average monthly wage and compensation paid in the calendar year preceding the year in which the temporary absence from work occurred or the average contribution base in the calendar year preceding the year in which the temporary absence from work occurred.

CHANGES TO THE TAX BASE FOR SOCIAL SECURITY CONTRIBUTIONS ON INCOME FROM OTHER CONTRACTUAL RELATIONSHIPS

For payments made from 1 February 2024 onwards, on the basis of the Act on Amendments and Additions to the Act on Pension and Disability Insurance ZPIZ-2N, the contribution base for any individual payment for work or services received on the basis of another legal relationship, which is considered income by law and is not exempt from personal income tax or is not considered other income under the law regulating personal income tax, will be reduced by the nominal cost of 10%. Accordingly, the base for calculation of social security contributions is lowered for mentioned costs.

NOTICE TO TAXABLE PERSONS PERFORMING CUSTOMS PROCEDURES 42

We would like to inform you that the Slovenian tax authorities (TA) have recently issued an official statement regarding reporting irregularities that they have identified among taxable persons performing customs procedures for the release of goods into free circulation which are subject to VAT exemption as part of tax-exempt supplies to other EU Member States (customs procedure 42, CP42).

Each supply of goods to another Member State must be tracked through the VIES system, hence the person importing the goods, which is listed as the importer in the data element PE 3/15 and 3/16 of the customs declaration and in PE 3/40 under code FR1, or whose tax representative is listed in PE 3/40 under code FR3, must, in addition to submitting a VAT return, also correctly submit ECSL report.

During regular VAT return and ECSL checks, the Slovenian TA have identified the following irregularities:

• taxable persons (or their tax representatives for CP42) who are importing goods under CP42 do not submit ECSL reports for the supply of goods to another EU Member State;
• there are significant discrepancies between the information included in customs declarations and information reported in the ECSL (by amounts and by recipients);
• information on supplies of goods previously released into free circulation under CP42 to another Member State is entered in column A3 rather than in column A4 in the ECSL (or in case of corrections, in column B3 instead of column B4).

Failure to submit and/or incomplete reporting of prescribed information in the ECSL is considered a serious tax offence, for which a fine is prescribed under the VAT Act (ZDDV-1) and is ranging from EUR 4,000 to EUR 125,000 for legal person and from EUR 1,000 to EUR 10,000 for the responsible person of a legal person.

Accordingly, the TA are encouraging all taxable persons or their CP42 tax representatives that perform CP42, to (1) review the correctness of their previous reporting and correct any errors (in ECSL, VAT or in the customs declaration) or in cases where they consider a discrepancy is justified provide explanations alongside submitted ECSL reports, and (2) consistently submit ECSL reports.

TA also draw attention to observed inconsistencies in the appointment of the tax representative for CP42. Namely, if a taxable person established in another EU Member State is identified for VAT purposes in Slovenia, they are not allowed to appoint a tax representative for CP42 (i.e. Power of Attorney 42) in Slovenia. Such a taxable person may, however, appoint a "general" tax representative in accordance with Article 4 of the Rules on the implementation of the VAT Act. If a taxable person mistakenly appointed a tax representative for CP42, TA urge them to revoke the authorization as soon as possible.

WEBCAST INVITATION – BEPS 2.0 AND PILLAR TWO IMPLEMENTATION DEVELOPMENTS

As we informed you in the December edition of Tax News, the National Assembly of the Republic of Slovenia adopted the Minimum Tax Act on 13 December 2023. Accordingly, the actual work of preparing for the new rules and calculating the top-up tax is moving into the technical part.

In line with the implementation deadline under the EU Directive, most EU countries, as well as some non-EU countries, have already implemented Pillar Two rules of the BEPS 2.0 measures, which introduce a new concept of taxation with a minimum tax of 15%. Despite this deadline, some EU countries have not been able to implement the rules within the deadline (Portugal, Poland, Croatia, the three Baltic States and Spain). An interactive and up-to-date overview of the status of implementation of the rules by country can be found here.

In this context, we invite you to a 90-minute EY webcast on Wednesday 31 January 2024 at 4pm CET for a discussion on the current state of implementation of the BEPS 2.0 Pillar Two rules. We will address the practical issues to consider in applying the rules and highlight what companies will need to focus on in particular in 2024 when the Pillar Two rules come into effect.

For more information and to register click here.

ACT ON RECONSTRUCTION, DEVELOPMENT AND THE PROVISION OF FINANCIAL RESOURCES ADOPTED

In the December edition of Tax News, we informed you about the upcoming changes to tax legislation imposed by the new Act on Reconstruction, Development and Provision of Financial Resources (hereinafter: “The Act”). The Act was also officially published in the Official Gazette on 22 December 2023.

The key points are summarized below:

1. Increase in the corporate tax rate: The Act introduces a temporary increase in the corporate tax rate to 22% for years from 2024 to 2028.
2. Balance sheet tax for banks and savings banks: A 0,2% balance sheet tax for banks and savings banks has been introduced for the same time period (until the end of 2028). The tax base is calculated as the average of the values of the balances on each last day of the month in the tax period.
3. Taxation of interest of natural persons: The Act supplements the Income Tax Act (ZDoh-2) in the part regulating the taxation of investors in securities whose issuer is the Republic of Slovenia and which will be issued in 2024, 2025 or 2026. According to the Act, the aggregate tax base on interest on such securities is reduced by EUR 1,000, while income tax is calculated and paid on an annual basis.

DO NOT MISS: UPCOMING DEADLINES

• 31 January 2024

In accordance with Article 337 of Tax Procedures Act, all income payors must prepare a Statement of income paid in the period from 1 January 2023 to 31 December 2023 and provide it to each income recipient until 31 January 2024.

Additionally, the deadline for reporting of certain type of control data for personal income tax expires on 31 January 2024. All payors of premiums for additional pension insurance for employees (“PDPZ”) must submit a file with control data via eTax portal. The data must refer to premiums paid in 2023 for the employer’s part of voluntary additional pension insurance for employees (VIRPN2.DAT).

Furthermore, the 2023 Rules on submitting data for personal income tax assessment introduced reporting on income payments that are not included or not included in the tax base up to a certain amount. Accordingly, payers are required to report payments of such income paid in year 2023 by 31 January 2024, which can be done by submitting a file via eTax portal (VIRDOH.DAT).

• 28 February 2024
  

In accordance with Tax Procedure Act (ZDavP-2) private individuals must submit a personal income tax return for interest, securities, dividends, and rental income, received in 2023, by 28 February 2024. This applies to both residents and non-residents of the Republic of Slovenia. The tax return can be submitted via eTax portal, in person or by post at any branch office of Slovenian Tax Authorities.