Tax News, September 2022

In the September issue of the tax news, we would like to inform you about the lower VAT rates of certain supplies of energy products and about the changed amount of tax-free meal allowance. We also summarized the obligation to charge VAT in case of supply of goods with installation in Slovenia.

Reduction of the VAT rate for energy products

On 23 August 2022, the National Assembly of the Republic of Slovenia adopted the Act on urgent measures in the field of VAT to mitigate the rise in energy product prices (“ZNUDDVE”), on the basis of which the VAT rate for certain energy products is reduced from 22% to 9.5%.

It is a temporary measure that applies from 01 September 2022 to 31 May 2023 inclusive, and in the case of price regulation of one or more of the energy products listed below, the Government may extend it, but until 31 May 2024 at most.

A lower VAT rate applies to the following supplies from September 1, 2022:

• Electricity from tariff code 2716 00 00
• Natural gas from tariff codes 2711 11 00, 2711 21 00 and 2711 29 00
• District heating, included in the code of the standard classification of activities D/35.30
• Firewood from tariff code 4401

The law has been published in the Official Gazette No. 114/2022 of August 31, 2022, and entered into force the following day, i.e., September 1, 2022.

Amendments to Decree on the tax treatment of reimbursement of costs and other income from employment (»Decree«) 

On August 30, 2022, the Government adopted changes regarding the tax free meal allowance:

• The non-taxable amount for reimbursement of meal costs is increased from the current amount of EUR 6.12 to EUR 7.96.
• The non-taxable amount of reimbursement for meals is also raised if the employee is present at work for ten hours or more. The amount increases from the current EUR 0.76 to EUR 0.99 for each additional hour of presence at work after eight hours of presence at work.

The changes apply already for the September salary calculation.

We would also like to note that at the end of June, the Government already approved a change in the amount of tax-free amount of reimbursement for transportation to and from work to the amount up to EUR 0.21 for each full kilometre between habitual residence and place of work for each day of presence at the workplace, if the place of work is at least one kilometre away from habitual residence of the employee.

The change also referred to the tax free reimbursement of transportation costs on business trip, where the amount was increased to EUR 0.43 for each kilometre travelled.

Obligation to charge VAT in case of supply of goods with installation in Slovenia

In the recent months, we have noticed increased issues in regard to correct VAT treatment in cases where the taxable person orders goods, for which the right to dispose as owner is transferred only after the goods are installed or assembled by the foreign supplier or by its subcontractor.

Since the equipment usually represents the majority of the contractual value, and the installations and assembly portray merely the smaller portion, in some cases foreign suppliers report these transactions in their EU Member States as intra-EU supply. In order to ensure that VAT reporting is harmonized, Slovenian entities then report these transaction as intra-EU acquisition of goods. However, such reporting is incorrect and is not in line with VAT legislation.

Namely, Art. 20 of the Slovenian Value Added Act (“VAT Act”) stipulates that the place of supply, when goods are dispatched or transported by the supplier, or by the customer, or by a third person, are installed or assembled by the supplier or another person on his behalf, with or without a trial run, is considered the place where the goods are installed or assembled. Thus, transaction is regarded as a local supply, and not intra-EU supply.

Why is it important for recipients to correctly determine transaction, when in case when a foreign supplier is not identified for VAT purposes, recipient self-charges VAT, as in case of intra-EU acquisitions?

If we leave the differences in VAT reporting aside, a very important difference represents the moment when obligation to charge VAT arises. With local supplies, the obligation to charge VAT arises also in case of prepayments, whereas in case of intra-EU supplies of goods advance payment does not create a tax point.

Due to the high contractual values the payments can be made before the supply is performed, therefore it is very important that the recipients ask themselves whether the payment to the foreign non-VAT registered supplier creates a tax point. Namely, despite of VAT neutrality, taxpayer can face late interest payment due to late self-charge of VAT.

Furthermore, even in the case where the goods are not installed or assembled by the supplier or third party on  his behalf, however the  goods arrive in Slovenia and the recipient does not acquire the goods upon their arrival in Slovenia but later on, they should ask themselves whether the subsequent purchase on their side can still be regarded as intra-EU acquisition (i.e.,  can the transport be attributed to the acquisition on their part or whether the storage of the goods “broke” the link between the transport and transfer of right to dispose with goods to recipient) or whether this is local purchase (transport from one Member State to Slovenia is assigned to the movement of supplier’s own goods). In this case correct determination also affects the proper conduct of the recipient in terms of obligation to (self)charge VAT.

In case the supplier is identified for VAT purposes in Slovenia, it will be primarily responsible for correct and timely charging of VAT.