Tax News, March 2025

In March edition of tax news we would like to remind you to submit corporate income tax return and tax return for income from business activities and advance tax prepayments, we also inform you about the dispatch of the first batch of Informative personal income tax calculations for the year 2024, about the changes in the amount of mandatory health contribution and about the question regarding the taxation of income of sole proprietors and the application of article 74 of the Tax Procedure Act (ZDavP-2), which was addressed by the Supreme Court in a revision procedure.

SUBMISSION OF CORPORATE INCOME TAX RETURN and TAX RETURN FOR INCOME FROM BUSINESS ACTIVITIES AND ADVANCE TAX PREPAYMENTS

In March tax news, we would like to emphasize the deadlines for submitting the corporate income tax return (CITR) and the income tax return from business activities for the past year. Both returns are required to be submitted electronically through the eDavki system.

CORPORATE INCOME TAX RETURN (CITR)

According to the second paragraph of Article 358 of the Tax Procedure Act, the taxpayer is required to submit the tax return for corporate income tax for the tax period that corresponds to the calendar year, no later than three months after the end of the calendar year.

Therefore, the CITR for the year 2024 must be submitted by Monday, 31 March, 2025, at the latest.

TAX RETURN FOR INCOME FROM BUSINESS ACTIVITIES AND ADVANCE TAX PREPAYMENTS

Self-employed individuals engaged in business activities must also submit the advance tax prepayments return and the tax return for income from business activities for the year 2024 by Monday, 31 March, 2025, at the latest.

A taxpayer who wishes to notify the Tax Authorities of Slovenia in the tax return for income from business activities for the year 2024 about the cessation of determining the tax base based on standardized expenses is required, starting from 1 January 2025, to maintain appropriate business records, as stipulated in the fifth paragraph of Article 308 of the Tax Procedure Act (ZDavP-2).

DISPATCH OF THE FIRST BATCH OF INFORMATIVE PERSONAL INCOME TAX CALCULATIONS FOR THE YEAR 2024

The Tax Authorities of the Republic of Slovenia will dispatch the first batch of Informative personal income tax calculations for the year 2024 on 31 March 2025.

The Informative personal income tax calculation is prepared based on the data available to the Tax Authorities from their official records and information about income received and dependent family members claimed, which have been provided to the Tax Authorities by income payers and taxpayers throughout the year.

The taxpayer must precisely review the Informative personal income tax calculation. If they disagree with the calculation or find that the data provided is incorrect or incomplete, they must submit an objection against the Informative personal income tax calculation to the Tax Authorities office that issued the calculation no later than 30 days (the 15th day from the receipt of the informative calculation, which is considered as received/delivered 15 days from the day of dispatch) from the date of dispatch of the Informative personal income tax calculation. If the taxpayer agrees with the data presented in the calculation and finds that it is properly prepared, they do not need to take any action. In such case, after the deadline for submitting objections has passed, the Informative personal income tax calculation is considered as the final decision on the assessment of personal income tax for the tax year.

The second batch of Informative personal income tax calculations is expected to be dispatched at the end of May 2025.

CHANGES IN THE AMOUNT OF MANDATORY HEALTH CONTRIBUTION FROM 1 MARCH 2025

The amount of mandatory health contribution is adjusted once a year, specifically on  1 March, in line with the growth of the average gross salary in the Republic of Slovenia in the previous year, according to the data from the Statistical Office of the Republic of Slovenia.

The amount of the mandatory health insurance contribution is determined by the Minister responsible for health, no later than February, and its amount is published in the Official Gazette of the Republic of Slovenia. In the Gazette No. 12/2025, dated 26 February 2025, the new amount of the mandatory health insurance contribution is published, which will be 37.17 EUR, starting from March 1, 2025.

The mandatory health insurance contribution of 37.17 EUR will be first calculated in the payroll for March 2025. 

SUPREME COURT ON TAXATION OF INCOME OF SOLE PROPRIETORS AND THE APPLICATION OF ARTICLE 74 OF THE TAX PROCEDURE ACT (ZDAVP-2)

In a revision procedure, the Supreme Court addressed the taxation of a sole proprietor who, as a self-employed individual, performed work for a limited liability company where he was also the director. The judgement no. X Ips 11/2024 addresses the distinction between employment income and business income, setting conditions under which tax authorities can reclassify income.

The Supreme Court ruled that Tax Authority may only reclassify income if they first determine that there is unlawful tax avoidance or other abuse, under Article 74 of Tax Procedure Act (ZDavP-2). In this context, the assessment must be based on the finding that the taxable person, together with other persons, has established legal relationships without a genuine business purpose, namely with the aim of creating special circumstances that lead to different taxation than what would normally occur in the usual conclusion or execution of legal transactions between reasonable entities. In this regard, the mere fact that a sole proprietor performs work for his own company is not sufficient for different taxation.

The court further stated that even in cases where unlawful tax avoidance is determined, the Tax Authority cannot determine the existence of an employment relationship as a preliminary question. Therefore, the Tax Authority cannot retroactively impose tax and contributions without a judgment from the competent labor court, as if an employment relationship with the taxpayer had existed at that time (in the past period to which the tax audit refers).

According to the ruling of the Supreme Court, the Tax Authority can, after determining unlawful tax avoidance under Article 74 of the ZDavP-2, tax the income either as income from employment received based on another dependent contractual relationship (point 2 of the third paragraph of Article 35 of the Personal Income Tax Act – Zdoh-2), or as another type of income under ZDoh-2, taking into account the circumstances that justify which taxation the taxable person sought to avoid illegally.

Given the above, we expect that the ruling will impact the tax practice in case of tax audit procedures of payments to sole proprietors regarding the risk of dependent contractual relationship.