Tax News, November 2024



ADOPTED AMENDMENTS TO CORPORATE INCOME TAX ACT AND TAX PROCEDURE ACT

On Thursday, 14 November 2024, the National Assembly adopted amendments to acts in the areas of corporate income tax and tax procedure. The adopted acts will enter into force the day following their publication in the Official Gazette of the Republic of Slovenia.

The National Assembly also confirmed the amendments to the Income Tax Act and the VAT Act, however the National Council voted a suspensive veto on both acts. Consequently the National Assembly will have to decide on these two acts again, about which we will update you in our next Tax Alert, as soon as it will be known, presumably  in December.

We previously informed you about the proposed amendments in the September EY Tax Alert, and the following paragraphs represent a refresh on the CIT and tax procedure measures actually adopted.

A. Corporate Income Tax

  •  Limitation rule on deductibility of interest

The thin capitalization rule, which defines interest on excess loans exceeding a capital-to-debt ratio of 1:4 as non-tax deductible, is abolished.

For tax purposes, interest expenses are limited to 30% of EBITDA or to an absolute threshold for recognizing excess borrowing costs, which the amendment increases to EUR 3 million.

  • Carry forward of tax losses

The amendment introduces a time limitation on the possibility of utilizing tax losses to 5 tax periods, with a transitional period of 5 tax periods for claiming unused losses from tax periods that began before the adopted act's application.

  • Tax relief for investments in digital and green transition

The amendment introduces the possibility of utilizing the unused part of the tax relief for investments in digital and green transition over 5 tax periods following the investment period. This applies to investments made after the act application begins.

B. Tax Procedure

  • Changing the “payer of tax” definition

The amendment expands the obligations of the employer as the payer of tax (withholding agent). In the future, entities that formally employ an employee will have to report to the tax authority all earnings that the worker would receive in the context of employment (also, for example, income from a foreign company), in the tax withholding calculation.

  • Advance payment of personal income tax on income from shares or interests in an entity

Income from employment in the form of shares or interests in an entity, received from innovative start-up companies, will not be increased by the tax withholding coefficient, provided that the taxpayer informs the tax authority in the tax withholding calculation, which based on this notification determines the advance payment of personal income tax or personal income tax with the decision.

  • Automatic data provision in cases of innovative start-up companies

Employers of innovative start-up companies will have to submit to the tax authority, on an annual basis, the data necessary for the collection of tax from the income for employees who have received options to purchase shares or interests or income in the form of shares or interests.

The amendment also imposes an obligation on the Slovenian Enterprise Fund to send data on the registration and deletion of companies registered in the register of innovative start-up companies to the tax authority on an annual basis.



How EY can help?


At EY, we regularly follow changes in the tax and legal fields and inform you about them. If you have a question in connection with the adopted tax changes or their impact on your business, our team of tax experts is at your disposal.



THE SUPREME COURT OF THE REPUBLIC OF SLOVENIA'S RULING REGARDING THE DEFERRAL OF THE ASSESSMENT OF TAX LIABILITY WITHIN THE FRAMEWORK OF SELF-DECLARATION

In the November edition of tax news, we are informing you about the Supreme Court of the Republic of Slovenia's ruling regarding the deferral of the assessment of tax liability within the framework of self-declaration.

The Supreme Court of the Republic of Slovenia, in its judgment X Ips 3/2024 dated October 2, 2024, made an important decision impacting taxable persons and their ability to claim a deferral of the assessment of tax liability. The court ruled that within the institute of self-declaration under Article 63 of the Tax Procedure Act (ZDavP-2), it is also possible to claim a deferral of the assessment of tax liability from the disposal of capital under Article 100 of the Personal Income Tax Act (ZDoh-2).

Until now, the Financial Administration of the Republic of Slovenia (FURS) has rejected applications for deferral of the assessment of tax liability if the applications were submitted after the filling deadline, i.e., after February 28 of the current year for the previous year. Such applications were dismissed as late, meaning that taxable persons could not claim a deferral if they missed the deadline for filing the tax return for the assessment of personal income tax from the disposal of capital.

In the aforementioned judgment, the Supreme Court decided that taxable persons who miss the deadline for filing such a tax return can still claim a deferral of the assessment of tax liability within the framework of self-declaration. This means that taxable persons who missed the deadline for filing the tax return can submit an application for deferral of the assessment of  tax liability together with the self-declaration, as long as the conditions that would prevent self-declaration are not met (e.g., notification of the decision).



How EY can help?


Our HR, employment law and personal income tax experts regularly advise on the tax treatment of individual institutes under the Personal Income Tax Act. If you have any questions regarding the aforementioned judgment, our team of tax and legal experts is available to assist you.



PROPOSAL TO AMEND THE EUROPEAN DIRECTIVE REGARDING RULES ON VALUE ADDED TAX FOR THE DIGITAL AGE 

On 5 November 2024, Economic and Financial Affairs Council (ECOFIN) has approved all three pillars or topics of changes which constitute the proposal to amend the European Directive on to respond to digitalization (VAT in the digital age). The purpose of the proposed changes is to modernize VAT reporting obligations, reduce administrative burden due to the VAT registration obligations in other EU member states due to transactions in the common market, and address the challenges of the platform economy.

Modernization of the VAT system in the EU includes measures including digital reporting for VAT purposes based on real-time electronic invoicing. In accordance with the agreed timeline amended VAT system would have to be established by 2030, while the existing national systems would have to become interoperable with the EU system by 2035. We would like to point out that some of the EU member states have already implemented new rules on e-invoicing or they are in the process of implementation of the new rules, which will enter into force before 2030. One of these countries is Slovenia, which would, with the proposal of the Act on the Exchange of Electronic Invoices and Other Electronic Documents, transpose Directive 2014/55/EU into the legal order of the Republic of Slovenia. According to the proposed act, business entities (entities registered in the Business Register of Slovenia) would be required to exclusively exchange e-invoices in their transactions. If the proposal is adopted, mandatory e-invoicing between business entities registered in the Business Register of Slovenia will be effective from the 1st June 2026.

Taxable persons, which would be obliged to register for VAT in more EU member states will under the new rules, have to register for VAT purposes only once for the entire EU and would fulfil their VAT obligations through a single online portal in one language.

In respect of passenger transport and short-term rental accommodation offers via online operators of online platforms will be responsible for collecting and paying VATin cases where the service providers would fail to do so.

More information on topics of changes was included in our tax news for January 2023.

Slovenia supports the proposed changes for the introduction of a digital reporting system for individual transactions and the introduction of electronic invoicing for VAT purposes. In addition to the introduction of electronic invoicing described above, the mentioned proposal of the Act on the Exchange of Electronic Invoices and Other Electronic Documents also includes reporting to the tax authorities on issued and received invoices, which is to be carried out through the UJP e-Račun portal, the official e-invoicing portal of the Public Payments Administration of the Republic of Slovenia (UJP) in the format of e-SLOG or through eInvoicing service providers approved by UJP. All e-invoices would have to be submitted to the tax authorities within 8 days of sending or receiving the e-invoice. If the e-invoice would be exchanged through eInvoicing service providers, both the issuer's and the recipient's eInvoicing service providers would be obliged to submit the e-invoice to the tax authorities within 8 days from the moment of receipt of the e-invoice.

On 14 November 2024, the National Assembly adopted a package of tax changes, which includes, among others, amendments to the Value Added Tax Act. The measure addressing the introduction of the digital reporting system is the mandatory reporting of VAT books of received and issued invoices, based on which the tax authorities will enable pre-filled VAT returns. The VAT Act and the new measures will come into effect on the 1st January 2025.

Slovenia also supports the amendment of the regulation regarding the arrangements for administrative cooperation in the field of VAT, necessary for the digital age, which, among others, envisages the establishment of a central electronic system for the exchange of VAT information, i.e., the central VIES system, which would reflect real-time updates regarding the verification of mass data.



How EY can help?

If you have a question in connection with the proposed changes or in case you would need support with analysing your readiness for the changes, review of implementation correctness or VAT obligations in other countries g, our team of tax experts is at your disposal.



DRAFT PROPOSAL OF THE ELECTRONIC PAYMENT INSTRUMENTS ACT

On 7 November, 2024, the Ministry of Finance sent the draft proposal of the Electronic Payment Instruments Act for a one-month public consultation. The law would, with some exceptions, impose an obligation on providers of goods and services to enable consumers to pay with at least one electronic payment instrument, such as a payment or credit card, at physical points of sale and online. The Act would come into effect 15 days after the publication in Official Gazette. Providers would have to enable electronic payment instruments within one year from the adoption of the Act.

According to the draft, the legislative proposal also defines exceptions to the obligation to accept electronic payment instruments. Specifically, the provider will not be required to provide payment with an electronic payment instrument if their net sales revenue in the previous fiscal year did not exceed 10,000 euros, nor in cases where the provider offers goods or services in an area where it is not possible to establish an electronic connection or where it is disabled or prohibited due to security and cyber threats.



How EY can help?

If you have any questions regarding the Draft Proposal of the Electronic Payment Instruments Act or other tax/legal topics, our tax and legal experts are always at your service.







Our tax team will be happy to help you find answers to any further questions.