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.