Slovenia Tax & Business Guide - Deloitte

/Home/Q-R-S Countries/Slovenia (Country Code 386)/Slovenia Tax Resources

Basic facts
Population 2m Inflation 2.5% (2006)*
Main languages Slovene GDP per head US$18,440 (2006)*
Currency Euro (ƒ) GDP real growth 5.6% (2006)*
Economic communities European Economic Area, EU, WTO
GDP sources 2.8% agriculture, 36.9% industry, 60.3% services
*Economist Intelligence Unit estimates.
Political environment

SloveniaÌs political system is a parliamentary democracy, currently governed by a four-party coalition.

Janez Jansa, the head of the Slovenian Democratic Party, is the prime minister; the president is Janez Drnovsek. The next elections are due in November 2007 (presidential) and October 2008 (parliamentary).
Foreign trade and investment
Exports US$22.3bn (2006)* Imports US$23.9bn (2006)*
* Economist Intelligence Unit estimates.

Major exports: Machinery and transport equipment, manufacturing and chemicals.

Leading export markets: Germany, Italy, Austria and Croatia.

Foreign direct investment (FDI) has been slow to arrive, in part owing to the legacy of Yugoslav Ïsocial ownershipÓ, but incentives have been introduced for foreign investors.
Business and financing
Business forms Limited liability companies, joint stock companies

The limited liability company (d.o.o.) and the joint stock company (d.d.) are the most frequently used forms of corporate organisation in Slovenia. The minimum founding capital for a limited liability company is ƒ7,500, and the maximum number of shareholders is 50 (more than 50 is possible with the special permission of the Ministry of the Economy). The minimum founding capital for a joint stock company is ƒ25,000 and the company can be established by one or more shareholders who adopt the articles of association.

The capital, Ljubljana, is the countryÌs financial centre.
Labour environment
Unemployment rate 9.6% (2006)* Minimum wage ƒ521.83 (monthly)
*Economist Intelligence Unit estimate.

The minimum wage is increased annually on August 1st in line with forecast rises in consumer prices. The monthly minimum wage is currently ƒ521.83.

Compulsory social security contributions are levied on both employers and employees: employees contribute 22.1% of gross wages and employers 16.1%. An additional payroll tax levied against the salaries of those eligible to pay social security contributions is applied progressively at rates ranging from 0% to 8.9% (for calendar year 2007) and 0% to 4.4% (for calendar year 2008).

Slovenia has fully harmonised its labour legislation with that of the EU but has retained strict rules on issuing work permits to non-EU applicants.
Taxation
Corporate tax
Main rate 23%

Resident companies are taxed on worldwide income; non-resident companies are taxed only on Slovenian-source income. Companies that have their head office or place of effective management in Slovenia are resident for tax purposes. Tax is charged at a flat rate of 23% (in 2007, to be reduced to 22% in 2008, 21% in 2009 and 20% for subsequent years). This rate is reduced to 10% for companies operating in a special economic zone. Dividends received are exempt from tax. An ordinary credit is granted to eliminate double taxation of dividends where dividends received from a foreign subsidiary are not exempt. The credit method also applies to eliminate the double taxation of foreign income. Partnerships, which are treated as separate taxable persons for tax purposes, are subject to corporate income tax.
Individual tax
Progressive rates up to 41%

Personal income tax applies to the income of individuals. There are six categories of income: income from employment, business income, income from agriculture, income from capital (dividends, interest and capital gains), property income (royalties and rental income) and other income. Dividends, interest and capital gains are taxed at a flat rate. The tax rate for dividends is 20% and for interest income 15% (20% after 2007).

Income tax on the other categories of income (known as Ïactive incomeÓ) is paid during the tax year in the form of advance tax payments. Advance tax payments are determined according to special tax rate schedules or flat tax rates.

There are three tax brackets in the annual tax schedule for active income. The progressive tax rates are: 16%, 27% and 41%. Advance tax payments paid during the tax period are deductible from the final tax liability, and any difference is collected on receipt of an assessment from the tax authorities. When the total sum of advance payments exceeds the tax payable, a refund is available.
Capital gains
Taxed at the same rate as other income

Fifty per cent of capital gains derived by companies from the sale of shares in another company is exempt from corporate income tax if the seller has held more than 8% of the subsidiary for at least six months. If the seller terminates its operation before the expiration of ten years from the year of its establishment, the capital gains that were exempt from taxation for the last five years will be added to the taxable base in the last corporate income tax return submitted to the tax authorities for the last year of operation. Conversely, 50% of capital losses are deductible for corporate income tax purposes.

For individuals, the tax rate on capital gains depends on the length of time the property has been held: a 20% rate applies where the property is held for up to five years; the rate is 15% if the property is held from five to ten years, 10% if held from 10 to 15 years, 5% if held from 15 to 20 years; and 0% if the property is held for more than 20 years. This tax is treated as a final tax for both residents and non-residents. These rules apply to gains from the sale of shares and gains from real property.
Indirect tax
VAT standard rate 20% Lower rate 8.5%

Value-added tax (VAT) applies to most transactions at the standard rate of 20%. A lower rate of 8.5% applies to food, agricultural goods and pharmaceutical products. Exemptions include banking, financial and insurance services, and exports. A reverse charge applies to certain supplies of services by non-residents.

Registration is compulsory for businesses with annual turnover above ƒ25,000.
Tax administration and compliance
Tax year Corporations: calendar or business year; Individuals: calendar year

Companies make monthly advance tax payments, based on the most recent assessment. A self-assessment tax return is due three months after the end of the tax year (for the calendar year by March 31st), and the final payment of tax is due within 30 days of the due date for submitting the return.

Tax is withheld at source from employment and professional income of individuals. Residents who are required to report must provide information to the tax authorities related to the previous year by January 31st. For individuals, the tax authority will complete the tax returns for the previous year based on the reported data. Reviewed and corrected tax returns must be returned to the authorities by April 30th. This process was new for 2006 and will undergo modification in 2007 whereby the tax authorities will fill in the data on the individualÌs return, with the individual then having an opportunity to file an appeal against the resulting tax liability.
Additional tax information
Withholding taxes Dividends, Interest and Royalties 15%. Rates may be reduced by tax treaties or EU directives.
Tax treaties Slovenia has signed 40 tax treaties.
Dividends Intercompany dividends are exempt; the credit method is used to prevent double taxation of dividends.
Revenue protection Slovenia has transfer-pricing and thin-capitalisation legislation.
Groups Consolidation is not allowed.
Incentives Investment in fixed assets; special economic zones; research and development; new employments; employment of handicapped workers.
Other taxes Customs and excise duties, Inheritance and gift tax, Property tax, Defined receipts tax, Tax on gambling and lottery winnings, Transfer tax on immovable property, Motor vehicle tax, Insurance services tax.