Ljubljana related

21 Jul 2020, 12:33 PM

STA, 21 July 2020 - Prime Minister Janez Janša has described decisions on the EU's own resources as one of the biggest achievements of the latest marathon summit of the bloc's leaders. In his view digital tax will likely make the biggest potential own resource of the EU.

Janša made the comments after the summit agreed a pandemic recovery package comprising the bloc's next seven-year budget to the tune of EUR 1.074 trillion and a EUR 750 billion recovery fund, of which EUR 390 billion will be in grants and the rest in loans.

Related: Janša Pleased With Results of EU Budget Talks

To allow the European Commission to borrow in the markets to finance the recovery, the headroom - the difference between the own resources ceiling of the long-term budget and the actual spending - has been temporarily increased by 0.6 percentage points.

This pandemic debt, and grants, will have to be repaid, with EU leaders committing to do so by the end of 2058. The increase in the own resources ceiling will now need to be ratified by the national parliaments.

To make the repayment of that debt easier, EU leaders also committed today to work toward reforming the system of own resources in the coming years by introducing new own resources such as a non-recycled plastic tax, to be introduced next year.

The European Commission will also propose a mechanism to tax carbon-intensive industrial imports from third countries, and a digital levy, plus an overhaul of the emissions trading system to expand it to the aviation and maritime industries.

"The subsidies will have to be repaid. One of the major shifts is those few words about own EU resources, because in seven years' time when we negotiate the next budget this will be the key," Janša said, singling out digital tax as likely the biggest potential own resource.

The coronavirus crisis has substantially increased the profits of digital giants, having accelerated a change in lifestyle, the profits that will at least double over the next five years, Janša said, adding that while profits are being generated everywhere, levies are not collected in the EU. "It's as if cars were being refuelled without any excise duty charged."

Janša also emphasized that no single member state could tackle the digital tax and only the EU was big and strong enough to negotiate a global deal for the benefit of all. "When it comes to big giants even the countries they come from have no serious oversight of the profits that are up to trebling in record time."

The Slovenian prime minister noted that he had talked with OECD Secretary-General Angel Gurria, pointing to the efforts for a deal on digital tax within the Organization for Economic Cooperation and Development.

Janša said taking such decisions was not problematic for the Slovenian parliament. Tax on emissions and plastic would be a problem for the countries that have included the resources in their national tax policies.

Although out of the spotlights, the headway on own EU resources is in Janša's view key from the aspect of agreements on all future financial instruments of the EU.

09 Jan 2020, 15:20 PM

STA, 8 January 2020 - Slovenia's Financial Administration (FURS) collected EUR 17.6 billion in taxes in 2019, which is by EUR 954 million or 5.7% more than in 2018, its early figures show.

The trend has been present ever since FURS was set up with the merger of the national tax and customs administrations in 2014. Since then its tax collection rose by 29%.

Last year all public budgets - the national budget as well as the municipal, pension and health budgets - posted rises in revenue, with excise duties being one of few major taxes the collection of which dropped (-1.1%).

Social security contributions collected - which provide for pension, disability and health insurance and are largely paid directly to the public pension and health funds, but some also to the national budget - increased by 7.2% to over EUR 7 billion.

FURS also collected by 9.4% more taxes on income and profit; a significant rise of 5.9% was recorded in personal income tax, while corporate tax collected rose by 17%.

The VAT take increased by 2.8%.

FURS pointed out in a press release that last year's 5.7% rise in taxes it collected was higher than Slovenia's GDP growth, which reached 2.7% in the first three quarters of the year.

The national revenue service also said that more than 95% of all taxes had been paid voluntarily last year.

It noted another positive trend of a falling tax debt ever since FURS was established. Last year, it dropped by 3.1% to some EUR 1.2 billion, and by 18% since 2014.

All our stories on taxes in Slovenia are here

01 Jan 2020, 09:55 AM

STA, 1 January 2020 - Recently adopted tax changes that slightly reduce the taxation of labour in favour of higher taxes on capital officially enter into effect on Wednesday.

The thresholds for all five personal income tax brackets have been increased, effectively subjecting a higher share of income to lower tax rates.

In the second and third tax brackets, which cover mostly the middle class, the tax rate will drop by a percentage point to 26% and 33% respectively.

Those on the minimum wage will see their earnings rise only marginally, while those on average pay can expect roughly EUR 150 more per year.

The threshold for the highest income bracket, which comes with a 50% tax rate, has been slightly raised to EUR 72,000; there are only about 3,900 individuals who fall into this tax bracket, or 0.3% of all income-tax payers.

The income tax changes are coupled with higher capital gains tax, which will rise to 27.5% from 25%. This rate will also apply to rental income.

Additionally, companies will be subject to a minimum corporate income tax rate of 7%, as tax credits for investments and losses from previous years will be reduced.

18 Dec 2019, 13:19 PM

The Slovenian Financial Administration (Finančna uprava) has issued a reminder that if you have property advertised on Airbnb, Booking and other non-Slovene providers then any income earned is subject to VAT. As such you much register as soon as possible, and submit your monthly VAT returns retrospectively (if needed) as a self-declaration in order to avoid fines.

If you rent out rooms, apartments or houses through intermediaries or advertising providers on websites (Airbnb, Booking, and the like) that are based outside Slovenia, you must pay 22% VAT as a recipient of brokerage services or advertising space. In order to benefit from such services you must first identify yourself for VAT purposes (even if you are not identified for VAT purposes because your turnover is below the mandatory VAT identification limit of €50,000).

You must submit monthly VAT returns electronically (via eDavki) and are not entitled to deduct VAT. You can correct any errors from previous periods by including them in your first (or current) VAT return. You also have to submit a VAT invoice even if you do not receive any income from the property in a given month (in which case you submit an empty invoice).

You must issue an invoice to the guest to whom you provided the service (i.e., renting out property for tourist leasing) and confirm it in the case of cash transactions. This is the case even if the guest paid for the service with a card or paid the advertising provider (Airbnb, etc) from whom you indirectly received this payment.

Taxpayers who "forget" to submit a monthly VAT return will receive a personal electronic warning in their personal inbox on eDavki. Failure to respond will result in a fine of €2,000. The Financial Administration notes with some regret that many people are not paying attention to the messages they receive on eDavki, and thus is asking all taxpayers to provide an e-mail address to ensure they receive such communication. This e-mail address must be sent to the Administration via the eDavki portal using the eSign-POS form.

Please note that this issue is of extra urgency given that the Administration is set to tighten controls in early 2020.

More information, in Slovene, can be found in a document entitled Oddajanje nepremičnin v turistični najem in DDV (Leasing of real estate for tourism and VAT).

27 Nov 2019, 15:00 PM

STA, 27 November 2019 - Peter Jenko is taking over as the new boss of the Financial Administration (FURS) on Wednesday. One of his goals will be to change the tax procedure act so that the names of major tax evaders could be made public, he told the newspaper Delo.

Jenko, who is starting his five-year term at the helm of FURS, succeeding Jana Ahčin, confirmed for the paper that quite a few known taxpayers had formally moved to Dubai recently. Some, including the taxpayer paying the second largest income tax in the country, actually moved there.

"Of course we have detected this and we know about these cases ... We are auditing such cases," he said in an interview for Delo.

FURS will try to establish whether those individuals have indeed become United Arab Emirates residents or has the transfer of their residence been merely fictitious, he announced.

In some cases, they continue to live in Slovenia, have families here, pay housing costs and use their pay cards here, he said.

Jenko believes the tax procedure act should be changed to allow for disclosure of the names of dishonest taxpayers. Under the current legislation, this is considered confidential tax information.

Names can currently be revealed only exceptionally. In one such case, the public got to know the dealings of Rok Snežič, who became known as the doctor of tax evasion, after he pressed charges against two tax inspectors over negligence.

"If a taxpayer is presenting only his side of the story in the media, the law allows FURS to reveal tax data that are otherwise confidential.

"But I must say time has come to review the institute of tax confidentiality ... I think that would be a step towards greater public trust in the work of FURS."

Jenko, who had previously served as FURS deputy director general, said he had already discussed the matter with the Finance Ministry and that FURS would propose the necessary changes soon.

FURS is currently in good shape. Public finance revenue grew by 6.9% last year to EUR 16.6 billion, while tax due dropped by 4.9%.

However, Jenko was surprised to learn that the National Assembly had stripped FURS of EUR 6 million with an amendment to the budget bill. The money was intended for development, foremost digitalisation, he said.

If this does not change, there will only be enough money for maintenance, while some major development projects will be delayed, he said.

FURS was founded with a merger of the tax and customs administrations in August 2014.

At the end of 2018, it employed 3,629 people, of whom 2,808 were authorised officials - 430 inspectors, 537 financial counsellors, 159 investigators, 257 customs officers, 1,018 controlling officers and 407 debt collectors, shows FURS's annual report for 2018.

17 Oct 2019, 09:33 AM

STA, 17 October 2019 - The parliamentary Finance Committee has finalised a package of tax bills that slightly reduce the taxation of labour in favour of higher taxes on capital, after adopting last-minute amendments to counter criticism that the legislation amounted to a generous handout to the rich.

Under the legislative package confirmed last evening and slated for passage at the National Assembly plenary next week, the thresholds for all five brackets will be slightly increased and the general tax credit will rise.

In the second and third tax brackets, which cover mostly the middle class, the tax rate will drop by a percentage point.

Those on the minimum wage will see their earnings rise only marginally, while those on average pay can expect roughly EUR 150 more per year.

The original government proposal also involved a significant tax cut for the richest, as the threshold for when the highest, 50% tax rate kicks, was to rise by over EUR 9,000 to EUR 80,000.

Bud amidst criticism, especially by the opposition Left, that this amounted to a generous handout to the richest, the committee set the threshold at EUR 72,000, about a thousand euro higher than now.

There are only about 3,900 individuals who fall into this tax bracket, or 0.3% of all income tax payers.

The income tax changes are coupled with higher capital gains tax, which will rise to 27.5% from 25%. This rate will also apply to rental income.

Additionally, companies will be subject to a minimum corporate income tax rate of 7%, as tax credits for investments and losses from previous years will be reduced.

The committee debate saw parties clash on taxes along ideological lines.

The Left unsuccessfully sought to withdraw the income tax changes altogether, arguing that the legislation would create a huge budget shortfall while doing too little to benefit the poorest.

The centre-right opposition, on the other hand, came up with amendments that would reduce the taxation of capital and accused the Left of "trying to banish managers out of the country", as New Slovenia (NSi) MP Jožef Horvat put it.

All opposition amendments were voted down.

And even an MP of the coalition, businessman Marko Bandelli of the Alenka Bratušek Party (SAB), wondered why the Left hated people with high pay "who push our country forward".

Robert Pavšič of the ruling Marjan Šarec List (LMŠ) countered that the government was heeding warnings by international organisations that labour is too heavily taxed and capital too little.

"The underlying purpose is to provide greater tax equality," he said.

The government had originally proposed a much more far-reaching tax reform package but the bills, first presented in February, got watered down due to GDP growth data and forecasts showing that economic growth is cooling down.

27 Sep 2019, 10:47 AM

STA, 27 September 2019 - While the Financial Administration (FURS) has just highlighted the continuing positive trend in the recovery of tax debt, it is bound to have a hard time recovering what are EUR 25 million owed by one of the biggest tax debtors in the country. Zlatan Kudić reportedly disappeared as a tax fraud trial against him was about to end.

According to Thursday's report by public broadcaster TV Slovenija, the former director of the Ljubljana company Maxicon, which went into receivership in 2012, has had an arrest warrant issued against him.

Kudić was undergoing a trial, along with two co-defendants, for tax evasion, money laundering and destruction of evidence.

The court ordered that he be detained when he stopped attending trial a few weeks ago and the police issued an arrest warrant, but so far to no avail.

According to TV Slovenija, Kudić and Maxicon have been erased from the list of tax debtors with the company's termination, but FURS could theoretically still go after the debt via a pecuniary claim in a criminal procedure.

The question, however, is whether Kudić will ever again be available to Slovenian courts and whether he officially has any assets at all, the report added.

06 Sep 2019, 09:30 AM

STA, 5 September 2019 - Slovenia is among the top EU member states in reducing the share of uncollected value added tax (VAT) revenue, or VAT gap, according to a study for 2017 released by the European Commission on Thursday.

Slovenia is among the seven EU countries which reduced their VAT gaps by two to four percentage points, with the country bringing it down by around three percentage points to 3.5%.

The most successful country in this respect was Malta, which reduced its VAT gap by seven percentage points, followed by Poland (six points) and Cyprus (four points).

In 2017, the biggest VAT gaps were registered in Romania (36%), Greece (34%) and Lithuania (25%), and the smallest in Sweden, Luxembourg and Cyprus, where the shares stood around 1%.

The study shows that the EU member states lost a total of EUR 137.5 billion in uncollected value added tax in 2017, which is EUR 8 billion less than in the year before in nominal terms.

That year, the amount represented 11.2% of total VAT revenue in the entire EU, which is one percentage points down compared to 2016, the European Commission said.

The trend of the decreasing VAT gap was observed for the fifth year in a row in 2017, and a preliminary estimate for last year suggests that the gap is to decrease further and drop below EUR 130 billion or 10% of the expected VAT revenue.

29 Jul 2019, 14:48 PM

STA, 29 July 2019 - The Slovenian Financial Administration (Furs) has told the STA that serious efforts have been under way to detect and sanction individuals engaged in regular crypto currency mining or trading while failing to pay taxes. It highlighted the example of a miner who had to pay EUR 100,000 in taxes after his undeclared activity was discovered.

Furs responded last year to the soaring values of popular cryptocurrencies by issuing warnings that regular crypto mining and trading can amount to a work activity that needs to registered and is subject to taxation.

Cases are evaluated on an individual basis, with key factors being the turnover value and number of transactions in a specific period.

Asked whether any undeclared miners or traders had been discovered in recent months, Furs highlighted the example of an individual who was discovered to have engaged in regular mining over an extensive period which would have required registration as an activity.

"This discovery of undeclared work led to the individual making a self-declaration and paying almost EUR 100,000 taxes," Furs explained.

It remains unclear how many people in Slovenia are engaged in the activity of mining or trading in cryptocurrencies.

Furs has various channels for obtaining information, indulging through the international exchange of data among tax administrations.

29 Jul 2019, 10:57 AM

STA, 28 July 2019 - The government has proposed a series of tax tweaks aimed at reducing labour taxation, coupled with higher taxes on capital, which would partly offset the loss of revenue. The rest is to be secured through more effective tax collection.

The Finance Ministry submitted the blueprint of the tax reform for public consultation on 22 June, and is accepting comments from stakeholders until 1 August after which it will compile draft amendments ready to be passed by the government and then by parliament.

The changes would affect laws on personal income tax, corporate income tax and on tax on profit from disposal of derivatives. This would also require changes to the tax procedure act. The bills are to hit parliamentary benches in the autumn to be fast-tracked in order to kick in on 1 January 2020.

Finance Minister Andrej Bertoncelj would like the package to be revenue neutral. "We've planned a set of soft measures with the main role to be played by the Financial Administration," the minister said in a recent interview with the magazine Reporter.

The revenue service is to produce an extra EUR 160 million through a proactive approach that would make tax collection more effective and crack down on tax evasion and fraud involving social contributions, the minister explained.

Overall, the planned cuts on labour taxation, along with the cuts on holiday allowance that have already been implemented, are projected to reduce receipts by roughly EUR 220 million annually, while additional taxes would increase receipts by an estimated EUR 87 million.

FURS has told the STA it has already drawn up measures designed to collect an additional EUR 160 million more in taxes. These include measures to increase voluntary payment of taxes such as expanding payment methods and advancing tax literacy among the young, and improving inspection procedures.

In this way they hope to collect EUR 50 million more social contributions, EUR 45 million more VAT and EUR 40 million more personal income tax. A further EUR 25 million could be gained from more aware tax payers and better oversight of how legal persons calculate and pay tax and of tax on motor vehicles.

The proposed changes include increasing general tax credit and tweaks to the income tax brackets to reduce the tax burden on the middle class. This is to be offset by higher corporate income tax and higher taxation of capital gains and of rental income.

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