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.
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.
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.
STA, 12 July 2019 - The opposition Democrats (SDS) and New Slovenia (NSi) have joined the initiative of Slovenian workers who commute to Austria for a constitutional review of what they see as discriminatory income tax legislation.
While the union of Slovenian migrant workers asked the top court to review the income tax act in November 2018, Franc Breznik of the SDS told the press on Friday that the two parties urged the court to give the matter absolute priority treatment.
"This is a very burning issue in particularly in the east on the country, an issue that is perhaps not felt so much in Ljubljana," he said.
Slovenians working abroad but residing in Slovenia pay part of the taxes in Austria and additional income tax in Slovenia, which the NSi's Jožef Horvat said leaves them with less disposable income compared to workers with similar income in Slovenia.
"If both make EUR 18,700 gross a year, the worker in Slovenia has EUR 1,750 more disposable income than the one working in Austria," he said.
Horvat, who highlighted a different tax treatment of food and transport allowances as a key source of the discrepancy, said the situation was at odds with a Constitutional Court reasoning from 2013 that put commuting migrant workers on "essentially equal" footing with their compatriots in Slovenia as regards income tax, "which means our legal order should treat them equally".
He added the current arrangement was also at odds with the principle of the welfare sate, since the segment of commuting migrant workers with high income is subjected to a more favourable treatment when it comes to the mentioned allowance costs.
Responding to the original initiative for a constitutional review a while ago, the Finance Ministry said that exempting Slovenian workers commuting abroad from income tax would be systemically unacceptable and violate the constitutional principle of equal tax treatment.
All of our stories on tax in Slovenia are here
STA, 16 April 2019 - The National Assembly voted down the Democratic Party (SDS)-sponsored amendment designed to cut the personal income tax on Tuesday, thus paving the way for the adoption of the government proposal to abolish tax on the annual holiday allowance up to average monthly pay.
In its third such proposal since 2017, the opposition party sought to reduce tax rates for all income brackets by two percentage points, raise brackets by EUR 2,000 upwards, and increase the general tax credit from EUR to 3,300 to EUR 4,000, as well see to its adjustment with inflation.
The party argued that labour taxation in Slovenia was among the EU's highest, which made Slovenian businesses less competitive and less productive because they could not spend enough money on research and development. The high taxation was also blamed for the brain drain.
The party calculated that the amendment would result in a loss of revenue from income tax of EUR 387m, which would be offset through higher receipts from VAT as a result of an increase in consumption.
The Finance Ministry estimated the loss of revenue at EUR 383m and the increase in VAT revenue at EUR 19m. The government and coalition MPs argued that the loss of revenue would thus be excessive.
The only other parties to back the SDS proposal were the fellow opposition New Slovenia (NSi) and National Party (SNS).
Now that the SDS amendment is off the table, the National Assembly will be able to move on to the government-sponsored amendment which increase the threshold at which the holiday allowance is exempt from taxes and contribution from 70% to 100% of average pay.
The parliament is expected to pass this proposal at a session due on 25 April.
The current session wrapped up today after only two days of proceedings, including Monday's questions time.
All our stories on tax in Slovenia are here
STA, 28 March, 2019 - The government adopted on Thursday legislative changes raising the threshold for exemption of annual holiday allowance from income tax and social security contributions. The measure will be applied this year, but only for holiday allowance up to the average national monthly wage.
"We've kept the promise and adopted the changes to the laws on pension and disability insurance and on income tax to exempt the holiday allowance of taxes as early as in 2019," the government wrote on Twitter.
"Every euro that employers spend on holiday allowance will be transferred to the employees, the state has given up income tax and contributions," Finance Minister Andrej Bertoncelj said.
Income tax and social security contributions will still have to be paid on the amount of holiday allowance exceeding the average monthly wage. At the moment, holiday allowance in the amount of 70% of the average monthly wages is exempt.
Slovenian employers are required by law to pay holiday allowance, while taxation in practice puts a soft ceiling on the amounts since taxes eat away at a large share of any allowance beyond what is tax exempt.
The benchmark will be data by Slovenia's Statistics Office, which publishes wage statistics on a monthly basis.
The latest available data is for January, when the average monthly gross wage stood at 1,729 euro and the average net wage at 1,116 euro.
The measure is designed to cut labour taxes and raise the disposable income of the workers who receive higher annual holiday allowance than the minimum wage - which is the lowest amount of holiday allowance the employer can pay out.
The government says this should improve Slovenia's competitive advantage, stimulate consumption and encourage companies to pay out more generous holiday allowances.
This is the first in a series of tax measures the government announced recently.
Last week, the Economic and Social Council, the country's main social dialogue forum, agreed this measure should be implemented as soon as possible, whereas the other measures will be subject to negotiations.
Bertoncelj said the government had kept its promise to sort this out as soon as possible. He expects the National Assembly will rush the bill as well since the government has proposed it be fast-tracked.
The Finance Ministry expects that the bill will reduce tax revenue by roughly EUR 90m annually, while the contributions shortfall is expected to amount to no more than EUR 2.4m.
All our stories on taxes in Slovenia are here
STA, 5 March 2019 - Slovenian chief financial officers (CFOs) expect a somewhat less positive outlook of the state of the economy this year, and point to operational cost management and lack of trained workers as the main risks to business, according to the 2019 survey by consultancy services provider Deloitte Slovenija.
"The main findings of the survey, which has been carried out for the 10th time in Central Europe and for the 8th time in Slovenia, are that CFOs expect growth to slow down.
"In Slovenia, they stressed that an unstable fiscal or legislative environment in general makes their business highly uncertain," Deloitte Slovenija director Barbara Žibret Kralj said as she presented the survey in Ljubljana on Tuesday.
With the minimum wage to rise in Slovenia, Slovenian CFOs expect labour costs to rise the most among all costs. And just like in 2018, they point to hiring adequately trained staff as one of the biggest problems.
The CFOs also expect the unemployment rate to rise, and see banks as the most popular lenders, with internal sources of funding also playing an important role.
Mojca Osolnik Videmšek from the Gorenjska Banka bank said the economy was deeply in an investment cycle, so the need for banks as sources of funds, also because of low interest rates, was there to stay.
This year's survey also focused on artificial intelligence.
More than three-quarters of CFOs in Central Europe and around 40% in Slovenia say their companies lack the support of artificial intelligence in decision-making processes.
In Slovenia, two-thirds of companies say artificial intelligence is important for the development of financial services, but are poorly prepared for implementation.
Slovenian CFOs also believe artificial intelligence will create many jobs in the medium term, but a quarter maintain it will make many jobs obsolete in the long run.
While firms compete globally to attract IT experts, Juri Sidorovič from Deloitte said directors not giving clear instructions and not setting goals was sometimes a problem.
"The problem is what a goal is, what we want, what can be modernised, what can be robotised," he stressed.
Deloitte Slovenija also commented on the tax reform presented last week, with Andreja Škofič Klanjšček saying it was more of a "correction since it brings no major changes".
She welcomed the planned changes to personal income tax to finally take the pressure off of those in the middle of the income scale, and exempting holiday allowance from all taxes.
However, Škofič Klanjšček is worried about the planned rise in corporate income tax from 19% to 22% and about the minimum taxation of 5% of all legal entities.
The participants of the news conference said raising the corporate income tax "is a bad signal to attract investors".
They also complained about the lack of a strategy in which the government would set goals to be achieved with tax changes.
Sidorovič said the state could for instance decided to promote IT and then take measures to implement such a strategy.
STA, 1 March 2019 - Peter Vilfan resigned as state secretary in charge of sports at the prime minister's office on Friday, following over a month of speculation that he evaded taxes. In his resignation, Vilfan once again denied being audited by the Financial Administration (FURS) or being issued a fine.
Prime Minister Marjan Šarec responded by saying that he accepted Vilfan's resignation.
In mid-January news portal Požareport said that Vilfan, a former basketball player, had been receiving sizeable payments from two TV stations for serving as basketball commentator.
Požareport said that the public TV Slovenija and commercial media company ProPlus paid the fees to Vilfan's own sports association and that he cooked the books to avoid tens of thousands of euro in taxes.
Vilfan on the other hand said that he had been paid about EUR 1,500 a month, while the figures circulated in the public were much higher.
Moreover, in late February the weekly Reporter said that Vilfan had been fined by FURS, which he denied immediately.
"Let me assure the public that neither I nor my association have been in any offence proceedings, and we have not been issued any decision or fine by FURS," Vilfan said in his letter of resignation forwarded to the media by the Pensioners' Party (DeSUS), of which he is a member.
In his response last week, Vilfan said that "the association filed a report on its own with FURS" and that they "are jointly examining a period of several years for possible accounting errors or irregularities".
DeSUS confirmed today that the review was concluded on Monday and the certain accounting irregularities had been discovered.
The party's president Karl Erjavec said he regretted the developments but respected Vilfan's decision.
Vilfan announced he was leaving politics for good. He was first elected to parliament as a member of Positive Slovenija of Ljubljana Mayor Zoran Janković in 2011, defecting to the Alenka Bratušek Party (SAB) after a split in 2014.
After being reelected MP in 2014, he joined the Pensioners' Party (DeSUS) in 2015, serving out his term until 2018 but he did not get re-elected in the June 2018 election. Instead, he was appointed state secretary at the PM's office.
He also commented matches when he served as an MP between 2011 and 2018, having being granted the permit by parliament.
A member of the Yugoslav national team that won the 1978 FIBA World Championship, Vilfan commented the 2017 EuroBasket matches for ProPlus channels POP TV and Kanal A under a similar arrangement as with RTV Slovenija.
Vilfan's resignation comes two days after Šarec accepted the resignation of Environment Minister Jure Leben, the third member of his cabinet leaving the government which was sworn in in September 2018.
STA, 1 March 2019 - The latest editorial of the left-leaning weekly Mladina tears apart the Finance Ministry's tax reform proposal as yet another taxation tweak to primarily benefits the rich.
Only two years have passed since the last changes that brought the biggest tax burden reduction and greatest gains for those who already have high wages.
While Prime Minister Marjan Šarec now stands to gain almost EUR 1,000 a year, his predecessor Miro Carar saw his wage rise by EUR 2,000 net at the annual level or to EUR 3,457 net a month, effective on 1 January 2017.
The argument keeps repeating - "we are doing this because of those who are the most productive", editor-in-chief Grega Repovž says, labelling this as despicable deceit by those working for the benefit of their own class.
It is true that high wages are taxed more in Slovenia, but on the other hand property is not subject to any serious taxation and the bulk of the income of the wealthiest stems from property.
Meanwhile, the taxation of the average wages of those in whose name the wealthiest would get even more after this reform is comparable to that in similar countries in Europe and is for instance lower than in Austria, Repovž says in the editorial entitled New Tax Cuts for the Rich.
At the same, the government is shying away from a real estate tax or from heavier taxation of those letting out several apartments, while it has also avoided reforming the compulsory health insurance system that continues to channel large sums of public money to private insurers.
This is an arrogant and offensive tax reform proposal that benefits the wealthy and should be withdrawn, Repovž says, adding PM Šarec dismissed the wrong minister this week.
STA, 28 February 2019 - In its latest commentary, the right-leaning weekly Demokracija is flabbergasted by the fact that a majority of the Slovenian media dedicated almost no attention to the warnings from the Fiscal Council that the general government expenditure planned for 2019 should be EUR 270m lower.
The warning about the need for the country to preserve a structural balance in compliance with the fiscal rule was buried quickly, ending up somewhere "on the dark side of the internet", editor-in-chief Jože Biščak says.
Is the expansive fiscal policy, which could cause a headache in the autumn, really a marginal topic, he wonders. It obviously is, as the media are busy "inflating the popularity of the prime minister," he adds in the commentary entitled It's Good to Be Marjan Šarec.
Šarec is really happy because, as the global economic situation is getting increasingly unpredictable, and forecasts more pessimistic than optimistic, the media do not bother him with questions about what to do if the economic growth happens to be lower than expected.
The fear of the 2008 crisis repeating has made the smart countries (Germany, Norway) start accumulating surpluses and creating reserves, while others are reducing general government debt (Estonia, the Czech Republic).
The only solution for the Slovenian government, if it wants to keep the public sector in the current size and meet the obligations given to the sector "either blindfolded or drunk on power", will be to increase the already high taxes.
The problem is not in taxes themselves, but what you get in return. According to an analysis by the Quality of Government Institute, Slovenia belongs to the countries which spend much, while giving back little to the citizens.
All our posts in this series can be found here
STA, 26 February 2019 - The Finance Ministry has drawn up changes to tax legislation, reducing taxes on labour on the one hand and increasing the capital tax on the other. It hopes that lower taxes on labour will boost spending and economic growth. Most of the changes would step into force in 2020.
Finance Minister Andrej Bertoncelj told the press in Ljubljana on Tuesday that the main goal of the reform was to increase net revenue of those employed to make the Slovenian labour market more competitive internationally.
This is to be achieved with changes to income tax brackets. The draft changes envisage moving the brackets up, reducing the tax rate for certain brackets, and increasing tax incentives.
The ministry expects this to have the biggest effect on the third income bracket, which the minister said affected the "most productive" part of the society. He said both the proposals of employers and trade unions had been taken into account in the changes.
If only the general tax incentive is taken into account, the net revenue of employees with minimum wage would go up by EUR 32, of those receiving average wage by EUR 144 and of those receiving two average wages by EUR 670 a year.
The taxes on the annual holiday allowance would be reduced. As so far, the allowance in the amount of up to average gross pay would not be taxed, but under the new proposal no social contributions would need to be paid from it either. Currently only the allowance that matches 70% of the average gross pay is exempt from contributions.
This means that the employee would receive the entire amount paid out by the company if it did not exceed average gross pay. The ministry would like this to be implemented this year.
For performance bonuses, the ceiling for being except from tax, which currently stands at 100% of average gross pay, would be raised to 150% in 2020. In 2021, it would be pushed to 175% and in 2022 to 200% of average gross pay.
The ministry believes this would cut the budget revenue by some EUR 270m a year. This is to be offset by an increase in corporate tax in 2020, 2021 and 2022 by one percentage point from 19% to 22%.
Current tax incentives for R&D investment would be preserved, but the effective tax rate for a company could not be lower than 5%. The average effective tax rate currently stands between 12% and 13%, Bertoncelj said.
The schedular taxation of certain revenue (capital tax, interest and dividends, and revenue from rents) would stay the same, while the tax rate would be raised from 25% to 30%.
Capital gains tax would still be lowered with time, but to a much lesser extent. While currently it drops to 15% after five years of ownership, to 10% after 10 years, to 5% after 15 years and to 0% after 20 years, now it would stand at 30% for the first 10 years and remain at 15% after 10 years.
In total, these changes would increase budget revenue by EUR 110m a year. The remaining EUR 160m needed to cover the gap would be brought in through more efficient tax collection, and the fight against tax fraud, grey economy and social fraud.
According to the ministry, this is how much measures in these fields brought in last year.
Bertoncelj said he had already presented the blueprint of the tax reform to the coalition informally and was currently presenting it to deputy groups. The coalition is to discuss the proposal at its meeting on 12 March.
The changes are also to be debated by the Economic and Social Council, an industrial relations forum.
The ZSSS confederation of trade unions as well as the Chamber of Craft and Small Business (OZS) and the Chamber of Commerce and Industry (GZS) expressed satisfaction with the ministry's proposal.
In its response the ZSSS noted that it had been fighting for lower labour taxes and higher taxation for the capital, while the OZS underlined it was against a higher corporate income tax. A similar position was also voiced by the GZS.