Slovenia Personal Income Tax

Residents are subject to income tax on their world­wide income. Nonresidents are subject to income tax on income from sources in Slovenia. Employment income and in come from the performance of services and business income are considered to be derived from sources in Slovenia if the employment, ser­vices and business are carried out in Slovenia. In addition, income is deemed to be derived from a source in Slovenia if it is paid or borne by a Slovenian tax resident.

An individual is considered to be resident for tax purposes in Slovenia if, during the fiscal year, he or she fulfills any of the following conditions:

  • He or she has an officially registered permanent residence in Slovenia.
  • His or her habitual abode or center of personal and economic interests is located in Slovenia.
  • He or she is present in Slovenia for a total of more than 183 days.

Income subject to tax. The taxation of various types of income is described below.

Employment income. Employment income includes all income that a person receives from the employer or other person with respect to either past or present employment. Employment in­come includes salary, holiday bonus, fringe benefits and direc­tors’ fees. Benefits provided to family members of employees are considered to be employees’ benefits.

Business income. Business income includes income derived from performance of business activities and income from individual business transactions. Taxable business income is the difference between gross business income and the expenses necessary to generate business income.

Income from agricultural activities and forestry. Income from primary agricultural and primary forestry activity is attributed to a person who has the right to use the land that is recorded in the land register as agricultural land or a forest (cadastral income). The tax base for cadastral income is the deemed income from the land determined under the relevant regulations.

Income from property leases. Income from property leases includes income from leases of immovable and movable property. In the determination of the tax base, standard costs of 10% are deducted from the income received. Instead of deducting stan­dard costs, individuals may opt to deduct the actual costs for the maintenance of property to preserve its usable value. Income from property leases is taxed at a flat rate of 25% and is treated as final tax.

Income from transfers of property rights. Income from transfers of property rights includes income derived from the conveyance of the right to use the following:

  • Material copyrights
  • Material rights of the operator
  • Inventions
  • Appearance of a product
  • Distinguishing signs
  • Technical improvements
  • Plans
  • Formulas
  • Methods
  • Personal names
  • Pseudonyms
  • Images

To determine the tax base, income is reduced by 10% of standard costs unless the holder of the right is not its author, operator, or inventor. Standard costs are not recognized in the conveyance of the right to use a personal name, pseudonym or image. An advance payment of income tax equaling 25% of the tax base is payable.

Income from capital. Income from capital includes dividends, interest and capital gains.

Income from dividends includes dividends and other income derived from ownership of shares. Tax on dividends is also payable on the following:

  • Hidden profit distributions
  • Gains that are distributed with respect to debt securities
  • Income received on the basis of profit sharing of mutual funds

Income similar to dividends, which is taxed in the same manner as dividends, includes income derived from sales of products and services at lower than market prices to shareholders and their family members and debt cancellations. A flat tax of 25% is imposed on dividends and is treated as final tax.

Interest income includes the following:

  • Interest on loans, debt securities, bank deposits, deposits with savings banks and other similar financial claims
  • Income from life insurance policies
  • Income from financial leases
  • Interest income received by unit holders from mutual funds that make payments on the basis of income sharing

Interest on deposits at banks and saving banks established in Slovenia or other European Union (EU) member states of up to EUR1,000 is not included in the tax base. Interest income is taxed at a flat rate of 25%.

An individual who is resident in a EU member state other than Slovenia is not subject to personal income tax on savings with a source in Slovenia to which the automated information exchange system between the EU member states applies.

Capital gains. Capital gains include the following:

  • Gains from the disposal of immovable property regardless of whether the condition of the property is changed or unchanged at the time of disposal
  • Gains from the disposal of securities and shares issued by com­panies and other entities
  • Gains from investment coupons

The tax base for capital gains is the difference between the value of the capital at the time of disposal and the value of the capital at the time of acquisition. Standard costs are recognized for acqui­sition and disposal costs and reduce the tax base.

Capital gains are taxed at a flat rate of 25% with a reduction of the tax rate for every completed five-year period of ownership of the capital. As a result, the following are the tax rates:

  • 15% after 5 years
  • 10% after 10 years
  • 5% after 15 years
  • 0% after 20 years

Other income. Other income includes awards, gifts, prizes from prize drawings, student grants and similar items. An advance payment of income tax equaling 25% of the tax base is payable. The 25% advance payment is withheld at source unless the payer of the income is a nonresident or an individual. In such cases, the recipient of the income must file a prepayment tax return.

Deductions. For 2016, residents may claim as deductions the follow­ing annual tax reliefs:

  • General relief of EUR3,302.70 if no other residents claim de­pendent family member relief with respect to the taxpayer. If the annual tax base is lower than EUR12,570.89, the tax relief is increased to EUR4,418.64. If the annual tax base is lower than EUR10,866.37, the tax relief is further increased to EUR6,519.82.
  • Dependent family member relief of EUR2,436.92.
  • Relief of EUR2,436.92 for the first, EUR2,649.24 for the sec­ond, EUR4,418.54 for the third, EUR6,187.85 for the fourth and EUR7,957.14 for the fifth dependent child.
  • Relief of EUR8,830 for dependent children in need of special care.
  • If certain conditions are met, relief of EUR17,658.84 for dis­abled persons with a severe physical disability.
  • Relief of EUR2,477.03 for a student if no other residents claim dependent family member relief with respect to the taxpayer and if other conditions are met.
  • For self-employed cultural workers or journalists earning annual income up to EUR25,000, a deduction equal to 15% of their annual income.

Nonresidents of Slovenia who are tax residents of other EU or European Economic Area (EEA) member states may apply the general relief and relief for dependent family members in their annual income tax return if they can demonstrate that at least 90% of their entire taxable income in a tax year is derived in Slovenia and if they can prove that the income was exempt from tax or not taxed in their country of residence.

Rates. Employees are subject to monthly employer withholding tax on salaries at rates ranging from 16% to 50%. Temporary workers are subject to a 25% withholding tax on income earned from the performance of work and services, reduced by 10% of standardized material costs. Payments on the basis of work con­tracts are subject to an additional tax at a rate of 25%, paid by the employer.

Individuals aggregate their active income (that is, employment income, business income, income from agricultural activities and forestry, rental income and income from transfer of property rights), apply the progressive tax rates below, subtract tax with­held and paid during the year and then pay any balance due or request a refund of any overpayment.

Individuals are subject to tax at the following rates for income earned in 2016.

Taxable income    
Exceeding Not exceeding Rate
EUR EUR %
0 8021.34 16
8021.34 20400 27
20400 70907.2 41
70907.2 ______________________ 50

Married persons are taxed separately, not jointly, on all types of income.

Relief for losses. Losses incurred by a private business may be carried forward for an unlimited number of years.

Other taxes

Inheritance and gift taxes. Resident individuals who inherit, or who receive as a gift, immovable or movable properties in Slovenia are subject to tax. Movable property received is not subject to the tax if it does not exceed the value of EUR5,000.

The taxable value for inheritance or gift tax is the current market value of the property, less transaction costs and any liabilities attached to the property. The inheritance and gift tax rates depend on the taxable value of the property and on the beneficiary’s relationship to the deceased or donor. Beneficiaries are divided into the following categories.

Class Beneficiaries
I Spouses, children and their spouses, and stepchildren
II Parents and siblings and their descendants
III Grandparents
IV All others

Class I beneficiaries are not subject to inheritance or gift tax. In addition, beneficiaries in any other class who inherit or receive a residence, and who have no other residence and were living in the household of the deceased or donor at the time of the death or gift, are not subject to inheritance or gift tax.

The rates for Class II beneficiaries range from 5% to 14%, for Class III beneficiaries from 8% to 17%, and for Class IV benefi­ciaries from 12% to 39%.

Property tax. Municipalities determine compensation for the use of building land based on points allocated to each building land. Each municipality has its own scoring system and point value. As a result, the compensation varies based on the location of the building land.

Municipalities tax real estate property of higher value at the fol­lowing rates:

  • Tax base from EUR500,000 to EUR2 million: 0.25% to 0.5%
  • Tax base over EUR2 million: 0.5% to 1%

The property tax is assessed on the value of immovable property. For residential property, 160 square meters are exempt from property tax. Property tax is payable quarterly.

Taxes on vessels. Taxes are imposed on vessels that are longer than five meters and satisfy one of the following additional conditions:

  • It is entered in the boat/ship register for shipping on the sea and continental waters
  • The owner of the vessel is a resident of Slovenia and the vessel fulfills the conditions to be registered as mentioned in the first item above, but it is not registered
  • The owner is a resident of Slovenia and the vessel fulfills the conditions to be registered, but is not registered because the ship is already registered abroad

The vehicle taxes do not apply to vehicles performing only regis­tered activities.

The following tables show the rates of the vehicle tax and the additional tax on vehicles.

 

Length class of the vessels    
Exceeding (meters) Not exceeding (meters) General tax (EUR) Tax per meter of vessel (EUR) Tax per kilowatt of power of vessel (EUR)
5 8 10 2.5 0.5
8 12 15 3 1
12 20 3.5 2
5 8 2 0.5 0.1
8 12 10 2 1
12 20 3.5 2

Social security

Slovenia imposes social security taxes to cover health insurance, pension and disability insurance, and unemployment insurance. Each month, employers and employees contribute amounts equal to the percentages of salary shown in the table below. No ceiling applies to the amount of salary subject to the contributions.

       
  Employer Employee Total
Type of contribution % % %
Pension and disability insurance 8.85 15.50 24.35
Health insurance 6.56 6.36 12.92
Unemployment insurance 0.06 0.14 0.20
Maternity allowance 0.10 0.10 0.20
Worker’s compensation insurance 0.53 0.00 0.53
Total 16.10 22.10 38.20

Self-employed persons must pay all of the above contributions, unless they are also employees. The tax base for the contributions is 70% of the profit generated by the business.

Contributions for health insurance and pension and disability insurance are also levied on contract workers. For contract work­ers, the rates of health insurance contributions are 6.36% of earned income for employees and 0.53% of earned income for employers. The contributions for pension and disability are 15.5% of earned income for employees who are not covered by pension and health insurance and 8.85% of earned income for employers. Employees who are already covered by pension and health insurance does not need to make contributions for pension and disability.

Contributions paid during the year are considered final payments. As a result, no adjustment or final settlement is made at the end of the year.

Tax filing and payment procedures The tax year in Slovenia is the calendar year.

The tax authorities prepare a calculation of each individual’s per­sonal income tax liability based on the information received from payers of income. Beginning from the date of dispatch of the cal­culation, the individual has 30 days to object and submit a tax return. If the individual does not object within 30 days, the calcula­tion is deemed to be a tax assessment and the individual is consid­ered to have waived his or her right to appeal.

If a resident individual does not receive the calculation by 31 May of the year following the tax year, he or she must complete and submit the tax return by 31 July of the year following the tax year.

Advance payments are due on the receipt of income (see Section A).

The tax is usually payable within 30 days after receipt of the tax assessment. The tax authorities have until 31 October of the year following the tax year to issue the annual tax assessment.

A rental income tax return must be filed by 28 February of the year following the tax year.

Interest received from abroad must be declared to the tax author­ities by 28 February of the year following the calendar year.

Capital gains must be reported by 28 February of the year follow­ing the calendar year.

A dividend tax return must be filed by 28 February of the year following the calendar year.

Tax treaties

Slovenia has entered into double tax treaties with the following countries.

Albania                          Greece                          Portugal

Armenia                         Hungary                       Qatar

Austria                           Iceland                         Romania

Azerbaijan                     India                             Russian

Belarus                          Iran                              Federation

Belgium                         Ireland                          Serbia and

Bosnia and                     Isle of Man                  Montenegro

Herzegovina                  Israel                            Singapore

Bulgaria                         Italy                              Slovak Republic

Canada                           Korea (South)              Spain

China                             Kosovo                        Sweden

Croatia                           Kuwait                         Switzerland

Cyprus                           Latvia                           Thailand

Czech Republic              Lithuania                      Turkey

Denmark                        Luxembourg                Ukraine

Egypt*                           Macedonia                   United Arab

Estonia                           Malta                            Emirates

Finland                          Moldova                      United Kingdom

France                            Netherlands                  United States

Georgia                          Norway                        Uzbekistan

Germany                        Poland

* This treaty has been ratified in Slovenia, but it is not yet effective.

Entry visas

EU nationals and nationals of the following countries may enter Slovenia for up to 90 days (unless otherwise specified) without obtaining entry visas.

Albania (c)                     Costa Rica                    New Zealand

Andorra                         El Salvador                  Nicaragua

Antigua and                   Guatemala                    Norway

Barbuda                         Honduras                     Panama

Argentina                       Iceland                         Paraguay

Aruba                            Ireland                          Romania

Australia                        Israel                            Russian

Bahamas                        Japan                            Federation (b)

Barbados                       Korea (South)              St. Kitts

Bosnia and                     Macedonia                   and Nevis

Herzegovina (c)             Malaysia                      San Marino

Brazil                             Mauritius                     Serbia

Brunei                            Mexico (a)                   Seychelles

Darussalam                    Monaco                        Singapore

Bulgaria                         Montenegro                 United States

Canada                           Netherlands                  Uruguay

Chile                              Antilles (d)                   Venezuela

a) Ordinary passport holders may enter for up to three months for tourism, and up to one month for business purposes.

b) Russian nationals may enter Slovenia without a visa only if they hold a perma­nent visa for Austria, Belgium, Denmark, France, Finland, Greece, Iceland, Ireland, Italy, Liechtenstein, Luxembourg, Germany, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland or the United Kingdom and if such visa has been valid for at least three months as of the date of crossing the Slovenian border.

c) The rule applies only to holders of biometrical passports.

d) The rule applies to the successors of the former Netherlands Antilles.

Holders of diplomatic and business passports from the following countries may also enter Slovenia without visas for specified durations (up to 3 months or 90 days).

Albania                           Egypt                             South Africa

Azerbaijan                     Indonesia                      Thailand

Bolivia                            Jamaica                         Tunisia

Bosnia and                     Kazakhstan                  Turkey

Herzegovina                  Maldives                       Ukraine

China                              Peru                                United States

Cuba                               Philippines                     Vietnam

Ecuador                          Russian Federation

Work permits and self-employment

Foreign nationals may be employed, seconded or self-employed in Slovenia if they possess work permits.

If a foreign national enters into an employment contract with a Slovenian employer, a work permit is issued at the request of the employer. Work permits are issued for one year with the possibil­ity of an extension.

A foreign national who establishes a company in Slovenia and intends to run the business as a founder must obtain a personal work permit for self-employment before registering the company.

In addition to the work permit requirement, the work of foreign­ers must be registered at the employment office. Registration is complete when the residence permit is granted (see Section H).

Employers from EU member states must register job positions at the employment office for persons who are seconded to a subsid­iary or branch office in Slovenia. No work permits are required for such persons. If a foreigner is not from an EU-member state, he or she must obtain a work permit.

The EU Blue Card is introduced for highly qualified employee migrants and entitles its holder to reside and work in the territory of an EU member state.

Work permits for secondments are valid for one year and may be obtained for persons who hold management positions and per­sons who have specific knowledge and high qualifications.

In general, work permits are issued for the period of one year with no possibility of extension. However, the work permit can be issued again to the same assignee in the event of a temporary suspension of assignment that has the same period as the work permit.

Workers that are seconded to work in Slovenia must be employed by the seconding company for at least one year before the sec­ondment. This applies to all types of secondments, such as cross-border services, movement within a group of companies and seasonal work.

Work permits may also be issued at the request of a foreign employer that has a contract with a company in Slovenia to supply services rendered by the foreign employer’s workers. These work permits are valid for three months, but may be issued for a longer period if a mutual agreement exists between Slovenia and the other country. Seasonal work and cross-border services cannot last for more than three months in the calendar year. The excep­tions for certain seasonal work in the areas of construction, tour­ism, accommodation and food services have been abolished.

Citizens of the EU do not need work permits to work in Slovenia. However, the Slovenian company for which they will be working must register at the National Employment Office.

Because the application process for work permits is time-consuming, applications should be submitted to the appropriate authorities at least two months before the intended start date of employment. Each employment of a foreign national must be registered at the employment office. For EU citizens whose work need only be registered and no work permit is required, the pro­cedure is shorter and simplified.

Residence permits

Temporary residence permits. Temporary residence permits are issued together with work permits or independently by the Regional Department of Internal Affairs for a 12-month period (or less if the passport or the work permit expires before the 12 months elapse). To apply for a temporary residence permit, the applicant must prove the following:

  • The length of his or her intended stay in Slovenia
  • Adequate means of support
  • Arrangement for health insurance

A foreign person must indicate one of the prescribed reasons for his or her residence in Slovenia, such as employment, work, fam­ily reunion or study.

The application for a first residence permit must be filed with the Slovenian embassy in the country of permanent residence. An application for a residence permit for seasonal work can be filed by a foreigner with the Slovenian embassy in a foreign country or by his or her employer in Slovenia or with the embassy abroad. The same application process applies with respect to cross-border services.

The residence permit must be obtained before arrival in Slovenia.

Temporary residence permits may be renewed. Applications for renewals must be filed with the authorities before the expiration of the existing permit.

Permanent residence permits. Permanent residence permits are issued to foreign nationals who have lived in Slovenia for five consecutive years under temporary residence permits if other conditions are met.

Permanent residence permits can be issued before five years have elapsed if certain conditions are met (a foreign person of Slovenian origin and family members of a foreign person who has already obtained a permanent residence permit).

A foreign national must file an application for a permanent resi­dence permit with the Regional Department of Internal Affairs in the area where he or she has a permanent place of residence.

EU nationals. An EU citizen may enter Slovenia with a valid identity card or passport and reside in Slovenia for three months without having to register his or her residence. In the event of a prolonged stay in Slovenia (in excess of three months), he or she is required to apply for registration of residence before the expi­ration of the first three months of his or her residence in Slovenia. Alternatively, he or she may apply for a registration of residence immediately after his or her entry into Slovenia.

A certificate of residence registration may be issued to an EU citizen who intends to or already resides in Slovenia for the pur­pose of employment or work, self-employment, provisions of services, studying or family reunion, as well as to an EU citizen who wishes to reside in Slovenia for another reason.

An EU citizen, who continuously resides in Slovenia for five years on the basis of a certificate of residence registration, may be granted a permit for permanent residence. This permit is valid for an indefinite time period.

A beneficial regime concerning the entry into and residence in Slovenia applies to family members of EU citizens.

Family and personal considerations

Family members. Working spouses of expatriates do not auto­matically receive the same types of permits as the expatriates. Appli cations must be filed independently.

Spouses and children of EU nationals who legally reside and work in Slovenia do not need work permits to be legally employed, but must have the approval of the National Employment Office.

Marital property regime. Under the Law on Marriage and Family Relations, a couple’s property is presumed to be owned in equal shares. However, the spouses may prove that they did not contrib­ute to the joint property in equal proportions. The law applies to married couples and long-term heterosexual partnerships (com­mon-law spouses). For spouses who are both foreign nationals, Slovenian law does not apply.

Forced heirship. Under Slovenian inheritance law, a specified per­centage of a deceased’s estate passes to a surviving spouse and children, regardless of the provisions of any will.

Driver’s permits. Foreign individuals who possess valid driver’s licenses in their home countries may drive vehicles in Slovenia for a period up to 12 months after taking up residence in Slovenia. However, citizens of EU countries may use their home-country driver’s licenses during the entire length of their stays in Slovenia without applying for Slovenian licenses. Foreign individuals may apply for a Slovenian driving license within two years after the date of entry into Slovenia. However, even if an individual applies for a Slovenian driver’s license within two years, he or she may not drive in Slovenia with his or her home country driver’s license after the 12-month grace period.

A Slovenian driver’s license may be issued if the applicant submits the application, results of a medical examination, valid foreign driver’s license and a fee. The foreign driver’s license is sent to the applicant’s home country and may be returned to the foreign indi­vidual when he or she returns to his or her home country.