On September 2, 2023, the Act on Intervention Measures to Eliminate the Consequences of Floods and Landslides from August 2023 (Official Gazette of the Republic of Slovenia, No. 95/2023 and 89/23; hereinafter: “ZIUOPZP“) adopted by the National Assembly on August 31, 2023, entered into force. The law introduces measures to help households, the economy and municipalities, as well as curative and preventive measures on public infrastructure, watercourses and flood protection. In the field of taxation, the ZIUOPZP introduces new measures and also complements the measures already adopted by the Act on Amendments of the Act on Elimination of the Consequences of Natural Disasters (Official Gazette of the Republic of Slovenia, No. 88/23, hereinafter: “ZOPNN-F“) from August 9, 2023, whereby the main measures may be presented as follows:
- TEMPORARY MEASURE OF SOLIDARITY WORK SATURDAY AND CONTRIBUTION
A temporary measure of work on “solidarity Saturday” (or another day of the week, if regular work at the employer is also organized on Saturday) and contribution is being introduced. It is foreseen as one additional workday in the years 2023 and 2024, to be determined by the employers upon consultation with its trade unions, the workers’ council, the workers’ representative or the respective employees. Each employee must give written consent to work on solidarity Saturday and works overtime or above the otherwise agreed working hours. The amount of salary for the work performed on this additional day, after calculated taxes and social security contributions, represents the employee’s contribution to the Fund for the Reconstruction of Slovenia. It is foreseen that the employer matches the employee’s contribution in the same amount. Hereby it should be noted that the employer’s contribution is not considered a relief for donations or even a tax-deductible expense in accordance with the Corporate Income Tax Act (Official Gazette of the Republic of Slovenia, No. 117/06 et seq.; hereinafter: “CIT“) and Personal Income Tax Act (Official Gazette of the RS, No. 13/11 et seq.; hereinafter: “PIT“).
The employers will calculate the contribution themselves on a special form and submit it via the eDavki (eTax) portal. The form (and additional information hereto) will be available in eDavki in the beginning of October 2023. The calculation will have to be submitted in the month following the month in which the “solidarity Saturday” took place. The deadline for payment is 10 days after submission of the calculation. The contributions will be wired to a special donation account in the budget of the Republic of Slovenia, Nr: SI56011008881000030, reference 19DŠ-27006. The contributions of workers and employers from “solidarity Saturday” will be considered when determining the Obligatory Solidarity Contribution according to Pt. 2 (below).
In instances when the calculation of contribution from the “solidarity Saturday” will not be submitted in the prescribed manner, within the prescribed deadlines or will not be paid, fines from 1,600 to 60,000 euros (depending on the size of the employer) may be imposed on the employer whereas the responsible persons of employers may be fined 800 to 8,000 euros.
- OBLIGATORY SOLIDARITY CONTRIBUTION
For the years 2023 and 2024, an Obligatory Solidarity Contribution for the reconstruction of Slovenia (hereinafter: “OSC“) is implemented. Taxpayers are both natural and legal persons, with different rules applying to each category.
a. In the case of natural persons, all tax residents of the Republic of Slovenia in a particular year are liable for OSC payment.
OSC Tax Base: The sum of gross income that is included in the annual tax base for progressive taxation (reduced by tax-deductible expenses), also including the payment for business performance, which is otherwise exempt from taxation. The tax base also includes income that is excluded in the annual tax base for progressive taxation (e.g., income from renting out property or transferring property rights, interest, dividends, capital gains) except for income from independent business activities and income that is exempt from income tax, reduced by tax-deductible expenses.
OSC Tax Rate: 0.3 %
Exemption: Exempt from OSC payment will be natural persons whose tax base for calculating OSC will not exceed 35% of the average salary in the Republic of Slovenia in the respective year. Based on 2022 data, this limit is approx. EUR 8,500 per year or EUR 700 monthly.
OSC assessment: OSC assessment will be part of the annual income tax assessment. If the taxpayer was not served with the Automatic Informative Tax Assessment, he is not obliged to file a tax return for OSP. For income that is not included in the annual tax base for progressive taxation (e.g., income from capital and rental), the assessment will be carried out by means of a Tax assessment issued by the Slovenian Tax Authority.
b. In the case of natural persons carrying out independent economic activities (e.g., sole entrepreneurs), all tax residents of the Republic of Slovenia in the respective years are liable for OSC payment.
OSC Tax Base: For each individual year, it’s the tax base for personal income tax assessment form independent economic activates before reductions for tax losses and tax exemptions.
OSC Tax Rate: 0.8 %
OSC assessment: By means of a Tax assessment issued by the Slovenian Tax Authority.
c. Legal entities obliged to pay OSC are taxpayers in accordance with CITA in each respective year (except for taxpayers established for the performance of non-profit activities).
OSC Tax Base: It’s the base according to ZDDPO-2, before reductions for tax losses and tax exemptions for the years 2023 and 2024 or for the tax periods starting in 2023 and 2024 respectively.
OSC Tax Rate: 0.8 %
OSC assessment: Legal entities calculate OSC themselves in the manner and within the time for calculating Corporate Income Tax in the respective years.
The established OSC may be reduced in each respective year by the employee’s or employer’s contribution from the “solidarity Saturday” from Pt. 1 (above), up to the amount of the OSC.
In case the OSC is not calculated in the prescribed manner and within the prescribed deadlines, a fine in the amount from EUR 2,400 to EUR 60,000 may be imposed on legal entities whereas the the responsible persons of the legal entities may be fined in the amount of EUR 800 to EUR 8,000.
- FAVORABLE TAX TREATMENT FOR EQUIPMENT DESTROYED IN FLOOD
In the event of flood destruction of equipment for which legal entities and natural persons performing independent economic activities have claimed the investment tax relief, the respective taxable persons are not required to increase their tax base (sixth paragraph 55.a of Article ZDDPO-2 or sixth paragraph 66.a of Article ZDoh-2).
- TAX TREATMENT OF ACCOMMODATION AND EXPENSES RELATED TO THEM
Income in the form of free use of accommodation or in the form of accommodation with a reduced rent received by natural persons who were forced to find new or temporary accommodation due to floods and landslides in August 2023 is not subject to income tax until the end of 2024, irrespective of who this accommodation is provided by. The provider of such accommodation – a taxpayer according to ZDDPO-2 or ZDoh-2 – who determines their tax base on the basis of actual income and expenses, may claim the expenses arising in connection with such accommodation as tax deductible until the end of 2024 despite the applicable rules on tax deductibility of expenses.
- AMENDMENT OF THE PROVISIONS OF ZOPNN-F REGARDING ONE-TIME SOLIDARITY AID AND TEMPORARY AID FOR SELF-EMPLOYED PERSONS
With ZOPNN-F the amount of the tax-free amount for the one-time solidarity aid to an employee who suffered severe damage due to the floods in August 2023, which threatens health and causes an unsuitable living environment, was raised to 10,000 euros from the generally applicable amount of 2,000 euros. As an addition to the established rules, ZIOUPZP implements the possibility of solidarity aid in the year 2023 in several instalments. Furthermore, the possibility of retroactive corrections of withholding tax calculations regarding the solidarity aid payments is introduced, applicable to those recipients of the aid who already paid withholding tax on the excess of 2,000 euros and those who paid withholding tax for multiple payments of the Solidarity aid prior to the implementation of ZIOUPZP. The corrections of withholding tax calculations can be made no later than 30 days after the entry into force of the ZIOUPZP, i.e. until October 2, 2023.
In relation to temporary aid for the self-employed persons, self-employed persons in culture and farmers, the ZIOUPZP stipulates that aid for the self-employed in culture, who are duly registered in the appropriate list, will not be included in the income census from Article 85 of the Act on the Realization of the Public Interest in Culture (Official Gazette of the Republic of Slovenia, No. 77/07 et seq.). Regarding the applications for the payment of aid the deadline is extended until January 31, 2024. As for the decline in income, which is relevant to the assessment of whether the beneficiaries can carry out an activity or they perform it to a significantly reduced extent and are therefore entitled to aid, a decline of 25 % (and no longer 50 %) is applicable.
In addition to the above, a reduction of the tax base from cadastral income for the year 2023 to 50 % for plots with a level of damage of 50 % or more is introduced; a tax exemption for monetary and other aid that natural persons affected by floods and landslides receive in the period from August 4 to December 31, 2023 from voluntary fire brigades in the affected municipalities is implemented as well as a VAT reduction to 5% for the supply of fire engines and equipment.