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2016/17

Slovenia

PKF Worldwide Tax Guide 2016/17 1

FOREWORD A country's tax regime is always a key factor for any business considering moving into new markets. What is the corporate tax rate? Are there any incentives for overseas businesses? Are there double tax treaties in place? How will foreign source income be taxed? Since 1994, the PKF network of independent member firms, administered by PKF International Limited, has produced the PKF Worldwide Tax Guide (WWTG) to provide international businesses with the answers to these key tax questions. As you will appreciate, the production of the WWTG is a huge team effort and we would like to thank all tax experts within PKF member firms who gave up their time to contribute the vital information on their country's taxes that forms the heart of this publication. The PKF Worldwide Tax Guide 2016/17 (WWTG) is an annual publication that provides an overview of the taxation and business regulation regimes of the world's most significant trading countries. In compiling this publication, member firms of the PKF network have based their summaries on information current on 30 April 2016, while also noting imminent changes where necessary. On a country-by-country basis, each summary such as this one, addresses the major taxes applicable to business; how taxable income is determined; sundry other related taxation and business issues; and the country's personal tax regime. The final section of each country summary sets out the Double Tax Treaty and Non-Treaty rates of tax withholding relating to the payment of dividends, interest, royalties and other related payments. While the WWTG should not to be regarded as offering a complete explanation of the taxation issues in each country, we hope readers will use the publication as their first point of reference and then use the services of their local PKF member firm to provide specific information and advice. Services provided by member firms include: Assurance & Advisory;

Financial Planning / Wealth Management;

Corporate Finance;

Management Consultancy;

IT Consultancy;

Insolvency - Corporate and Personal;

Taxation;

Forensic Accounting; and,

Hotel Consultancy. In addition to the printed version of the WWTG, individual country taxation guides such as this are available in PDF format which can be downloaded from the PKF website at www.pkf.com

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IMPORTANT DISCLAIMER This publication should not be regarded as offering a complete explanation of the taxation matters that are contained within this publication. This publication has been sold or distributed on the express terms and understanding that the publishers and the authors are not responsible for the results of any actions which are undertaken on the basis of the information which is contained within this publication, nor for any error in, or omission from, this publication. The publishers and the authors expressly disclaim all and any liability and responsibility to any person, entity or corporation who acts or fails to act as a consequence of any reliance upon the whole or any part of the contents of this publication. Accordingly no person, entity or corporation should act or rely upon any matter or information as contained or implied within this publication without first obtaining advice from an appropriately qualified professional person or firm of advisors, and ensuring that such advice specifically relates to their particular circumstances. PKF International Limited (PKFI) administers a family of legally independent firms. Neither PKFI nor the member firms of the network generally accept any responsibility or liability for the actions or inactions of any individual member or correspondent firm or firms. PKF INTERNATIONAL LIMITED JUNE 2016 © PKF INTERNATIONAL LIMITED All RIGHTS RESERVED USE APPROVED WITH ATTRIBUTION

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STRUCTURE OF COUNTRY DESCRIPTIONS A. TAXES PAYABLE

COMPANY TAX BRANCH PROFIT TAX VALUE ADDED TAX (VAT) FINANCIAL SERVICES TAX FRINGE BENEFITS TAX LOCAL TAXES OTHER TAXES

B. DETERMINATION OF TAXABLE INCOME

DEPRECIATION STOCK / INVENTORY AND RECEIVABLES CAPITAL GAINS AND LOSSES DIVIDENDS INTEREST DEDUCTIONS AND WITHHOLDING TAX RATE ROYALTIES WITHHOLDING TAX RATE LOSSES FOREIGN SOURCE INCOME INCENTIVES

C. FOREIGN TAX RELIEF D. CORPORATE GROUPS E. RELATED PARTY TRANSACTIONS F. WITHHOLDING TAX G. EXCHANGE CONTROLS H. PERSONAL TAX

EXEMPTIONS ALLOWANCES AND DEDUCTIONS DIRECT TAXES ON PROPERTY - INHERITANCE AND GIFT TAX PROPERTY TAX - REAL ESTATE TAX ACT TAX ON PROFITS DUE TO CHANGES IN LAND USE

I. TREATY AND NON-TREATY WITHHOLDING TAX RATES

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MEMBER FIRM City Name Contact information Ljubljana Primoz Pecnik +386 1230 8510 [email protected] Ljubljana Tomaz Lajnscek +386 1230 8510 [email protected] BASIC FACTS Full name: Republic of Slovenia Capital: Ljubljana Main languages: Slovenian Population: 2 million (2013 PRB) Major religion: Christianity Monetary unit: Euro (EUR) Internet domain: .si Int. dialling code: +386 KEY TAX POINTS • Resident companies are subject to corporate income tax on their worldwide income. Non-

residents are taxable on Slovenian source income. • Capital gains are included in a company's profits subject to corporate income tax. 50% of gains

derived from the disposal of shares are exempt under certain circumstances. • VAT is chargeable in accordance with the provisions of EU law. A standard rate of 22% applies

to most transactions with a reduced rate of 9.5% available on some goods and services. • Relief for double taxation is provided by means of credit for overseas tax suffered on overseas

income. The credit is the lower of the foreign tax paid and the Slovenian tax on the income concerned.

• Withholding taxes are due in respect of various types of payments to residents and non-residents. Withholding taxes do not apply to dividends distributed to persons where a common system of taxation applies or in respect of dividends and similar incomes distributed through a business unit of a non-resident located in Slovenia.

• Resident individuals are subject to income tax on their worldwide income. Non-residents are taxable on Slovenian source income.

A. TAXES PAYABLE COMPANY TAX A company is resident in Slovenia if it has its legal seat or place of effective management in Slovenia. Resident companies are taxed on their worldwide income. Non-resident companies are taxed on their Slovenian source income. Corporate income tax is levied on the taxable profits of private companies at a rate of 17% for year 2013 and forward with a special rate of 0% for investment funds, pension funds, insurance undertakings for pension plans (under certain conditions) and venture capital companies which were set up under the Venture Capital Companies Act and which prepare a separate tax statement for that part of their activity. As of 1 January 2013 there is an optional flat-rate taxation regime. In accordance with this flat-rate regime, the tax base was determined on the basis of lump-sum costs accounting for 70% of income (increased to 80% for the year 2015 and forward). The income shouldn't exceed EUR 50.000 per year (increased to EUR 100.000 for the year 2015 and forward under certain conditions).

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BRANCH PROFIT TAX Non-resident companies are subject to corporate income tax in Slovenia on business activities carried on through a permanent establishment in Slovenia. VALUE ADDED TAX (VAT) General All companies pay VAT except those carrying out certain defined activities, small businesses and farmers with a turnover and income below defined thresholds, and those dealing with products intended for export and international transport. VAT is payable on all supplies of goods and services effected by a taxable person acting as such for consideration within the territory of Slovenia, on intra-Community acquisition, including intra-Community acquisition of new means of transport, and on importation of goods. It is also imposed on the transfer of ownership of buildings or parts thereof if the transfer is made before first occupancy or within a period of two years after first occupancy. Slovenia adopted a value added tax system in July 1999. In May 2004, when Slovenia became a member of the European Union, all provisions concerning intra-Community trade were enacted. The Slovenian VAT Act was generally changed with effect from 1 January 2010. The purpose of those changes was to follow the development of European VAT regulations. Taxable Persons A taxable person must apply for registration if the value of his supplies within the period of the last 12 months exceeds the threshold of EUR 50,000. There is a separate threshold for registration in the VAT system for agricultural activities exceeding EUR 7,500 in accordance with the cadastral income of agricultural and forestry land. A foreign taxable person who makes supplies where the place of supply is Slovenia is liable to be registered irrespective of the fact that his turnover does not meet the prescribed threshold of EUR 50,000. Small businesses (including farmers) may apply for voluntary registration which is valid for at least a five-year period. Rates There are two VAT rates applicable in Slovenia (new rates are applied from1 July 2013): (1) The standard rate of 22% applies to all supplies of goods and services not specified as being

subject to the reduced rate or to exemptions. (2) The reduced rate of 9. 5% applies to goods and services specifically defined by the VAT Act.

These include food, medicines, the supply of medical appliances for the personal use of disabled persons, supply of water, supply of books and other printed materials, tickets to cultural and sports events and the construction, renovation and supply of residential property unless it is built or supplied as part of social policy.

VAT Declaration – Payment / VAT Return VAT shall be paid no later than the last day of the month following the expiration of the tax period. Registered persons shall calculate their tax liability and submit a VAT return for the tax period (calendar month or calendar quarter). Taxable persons who are obliged to submit recapitulative statements shall submit a monthly VAT return on the 20th day of the month following the expiration of the tax period. In principle, tax credits (excess of input tax over output tax in the tax period) shall be carried forward to the next tax period. However, VAT may be refunded to a taxable person upon his request within 21 days after the VAT return is submitted. The Place of Supply of Services There are different rules depending on the place of the provision and type of service. From 1 January 2010, business-to-business (B2B) supplies of services are taxed where the buyer is situated, rather than where the seller is located. For business-to- consumer (B2C) supplies of services, the place of taxation is where the seller is established. However, in certain circumstances, the place of supply is the place of consumption. These exceptions include services such as: intermediary services; services connected with immovable property; transport services; cultural, artistic, sporting, scientific, educational, entertainment or similar services, ancillary transport services, valuations of movable tangible property or work on such property; restaurant and catering services; the hiring of means of transport, and electronic services supplied to consumers.

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For services provided in the fields of culture, art, sports, science, education, entertainment, fairs, exhibitions to businesses, the place of consumption is the headquarters of the purchaser. Foreign Taxable persons VAT Refund Foreign taxable persons are entitled to a refund of VAT paid in the Republic of Slovenia on supplies of goods and services and upon importation of goods if the conditions defined by law are fulfilled. The claim for a refund of VAT must be filed electronically in the claimant's own territory. To obtain a refund of VAT in Slovenia, the taxable person, if established in another Member State, must address an electronic refund application to Slovenia and submit it to the Member State in which he is established via the electronic portal set up by that Member State. Minimum refund limits are as follows: • EUR 400 or the equivalent in national currency if the refund period is between three months and

less than a calendar year; • EUR 50 or the equivalent in national currency if the refund period is of a calendar year or the

remainder of a calendar year. VAT refunds due to taxable persons established outside the EU are only granted according to the conditions of reciprocity. Refund applications must be submitted by 30 June of the calendar year following the refund period to the competent tax authority. Special Scheme for Small Taxable Persons Small enterprises whose turnover does not exceed EUR 50.000 are exempt from charging VAT and have consequently no right to recover input VAT. Special Scheme for Farmers Farmers are exempt from charging VAT if their fanning income does not exceed EUR 7,500. They are not able to recover VAT incurred on their purchases, but they are allowed to charge VAT a flat rate at 8% on supplies to taxable persons and retain it. Special Cash Accounting Scheme Small businesses with a taxable turnover of up to EUR 400,000 per year, exclusive of VAT, may opt for the cash accounting scheme under which a taxable person may account for VAT on the basis of cash paid and received. Certain transactions are excluded from the scheme e.g. exports, imports, intra-Community supplies, intra-Community acquisitions, etc.). FINANCIAL SERVICES TAX Financial Services Tax Act is introducing liability to pay tax on financial services that are exempt from VAT according to current regulations governing the VAT system and services performed by insurance brokers and insurance agents. Subject of taxation are: (a) Grant and negotiation of credits or loans in the form of money and the management of credits or

loans in the form of money by the person granting them; (b) Negotiation of or any dealings in credit guarantees or any other security for money and the

management of credit guarantees by the person who is granting the credit; (c) Transactions, including negotiation, involving deposit and current accounts, payments, transfers,

debts, cheques and other payment instruments; (d) Transactions, including negotiation, involving currency, bank notes and coins used as legal

tender; (e) Services provided by insurance brokers and insurance agents. The tax base is the fee or commission paid on the basis of a concluded financial service. Transactions in shares, interests in companies or associations, debentures and other securities and management of investment funds are not subject to the financial services tax, even though these services are exempt from VAT. Liability to pay the tax arises when the financial service is performed. A financial service is considered to have been performed when a fee (commission) has been paid tor this service. Any person performing financial services in the territory of the Republic of Slovenia is subject to the financial services tax. A financial services tax return must be filed by anyone subject to the tax. It is a transaction tax and is charged at the moment when the financial service is performed. A financial service is considered to have been performed when a fee (commission) has been paid for this

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service. The tax rate increased from 6.5% to 8.5% of the tax base in 2015 and forward. FRINGE BENEFITS TAX In principle, all fringe benefits given by employers or other persons to their employees or family members of employees in connection with employment, such as the private use of company cars, rental benefits, zero-interest loans, discounts on products and services, gifts and share options, are taxed. LOCAL TAXES There are no special regional or local taxes in Slovenia. OTHER TAXES Other taxes not covered above are: • Personal income tax; • Derivative instruments gains tax; • Contractual work tax; • Contributions to social security insurance; • Taxes on lottery winnings; • Tax on gambling; • Inheritance and gift tax; • Property tax (new Real Estate Tax has not been enforced yet); • Tax on vessels; • Circulation tax; • Tax on insurance services; • Immovable property transfer tax; • Customs Duties and Excise Duties. B. DETERMINATION OF TAXABLE INCOME DEPRECIATION Depreciation costs are allowed in Slovenia. Rates applicable to the main types of assets are:

Description Rate

Building projects, including investment property 3%

Parts of building projects, including parts of investment property 6%

Equipment, vehicles and machinery 20%

Parts of equipment and equipment for research 33.3%

Computers and computer equipment 50%

Long-term plantations 10%

Breeding and working herds 20%

Other investments 10% STOCK / INVENTORY AND RECEIVABLES If the cost of stock and inventory exceeds the net realisable value, the effect of write-offs is tax deductible. The write-off of a receivable is recognised as an expense when recorded in the business

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accounts. However, the amount written off must not exceed the lower of the following two amounts: the arithmetical average of the actual write-off of the last three years or the amount representing 1% of taxable revenues in the tax period. CAPITAL GAINS AND LOSSES Capital gains from regular income are subject to tax. Capital gains are included within the profits chargeable to corporation tax for an accounting period. Capital losses can be set against income of an accounting period when they are realised. 50% of capital gains derived on the disposal of shares are exempt where: • The shares represent at least an 8% participation in capital or voting rights of the company; • The shares have been held for at least six months; • The company has at least one employee; • The participation is not in a company in a low tax jurisdiction (Where the nominal tax rate is less

than 12.5%). DIVIDENDS Companies paying dividends withhold tax at a rate of 15% on each dividend distributed to residents and non-residents of Slovenia. If international treaties on the avoidance of double taxation stipulate a tax rate lower than 15%, the tax rate from the treaty applies. No withholding tax applies where a resident taxpayer notifies the payer of its tax number or if a non-resident taxpayer with activities in a business unit in Slovenia notifies the payer of its tax number. No tax is withheld from payments of dividends and similar income distributed to companies resident in the EU with at least 10% equity stake which has been held for at least 24 months prior to the dividend payment. There is no withholding tax on dividends paid to a non-resident who is a resident of the EU or EEA (excluding the Principality of Liechtenstein) if the recipient of the dividend is not able to set off the applicable Slovenian withholding tax in his/her country of residence. Similar applies to payments of dividends and interest paid from Slovenia to EU and EEA (excluding the Principality of Liechtenstein) investment and pension funds. Companies are, in most cases, exempt from tax on dividends if the payer is: • Liable to pay tax by the Corporate Income Tax Act; or, • A tax paying resident in an EU Member State under that State's domestic tax law , is not deemed

to be resident outside the EU under a tax treaty concluded with a non-member state; or, • Liable to pay the equivalent of Slovenian corporate income tax and is resident in a country in

which the rate of tax on corporate profits is at least 12.5%. INTEREST DEDUCTIONS AND WITHHOLDING TAX RATE Interest paid on borrowed money is treated as a regular financial expense and can be set against income arising in the same accounting period. Thin capitalisation rules apply to loan finance received from shareholders (and some other loans under certain circumstances) who have at least a 25% participation in the company unless the taxpayer can demonstrate that the loan finance would have been provided on the same terms by a non-related entity. These rules prescribe a maximum debt to equity ratio of 6:1 in 2008 to 2010, 5:1 in 2011 and 4:1 from 2012. Withholding tax at a rate of 15% applies to interest payments. In the case of interest on loans raised and securities issued by the government of Slovenia and interest paid by banks there is no withholding tax. ROYALTIES WITHHOLDING TAX RATE Withholding tax at a rate of 15% applies to royalties. There is no withholding tax if a resident taxpayer notifies the payer of its tax number and if a non-resident taxpayer for activities in a business unit in Slovenia notifies the payer of its tax number.

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LOSSES Losses are calculated as the surplus of expenses over revenues defined by the Corporate Income Tax Act. Losses may be offset against taxable profits in the following years. Losses may be carried forward undefined but the carry back of losses is not permitted. The tax base may be decreased by the amount of loss from previous tax periods up to a maximum of half the tax base (before1 January 2013, 100% of the tax base) and may be carried forward indefinitely (unless more than 50% ownership of the capital has changed in the meantime and under some other additional circumstances). FOREIGN SOURCE INCOME Slovenia has no special rules that apply to foreign source income. All legal persons carrying out commercial activities and having their head offices in Slovenia or having their place of effective management in Slovenia (partnerships and other corporate forms, investment funds, banks, insurance companies, co-operative enterprises, public enterprises and other legal persons) are subject to corporate income tax. Non-residents (legal persons who do not have their headquarters in Slovenia or their place of effective management in Slovenia) are subject to corporate income tax to the extent that their income has its source in Slovenia. INCENTIVES A 100% deduction is available for research and development (R&D) investment activities and the purchase of R&D services not exceeding the amount of the taxable base. There is also a 40% deduction for amounts invested in equipment and intangibles, again only up to the amount of the taxable base. There are also further general tax incentives under certain conditions for entities that provide work for employees, trainees or disabled persons, as well as relief for donations and voluntary supplementary pension insurance. A tax relief of 45% of eligible salary payments (subject to a maximum of the employer's tax base) is granted to a taxpayer who employs a person under the age of 26 or a person above the age of 55 who has been registered as unemployed with the Employment Service of the Republic of Slovenia for at least six months and has not been employed with this taxpayer or his/her associated enterprise for the last 24 months. There are further general tax incentives available to entities that provide work for apprentices or disabled persons. A taxpayer who employs disabled persons under the Act regulating the vocational rehabilitation and employment of disabled persons may claim a tax deduction equal to 50% of the salaries of such persons but not exceeding the amount of the taxable base. A taxpayer who employs disabled persons with a 100% physical or hearing disability may claim a reduction in the taxable base in the amount of 70% of the salaries of such persons but not exceeding the amount of the taxable base. If a taxpayer under a teaching agreement employs an apprentice or student to perform practical work in professional education, the taxpayer may claim a reduction in the taxable base in the amount of the salary paid but not exceeding 20% of the average monthly salary in Slovenia for each month of performing practical work and for each individual person who takes part in such professional education. A taxpayer may claim a reduction in the taxable base for amounts paid in cash and in kind for humanitarian, disabled, charitable, scientific, educational, medical, sports, cultural, ecological and religious purposes. A reduction may also be claimed for payments made to residents of Slovenia or residents of Member States of the EU or EEA (excluding the Principality of Liechtenstein) who are established under special regulations for the performance of such activities and up to an amount equivalent to 0.3% of the taxpayer's taxable revenue in the current tax period. A taxpayer may also claim a reduction in the taxable base for amounts paid in cash and in kind to political parties up to an amount equivalent to three times the average monthly salary per employee of the taxpayer in the current tax period. The cumulative amount of relief granted may not exceed the amount of the taxable

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base. An additional reduction of 0.2% of the taxpayer's taxable revenue is granted for amounts paid in cash and in kind for cultural purposes and voluntary societies incorporated for protection from natural and other disasters who work in the public interest and are residents of Slovenia or residents of Member States of the EU or EEA (excluding the Principality of Liechtenstein) and are established under special regulations for the performance of such activities. Relief is available for voluntary supplementary pension insurance up to 24% of the compulsory contributions for pension and disability insurance for an insured employee but no more than EUR 2,819.09 annually (for the year 2016) per employee may apply under certain conditions. Additional tax incentives for eligible costs for initial investments and employment costs are given to companies which operate in an economic zone. C. FOREIGN TAX RELIEF Relief for double taxation is provided by means of credit for overseas tax suffered on overseas income. The credit is the lower of the foreign tax paid and the Slovenian tax on the income concerned. D. CORPORATE GROUPS Groups cannot be taxed as a single entity in Slovenia. E. RELATED PARTY TRANSACTIONS Transactions of Slovenian resident companies with non-resident companies must be carried out on an arm's length basis or adjustments are required for tax purposes. The rules also apply to transactions between Slovenian resident companies with which they are related where one is in a tax advantageous position (e.g. through losses brought forward from an earlier period). Companies are related by virtue of a 25% participation of one in the other or a common 25% participation by a third company. F. WITHHOLDING TAX A company paying dividends withholds tax at a rate of 15% on each distributed dividend to residents and non-residents of Slovenia but this may be reduced under the terms of a relevant double taxation treaty. No withholding tax is payable on dividends distributed to persons where a common system of taxation applies (broadly where the payee has at least 10% equity in the payor, with shares having been held for at least 24 months prior to the payment) or where the recipient is resident in another EU or EEA member state (provided that the withholding tax cannot be credited in the recipient's residence state). There is no withholding tax on dividends paid to a non-resident who is a resident of the EU or EEA (excluding the Principality of Liechtenstein) if the recipient of the dividend is not able to set off the applicable Slovenian withholding tax in his/her country of residence. A similar principle applies to payments of dividends and interest paid from Slovenia to EU and EEA (excluding the Principality of Liechtenstein) investment and pension funds. Withholding tax is charged in respect of payments to resident and non-resident persons by a resident of the Republic of Slovenia. This applies to dividends and similar incomes, except for dividends and similar incomes distributed through a business unit of non-residents located in the Republic of Slovenia including: • Interest (with some exceptions such as interest on loans taken out by the Republic of Slovenia or

any interest paid by a bank to a non-resident, except inter-bank interest); • Payments for using or for the right to use copyrights, patents, licences, trademarks and other

owners' rights and other similar incomes; • Payments for real estate leases; • Payments for the services of contractors and athletes if these payments belong to another

person (for example a society where they perform the service); • Payments for services to non-EU resident companies suffering tax at a rate less than 12.5%.

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Withholding tax is not required on payments to: • The Republic of Slovenia, a self-governing local unit in Slovenia or the Bank of Slovenia; • A taxable person who has informed the income payer of their tax number; • A non-resident taxable person who is obliged to pay the income tax which they generate through

activities in a business unit or via a business unit in the Republic of Slovenia and who has informed the income payer of their tax number. The domestic tax rate is 15% in all cases. Double tax treaties may apply which reduce the rate applicable.

G. EXCHANGE CONTROLS There are no exchange controls in Slovenia. H. PERSONAL TAX Personal income tax is levied on six categories of income: • Income from employment; • Business income; • Income from basic agriculture and forestry; • Income from rents and royalties; • Income from capital; • Other income accruing to persons liable to tax in the Republic of Slovenia. Residents are liable to

income tax on their worldwide income (i.e. income derived in Slovenia as well as abroad). Non-residents are liable to income tax on income derived in Slovenia.

An individual, regardless of his nationality, is a resident in Slovenia for personal income tax purposes if he has a formal residential tie with Slovenia i.e. has permanent residence in Slovenia, is a Slovenian public employee employed abroad or was a Slovenian resident but is currently employed in an EU institution). A person who is present for more than 183 days in a taxable year in Slovenia is deemed to be resident there in that tax year. Each individual is treated as a separate taxpayer. There is no taxation of spouses or a family as a whole. The tax year is the calendar year. Tax on income from capital (on interest, dividends and capital gains) is paid according to a flat income tax rate. Any such tax payment is treated as a final tax for residents and non-residents alike. Tax rates are the following: • Interest: 25% (20% before 1 January 2013); • Dividends: 25% (20% before 1 January 2013); • Capital gains: 25% (20% before 1 January 2013) for a holding period of up to five years, 15% for

a holding period from five to 10 years, 10% for a holding period from 10 to 15 years, 5% for a holding period from 15 to 20 years, and 0% for a holding period greater than 20 years.

Income tax on other categories of income (income from employment, business income, income from basic agriculture and forestry, rental income, royalties and other income hereinafter referred to as active income) is paid during the tax year in the form of advance tax payments. The rate for advance tax payment is prescribed by the Personal Income Tax Act. Any such advance tax payment of a non-resident is treated as a final tax while, in the case of a resident, it is treated as a prepayment of tax. Tax schedule for the year 2016 (in EUR) is slightly changed compared to 2015. The tax schedule for the year 2015 is as follows:

Taxable Income

Tax on lower amount (EUR)

Tax Rate Exceeding

(EUR)

Not Exceeding

(EUR)

0.00 8.021,34 - 16%

8.021,34 18.960,28 1.283,41 + 27% above

18.960,28 70.907,20 4.236,92 + 41% above

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Taxable Income

Tax on lower amount (EUR)

Tax Rate Exceeding

(EUR)

Not Exceeding

(EUR)

70.907,20 - 25.535,16 + 50% above

The tax schedule for the year 2016 is as follows:

Taxable Income Tax on lower

amount

Tax Rate Exceeding

(EUR) Not Exceeding

(EUR) (EUR) 0.00 8.021,34 - 16%

8.021,34 20.400,00 1.283,41 + 27% above

20.400,00 70.907,20 4.625,65 + 41% above

70.907,20 - 25.333,60 + 50% above Advance tax payments are deductible from the annual active income tax liability of a resident and any difference is collected upon receipt of an assessment from the tax authorities. The Tax Administration is obliged to generate an annual tax return from its own information, to assess the tax and submit the return to the taxpayer. If the taxpayer does not dispute the tax assessment, the tax will be due (the difference between the total tax payable and the total amount of tax paid in advance) within 60 days of the day the tax assessment is submitted. When the total sum of advance payments exceeds the annual tax payable, a refund will be provided within the same time limit. If the tax assessment has not been submitted to the taxpayer by the end of May, then the taxpayer is obliged to file an annual income tax return by the end of June. Then the tax liability of the taxpayer will be calculated by the Tax Administration which is obliged to issue a written order before 31 October of the same year. The tax due (the difference between the total tax payable and the total amount of tax paid in advance) must be paid within 30 days of the day the written order is submitted. When the total sum of advance payments exceeds the annual tax payable, a refund is provided within the same time limit. From the year 2016 the tax return is required for all taxpayers regardless annual taxable base. All taxpayers (except for basic agricultural and forestry activity) must keep records of their income. They are obliged to keep records for at least five years from the year to which they relate. To avoid double taxation of income, Slovenia has concluded a considerable number of double taxation conventions. EXEMPTIONS There are a number of exemptions within each category of income which are defined by the Personal Income Tax Act. ALLOWANCES AND DEDUCTIONS Allowances that reduce the aggregated taxable base (deductions) for a resident taxpayer on an annual level include (for the year 2015 and 2016): General allowances • EUR 6,519.82 for residents with active income up to EUR 10,866.37; • EUR 4,418.64 for residents with active income between EUR 10,866.37 and EUR 12,570.89; • EUR 3,302.70 for residents with active income more than EUR 12,570.89.

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Personal allowances: • Disabled person's allowance: EUR 17.658,84 if the resident is a disabled person; • Independent artists, journalists and sportsmen: a special deduction of 15% of their revenues (up

to EUR 25,000 of revenues); • Student allowance: 75% of the basic yearly allowance (amount of 2.477,03 for 2015 and 2016)

for income earned by pupils or students for temporary work done on the basis of a referral issued by a special organization dealing with job-matching services for pupils and students.

Family allowances: Family allowances are granted to residents who are supporting their family members, as follows: • EUR 2.436,92 for the first dependent child; for each subsequent dependent child this amount is

increased; • EUR 8.830,00 for a dependent child who requires special care; • EUR 2.436, 92 for any other dependent family member; • Special deduction for voluntary additional pension insurance payments: premiums paid by a

resident to the provider of a pension plan based in Slovenia or in an EU Member State according to a pension plan that is approved and entered into a special register, but limited to a sum equal to 24% of the compulsory contribution for compulsory pension and disability insurance for the taxpayer, or 5.844% of the taxpayer's pension, and no more than EUR 2.819,09 annually.

Pensioners and working disabled persons are entitled to a tax credit in the amount of 13.5% of the pension/compensation received from compulsory pension and disability insurance. Self-employed persons may claim additional allowances: • Allowance for investment; • Allowance for investment in research and development; • Allowance for employing disabled persons; • Allowance for donations. An individual who is a resident of another EU Member State and derives income from employment, business income, income from agriculture, rental income, royalties or other income in Slovenia may claim a general allowance, seniority allowance, family allowance, disabled person allowance, Independent artists, journalists and sportsmen allowance and special deduction for voluntary additional pension insurance payments, if the individual can attest that the above-stated income derived in Slovenia amounts to at least 90% of his/her entire taxable income for the tax year, and that this income is not taxed in the country of his/her residence. A non-resident claiming such allowances is obliged to file the same annual active income tax return that applies to residents. DIRECT TAXES ON PROPERTY INHERITANCE AND GIFT TAX Inheritance and gift tax applies to transfers of property. The tax is paid by individuals or legal persons of private law receiving property in the form of inheritance or gifts. Taxpayers are divided into four categories according to their relationship with the deceased or donor as follows: • Class I: all direct descendants and spouses; • Class II: parents, siblings and their descendants; • Class Ill: grandparents; • Class IV: others. The tax base of inherited or given property is the value after deduction of debts and other liabilities. For real estate, this value is set at 80% of gross appraisal value. For movable property except money this value is set as market value. Exemptions to the inheritance and gift tax include: • Individuals classified under Class I; • Taxpayers who inherit a house or apartment and who own only one house or apartment

themselves and have lived in the same house as the decedent; • Farmers who inherit agricultural land or an entire farm; and, • Legal persons of private law, established for religious, humanitarian, educational, cultural,

charitable and certain other activities.

Slovenia


Movable property up to a value of EUR 5,000 is also exempt from taxation. The tax is levied progressively depending on the value of the property and the category under which the relation to the deceased or donor is classified. Inheritance and gift tax rates are as follows:

Category Tax Rate Ranges

Class II 5% to 14%

Class III 8% to 17%

Class IV 12% to 39% Taxpayers must declare their liability to the local tax authority within 15 days of receiving a gift. The assessment of inheritance tax is made according to the inheritance decision sent by the court to the tax authority. The tax is payable within 30 days of the assessment being issued PROPERTY TAX REAL ESTATE TAX ACT Real Estate Tax Act has been invalidated by Slovenian Constitutional Court in 2014. A new Act expects to be adopted in the future. TAX ON PROFITS DUE TO CHANGES IN LAND USE The Public Finance Balance Act., (ZUJF), entered into force on 31 May 2012, introduced a new tax on profits due to changes in land use. The new tax applies to capital gains from the sale of land whose use has been altered to building use after acquisition. The taxable persons are residents and non-residents, natural or legal persons selling the land. The tax base is the difference between the value of the land at disposal and the value of the land at acquisition. The tax rates are 25% for transfers within 1 year after the change in land use; 15% for transfers within 1 to 3 years after the change in land use; 5% for transfers within 3 to 10 years after the change in land use and 0% for transfers in a period exceeding 10 years after the change in land use. The tax applies to transactions undertaken after 31 May 2012. I. TREATY AND NON-TREATY WITHHOLDING TAX RATES A list of the double taxation conventions currently in force at 1 January 2015 (no new convention in 2016) are as follows:

Dividends (%)

Interest (%)

Royalties (%)

Non-treaty countries 15 15 15 Treaty countries:

Albania 10/5 7 7

Austria 15/5 5 5

Armenia 10/5 10 5

Azerbaijan 8 8 5/10

Belarus 5 5 5

Belgium 15/5 10 5

Slovenia


Dividends (%)

Interest (%)

Royalties (%)

Bosnia-Herzegovina 10/5 7 5

Bulgaria 10/5 5 5/10

Canada 15/5 10 10

People’s Republic of China 5 10 10

Croatia 5 5 5

Cyprus 5 5 5

Czech Republic 15/5 5 10

Denmark 15/5 5 5

Estonia 15/5 10 10

Finland 15/5 5 5

France 15/0 5 5

Georgia 5 5 5

Germany 15/5 5 5

Greece 10 10 10

Hungary 15/5 5 5

Iceland 15/5 5 5

India 15/5 10 10

Ireland 15/5 5 5

Iran 7 5 5

Isle of Man Not Valid Not Valid Not Valid

Israel 5/10/15 5 5

Italy 5/15 10 5

Korea, Republic of 15/5 5 5

Kuwait 5 5 10

Kosovo 5/10 5 5

Latvia 15/5 10 10

Lithuania 15/5 10 10

Luxembourg 15/5 5 5

Macedonia 15/5 10 10

Malta 15/5 5 5

Moldova 10/5 5 5

Montenegro 10/5 10 5/10

Slovenia


Dividends (%)

Interest (%)

Royalties (%)

The Netherlands 15/5 5 5

Norway 15/0 5 5

Poland 15/5 10 10

Portugal 15/5 10 5

Qatar 5 5 5

Romania 5 5 5

Russia 10 10 10

Singapore 5 5 5

Serbia 10/5 10 5/10

Slovak Republic 15/5 10 10

Spain 15/5 5 5

Sweden 15/5 0 0

Switzerland 15/5 5 5

Thailand 10 10/15 10/15

Turkey 10 10 10

Ukraine 5/15 5 5/10

Uzbekistan 8 8 10

United Kingdom 15/0 5 5

United Arab Emirates 5 5 5

United States 15/5 5 5 Convention has been ratified with Egypt but not yet effective. The convention ratified with Isle of Man is not valid for the dividends, interest and royalties purposes.

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