Taxation of Individuals
The minimum wage in Slovenia in 2020 makes €940.58 before taxes (gross wage). From 2021, the calculation of the minimum wage shall be introduced according to a new formula and an increase in the minimum wage is expected.
1) Income tax in Slovenia is levied at a progressive rate that ranges from 16% to 50% depending on the annual income. The income ladder looks like this:
|Annual Tax Base (Income in EUR)||
(Sum of Two Columns)
|8,500||25,000||€1,360||+ 26% for the difference over 8,500|
|25,000||50,000||€5,650||+ 33% for the difference over 25,000|
|50,000||72,000||€13,900||+ 39% for the difference over 50,000|
|72,000||€22,480||+ 50% for the difference over 72,000|
The profit of individual entrepreneurs (samostojni podjetnik or s.p.) in Slovenia is taxed according to the same ladder.
For example, this is how an income of €30,000 will be taxed:
- Income up to €8,500 — taxed at a rate of 16% (tax equals to €1,360).
- From €8,500 to €25,000 — taxed at a rate of 26% (tax equals to €4,290).
- Between €25,000 and €50,000 — that is, in this case, €5,000 (30,000–25,000) — is taxed at a rate of 33% (tax equals to €1,650).
Therefore, an entrepreneur with an income of €30,000, according to this calculation, must pay €7,300 of income tax.
However, entrepreneurs in Slovenia are entitled to tax incentives (davčna olajšava).
The total tax relief in 2020 makes €3,500. The amount of incentives is deducted from the total income. Therefore, a self-employed individual entrepreneur, according to the example above, after using the general tax incentives, will pay tax in the amount of €6,145 (30,000 – 3,500 = €26,500). In case of income over €25,000 (26,500 – 25,000 = 1,500), the tax will be €495 instead of €1,650.
There are also other types of tax incentives.
2) Foreign students in Slovenia, who came to the country only for the purpose of studying, are not recognised as tax residents. A student can become a tax resident in six months if he/she studies and is employed in the country.
The minimum wage for a student in 2020 is €5.60 per hour before taxes (approx. €4.56 per hour after taxes).
Non-residents pay taxes in Slovenia only on the income received within the country.
Tax residents of Slovenia are required to pay taxes on all their income received both domestically and internationally in any country around the world.
In order for an individual to become a tax resident, he/she needs to submit a special application to the tax office. You need to decide for yourself whether it is beneficial for you to be a tax resident or remain a non-resident — in each case, it depends on many factors that should be taken into account.
Anyway, you first have to obtain a Slovenian tax number — whether you arrived in Slovenia for the purpose of doing business or for the purpose of studying.
Taxation of Legal Entities
1) The corporate income tax in Slovenia makes 19%.
The balance sheet shall be submitted annually by 31 March of the year following the reporting one.
2) The standard VAT rate in Slovenia is 22%. There are groups of goods and services that are taxed at a reduced rate of 9.5% or are not subject to VAT.
Examples of goods and services taxed at a reduced rate of 9.5%:
- certain medications;
- food products, except for alcoholic beverages;
- water supply;
- hairdressing services, etc.
In most cases, VAT payers are business entities whose annual turnover exceeds €50,000. If this threshold is exceeded, the entity is obliged to become a VAT payer. Until then, inclusion in the VAT system could be done on a voluntary basis.
Becoming a VAT payer is unprofitable for small businesses that work mainly with individuals and issue invoices because VAT increases the total cost of a product or service for a consumer. It makes sense to voluntarily become a VAT payer for those companies that incur high costs in the course of their activities and also work with VAT payers.
Other Types of Taxes
- Dividend tax — 25% (if the founder withdraws the profit).
- Property transactions (purchase/sale of real estate) — 2% of the property value.
- Transport taxes:
– When transporting a car registered in another state, 6 months are given for re-registration of the vehicle. It will be necessary to undergo a technical inspection, during which the car will be assigned to a certain environmental class. In accordance with this class, along with other indicators, the tax rate will be individually calculated. After paying the tax, you can register a car in Slovenia, receive a legal number plate, and take out insurance.
– When registering a car in Slovenia, the so-called “cestnina” shall be paid — an analogue of the road maintenance tax. The amount is calculated individually.
This is a brief overview of the tax system in Slovenia.
Avtor: AG Skupina