In Slovenia, employers have specific tax obligations related to their employees' salaries and wages. These responsibilities include withholding income tax and social security contributions.

Withholding Income Tax

Employers are required to withhold income tax from employee salaries and wages according to progressive tax brackets. The withheld income tax needs to be remitted to the competent tax authority on a monthly basis, usually within 5 days after the employee receives their pay. Additionally, a monthly report detailing the withheld income tax for each employee must be filed with the Slovenian Tax Authorities using the REK-1 form.

Social Security Contributions

Social security contributions in Slovenia cover pension, disability, health, unemployment, and parental care. Both employers and employees contribute to these funds, with different contribution rates. Employers contribute a total of 16.1% of the employee's gross salary. This covers:

• Pension and disability insurance
• Health insurance
• Unemployment insurance
• Occupational accident insurance
• Parental care fund

Employees contribute to the same funds (except for occupational accident insurance) at a rate of 22.1%.

Additional Notes

Employers are not obligated to provide a complementary pension scheme for employees, but they can choose to do so voluntarily.

All resident taxpayers qualify for a general tax allowance. The general tax allowance for 2023 is EUR 4,500. This allowance is deducted from the employee's taxable income.

Additional General Tax Allowance

Employees with taxable income up to a specific threshold are eligible for an additional general tax allowance. This threshold is adjusted annually. The allowance is determined via a formula, resulting in a linearly decreasing allowance for those in the eligible income range.

Dependent Family Member Allowances

Taxpayers supporting dependent children or other dependent family members are eligible for dependent family member allowances. The amount of the allowance varies based on the number of dependents. This allowance is deducted from the employee's taxable income.

Pension Insurance Contributions

Pension insurance contributions are mandatory for most employees. These contributions are calculated as a percentage of gross salary, withheld by the employer. The current contribution rate is 22.1%.

Voluntary Pension Insurance Contributions

Employees can opt to make additional contributions to voluntary pension plans. The deduction limits are up to 24% of compulsory pension and disability insurance contributions or 5.844% of their gross salary, with a maximum of EUR 2,903.66 annually. These contributions are tax-deductible up to the limits specified.

Slovenia operates a multi-rate VAT system in line with the European Union's VAT Directive. The standard rate is 22%, which applies to most services and goods. There are also reduced rates of 9.5% and 5%. The 9.5% rate applies to specific services like hotel accommodations, food, medicine, books, etc., while the 5% rate applies exclusively to e-books since January 1st, 2020.

VAT Exemptions

Certain services are exempt from Slovenian VAT. These typically include financial services, insurance services, educational services, and healthcare services.

VAT Filing Procedures for Services

Businesses providing taxable services in Slovenia must generally follow these filing procedures:

• VAT Registration: If your business generates taxable supplies exceeding €50,000 in a 12-month period, VAT registration is mandatory.
• Filing Frequency: VAT returns are generally filed monthly.
• Due Date: VAT returns and payments are due by the last working day of the month following the tax period.

VAT Implications and Digital Services

If you are providing digital services to customers based in Slovenia, the rules can vary depending on if your customer is a business (B2B) or a consumer (B2C):

• B2B: If your customer provides a valid Slovenian VAT number, the reverse-charge mechanism applies. You don't charge VAT, and your customer accounts for it in their own VAT return.
• B2C: You generally need to charge Slovenian VAT at the applicable rate.

Slovenia provides a variety of tax incentives to stimulate business activity and attract investment. These incentives range from investment allowances to tax relief for employing certain individuals.

Investment Allowances

Businesses can deduct a portion of their investments in tangible and intangible assets from their taxable profits. To qualify, investments must be related to setting up a new company, expanding capacity, product diversification, or significant production process changes. Minimum investment thresholds may apply depending on the size of the company and the location of the investment. Investment incentives are typically granted through public calls for tenders announced by SPIRIT Slovenia, the national agency for entrepreneurship and foreign investments. Businesses submit applications following the guidelines outlined in the specific call for tenders.

Research and Development (R&D) Tax Allowance

Companies can deduct 100% of their R&D expenditures from their taxable profits. The R&D activities must be defined as such under the Slovenian R&D Act. No formal application is needed. Companies simply claim the R&D deduction when filing their tax returns.

Tax Relief for Employing Certain Individuals

Businesses receive tax breaks for employing specific groups considered disadvantaged in the labor market. Eligible groups include young people under 29 years old, individuals over 55 years old, long-term unemployed individuals, and disabled individuals. Specific conditions regarding the duration of unemployment and prior employment with the company may apply. Companies don't need to formally apply. They simply calculate and claim the tax relief when filing their tax returns.

Local Incentives

Municipalities in Slovenia can offer additional tax incentives on a case-by-case basis. These incentives depend on individual negotiations with the municipality and may involve tax holidays, easier access to industrial sites, and utility connection support. Businesses directly contact the relevant municipality's economic development department to inquire about available local incentives and application procedures.

High-Value Added and Innovative Start-Up Companies

Slovenia offers special tax regimes for these companies, potentially including reduced corporate income tax rates. Specific criteria and application processes for these regimes vary.