Slovenian Government Approves Personal Income Tax Amendments

by Ulrika Lomas, Tax-News.com, Brussels

07 October 2009

It has emerged recently that the Slovenian Government has approved a draft Act amending the Personal Income Tax Act, thus rectifying certain implementation issues, and aligning the provisions with European Union law.

The draft Act proposes the following amendments:

• In accordance with the EU’s letter of formal notice regarding the taxation of performers and non-resident athletes, the tax base for individuals with business units in Slovenia will include relevant expenses incurred in Slovenia, capped at 25% of total income.
• Wages earned by Slovenian residents working outside of the country for a foreign employer (cross-border commuters) will benefit from a special tax deduction of EUR7,000. Residents who have worked in Austria for an Austrian employer will not be required to pay personal income tax on earned income, subject to the conditions of the amended Tax Procedure Act.
• Income derived from farming in less-favoured areas will become exempt from tax, in accordance with the second provision of Article 26.
• MEPs’ taxes pertaining to their residency, income and related taxes levied by the Community are specially regulated. These taxes will be subject to the extraterritorial expansion of the concept of residency, stipulating that such persons are considered Slovenian residents even though they actually live abroad. Given the proposed solutions, MEPs will have to declare income arising from their position, and settle the difference as personal income tax in Slovenia, should the tax levied on this income by the Community be lower than that in Slovenia.
• For Slovenian residents, a withholding tax will not be levied on interest derived from securities issued by the Republic of Slovenia. The interest will instead be taxed on the basis of a formal tax declaration submitted by the individual. Non-residents will, however, become exempt from such tax.
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