2015-Questions-answers-TAXATION OF INDIVIDUALS-Annual ... · TAXATION OF INDIVIDUALS Annual Income Tax Return Questions & Answers 1ST version, MARCH 2016 . 2 TABLE OF CONTENTS Question

REPUBLIC OF SLOVENIA MINISTRY OF FINANCE

FINANCIAL ADMINISTRATION OF THE REPUBLIC OF SLOVENIA

Šmartinska cesta 55, PO Box 631, 1001 Ljubljana, Slovenia T: +386 1 478 38 00

F: +386 1 478 39 00

E: [email protected]

www.fu.gov.si

TAXATION OF INDIVIDUALS

Annual Income Tax Return

Questions & Answers

1ST version, MARCH 2016

2

TABLE OF CONTENTS

Question 1: How do I file the annual income tax return if I am a nonresident of Slovenia? .... 3 Question 2: How do I file the annual tax return once I have become a resident of Slovenia? 3 Question 3: What is the personal income tax rate schedule in Slovenia? ............................... 3 Question 4: Am I entitled to any personal tax allowances as a nonresident of Slovenia? ....... 3 Question 5: Am I entitled to any tax allowances as a nonresident of Slovenia if I am a

resident of another EU or EEA Member State? ....................................................................... 4 Question 6: What tax allowances can be claimed by residents (and in very special case

mentioned above nonresidents) of Slovenia under the Personal Income Tax Act? ................ 4 Question 7: What are personal tax allowances? ...................................................................... 5 Question 8: What are special personal tax allowances? ......................................................... 5 Question 9: What is the deduction for voluntary additional pension insurance? ..................... 6 Question 10: What are the family allowances? ........................................................................ 7 Question 11: What are the preliminary conditions that a person can be considered a

dependent under the Personal Income Tax Act? ..................................................................... 7 Question 12: When is an immigrant worker who came to work to Slovenia temporarily

entitled to claim the tax allowances? ........................................................................................ 8 Question 13: Who is a dependent child under the Personal Income Tax Act in Slovenia? ..... 8 Question 14: Who are other dependent family members under the Personal Income Tax

Act? .......................................................................................................................................... 9 Question 15: How am I taxed in Slovenia if I am sent to work to Slovenia from my employer

in my home country (country of residence for tax purposes)? ............................................... 10 Question 16: Who pays social security contributions for me if I am sent to work to Slovenia

from my employer in my home country? ................................................................................ 10 Question 17: How are dividends taxed in Slovenia? .............................................................. 11 Question 18: How do nonresidents pay tax on dividends? .................................................... 11 Question 19: How do I claim a more favourable tax rate on dividends based on the Double

Taxation Agreement (DTA)? .................................................................................................. 11 Question 20: How is interest taxed in Slovenia if it is earned by a nonresident? .................. 12 Question 21: How is interest defined for tax purposes? ........................................................ 12 Question 22: How do nonresidents pay tax on interest in Slovenia? ..................................... 13 Question 23: What is the EU Savings Directive? ................................................................... 13 Question 24: How do I claim a more favourable tax rate on interest based on the Double

Taxation Agreement (DTA)? .................................................................................................. 13 Question 25: How are capital gains taxed in Slovenia? ......................................................... 14 Question 26: How do nonresidents pay tax on capital gains in Slovenia? ............................ 14 Question 27: How do nonresidents pay tax on capital gains from alienation of immovable

property in Slovenia?.............................................................................................................. 15 Question 28: How do nonresidents pay tax on capital gains from alienation of financial

capital (securities and ownership/equity shares and investment coupons) in Slovenia? ...... 15 Question 29: How do I obtain a notification for the purposes of claiming a tax credit of the

already paid tax in Slovenia in my home country (county of residence for tax purposes)? ... 16

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Question 1: How do I file the annual income tax return if I am a nonresident of Slovenia? Answer If you are not a resident of Slovenia you do not need to file the tax return form and you do not

receive the indicative calculation of personal income tax. The tax that is withheld by the payer of

income or the tax that is settled as the advance tax payment counts as your final tax.

Question 2: How do I file the annual tax return once I have become a resident of Slovenia? Answer The indicative calculation of personal income tax is automatically generated and prepared by

the Tax Administration of Slovenia for all residents from 2016 onwards.

So, once you have become a resident of Slovenia the indicative calculation of personal income

tax is sent to you by May 31st

at the latest for the previous tax year under the conditions

mentioned above. In 15 days after this date the taxpayers are required to file a complaint if the

data on the calculation do not match their own. The Tax Administration will treat your complaint

as a tax return and assess the tax liability based on it. If the complaint is not filed the indicative

calculation does not only serve as a substitute for the return anymore, but it actually becomes a

tax return and an official tax assessment at the same time. If, for some reason, you did not

receive the indicative calculation, but you earned taxable income in the previous tax year you

are required to file the personal income tax return by 31st of July of the current tax year for the

previous tax year.

Question 3: What is the personal income tax rate schedule in Slovenia? Answer Annual personal income tax rate schedule in Slovenia used to be revalued each year depending

on the annual rate of inflation. The schedule for the current tax year was published in December

of the previous tax year by the Ministry of Finance.

For the tax year 2016 the tax rate schedule is the following:

When the Net Yearly Tax Base is in the Interval

Income Tax in Euros amounts to

From To

0 8.021,34 16 %

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

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

70.907,20 25.333,60 + 50 % above 70.907,20

Net Yearly Tax Base is the gross income decreased by social security contributions and personal allowances.

Question 4: Am I entitled to any personal tax allowances as a nonresident of Slovenia?

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Answer No. You are not entitled to any personal tax allowances if you are a nonresident of Slovenia for

tax purposes. The reason for this is that you are already entitled to allowances in your home

country (your country of residence for tax purposes). Since you cannot claim any allowance it is

not required that you file a tax return and the tax withheld by your employer or the payer of

income is a final tax. However, there is an exception to this provision if you are a resident of

another EU or EEA Member State and you earn income in Slovenia. More details are found in

the answer to the question no. 5 below.

Question 5: Am I entitled to any tax allowances as a nonresident of Slovenia if I am a resident of another EU or EEA Member State? Answer There is a specific situation that under certain conditions allows nonresidents to be granted tax

allowances when they earn income in Slovenia as stated in the Article 116 of the Slovenian

Personal Income Tax Act. Nonresidents of Slovenia that earn income from employment, income

from business (excluding the special option for paying tax on income from small business that a

person owns as a sole entrepreneur or a self-employed person on the basis of revenues and

standard expenditures in the amount of 80% of the shown revenues), income from basic

farming and forestry activities, income from royalties and certain other types of income (like

prizes, rewards, stipends etc.) in Slovenia and are residents of an EU or EAA Member State

can claim tax allowances. In order to be able to claim allowances however, they have to prove

that the amount of all types of income combined that they have earned in Slovenia in a

particular tax year represented at least 90% of all of their taxable income. Furthermore, they

have to prove that income earned in Slovenia was exempt from taxation or was not taxed in

their country of residence. The tax allowances can be claimed on the form filed with the

competent tax authority in Slovenia by July 31st of the current tax year for the previous tax year.

Question 6: What tax allowances can be claimed by residents (and in very special case mentioned above nonresidents) of Slovenia under the Personal Income Tax Act? Answer Slovenia’s Personal Income Tax Act does not allow for itemizing actual deductions such as

medical expenses, charitable contributions, etc. Instead every resident of Slovenia is entitled to

the general tax allowance as long as nobody is claiming the family allowance for her/him. It is

euro amount that reduces the amount of income on which you are taxed. The general allowance

is adjusted in the year in which the coefficient of growth of consumer prices in the current year,

compared to the past year, exceeds 1,03.

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From the tax year of 2013 onwards it is shown in the following table:

If the Overall Gross Income is in the Interval

General Tax Allowance in Euros to be deducted from Net Yearly Tax Base amounts to

From To

10.866,37 6.519,82

10.866,37 12.570,89 4.418,64

12.570,89 3.302,70

Apart from the general tax allowance residents and above mentioned nonresidents (residents

of an EU or EAA Member State) are entitled to personal allowances, special personal

allowances, deduction for voluntary additional pension insurance and family allowances that

further decrease the taxable amount. Self-employed persons can claim additional allowances

that are mentioned in the answer to the question no. 15 in brochure Taxation of individuals,

Advance tax payment.

Question 7: What are personal tax allowances? Answer Residents and nonresidents (under certain conditions that are mentioned in questions above)

can claim the following personal allowances:

- Disabled person’s allowance (if you are a disabled person with 100% physical impairment –

proved by a decision of the competent authority, you are entitled to a deduction of an additional

amount – from the tax year of 2013 onwards this deduction amounts to 17.658,84 euros.

- Seniority allowance (once you reach the age of 65, you are entitled to a deduction of an

additional amount – in the tax year of 2013 it amounts to 1.421,35 euros). Seniority allowance

will only be in use for the tax year of 2013, since it is being terminated in January 2014.

The following personal allowances can be claimed up to the amount of tax assessed on each

type of income received.

- Allowance for recipients of pension and occupational pensions (a person who receives a

pension based on compulsory pension and disability insurance is entitled to a deduction of

13.5% of the determined pension from the amount of tax they are required to pay)

- Personal allowance for other special groups (persons who receive state honorary

allowance from the state on the basis of their life achievements in art and other cultural fields

and persons who receive allowance for disability are entitled to the following tax allowance - the

same as above - a deduction of 13.5% of the determined amount of income from the amount of

tax they are required to pay)

Question 8: What are special personal tax allowances? Answer Only residents (and nonresidens under certain conditions, mentioned above) can claim the

following special personal allowances:

- Allowance for independent artists (self-employed persons who work in the cultural field and

who are registered with the Ministry of Culture are entitled to a deduction of 15% of their yearly

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revenues – limited to 25.000 euros – from their tax base; however, to be entitled to this

allowance a person must not conclude an employment contract and must not be doing business

in any other field but cultural)

- Allowance for independent journalists (self-employed and independent journalists that are

registered with the Ministry of Culture are entitled to a deduction of 15% of their yearly revenues

– limited to 25.000 euros – from their tax base; however, to be entitled to this allowance a

person must not conclude an employment contract and must not be doing business in any other

field)

- Allowance for independent professional sportsmen and sportswomen (self-employed

sportsmen and sportswomen who are registered with the Ministry of Education and Sport are

entitled to a deduction of 15% of their yearly revenues – limited to 25.000 euros – from their tax

base; however, to be entitled to this allowance a person must not conclude an employment

contract and must not be doing business in any other field)

- Student allowance (a person holding the status of a student, who goes to school aged 26 or

less earning income only temporarily and on the basis of a voucher from the competent

authority – most common Student Services Office – is entitled to a deduction of an additional

amount. The allowance equals 75 % of the general tax allowance (2.477,03 euros from the

year of 2013 onwards); furthermore students are also entitled to this allowance if they are aged

26 or more, but they enrolled in school before the age of 26, in this case the allowance can be

claimed 6 years from the date they enrolled into an undergraduate program and 4 years from

the date they enrolled into a graduate program). The student’s allowance can be claimed only

by residents or nonresidents if a special provision was included into the Double Taxation

Agreement (DTA) concluded between their country of residence and Slovenia that allows for

such a benefit. More information is available in the question no. 9 in brochure Taxation of

individuals, Advance tax payment.

- Allowance for daily migrant workers (a person who commutes to work across the border

every day or at least once a week is entitled to a deduction of a predetermined amount from

their yearly net tax base - 7.576,62 euros in 2013); additional conditions for this allowance are

having a nonresident employer across the border, receiving income from employment and

actually carrying out work across the border. The new tax reform adopted in 2013 abrogates the

allowance for daily migrant workers from January 2014. The allowance is still in use for the tax

year of 2013.

Question 9: What is the deduction for voluntary additional pension insurance? Answer Residents and above mentioned nonresidents (residents of an EU or EAA Member State) can

claim the deduction for voluntary additional pension insurance in the amount of the insurance

premium that they pay for themselves. In order to be entitled to claim the deduction, insurance

premium has to be paid to the official pension plan provider with headquarters in Slovenia or

any other EU Member State. The pension plan has to be approved by the competent authority

and entered into a special register.

The amount of insurance premium that can be claimed as a deduction is limited up to 24% of

compulsory social security contributions for pension and disability insurance for the insured

person or up to 5,844% of a pension when a person is paying the insurance from a pension, but

this deduction is limited up to a certain amount (from the tax year of 2013 onwards this amount

is 2.819,09 euros).

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Question 10: What are the family allowances? Answer Residents and nonresidents (under certain conditions that are mentioned in questions above),

who take care of their family members can claim the following allowances to be deducted from

their yearly net tax base:

- FOR DEPENDENT CHILDREN allowances can be summarized in the following table:

From the tax year of 2013 onwards

Yearly allowance in euros

For the first dependent child 2.436,92

For a dependent child that needs special care and protection

8.830,00

For the second dependent child 2.649,24

For the third dependent child 4.418,54

For the forth dependent child 6.187,85

For the fifth dependent child 7.957,14

For the sixth dependent child 7.957,75 + 1.769,30

Allowance for the seventh child and any other additional child is calculated by adding the

amount of 1.769,30 euros to the amount of allowance for the previous child.

- FOR EVERY OTHER DEPENDENT FAMILY MEMBER there is an allowance of a

predetermined amount (from the tax year of 2013 onwards this amount is 2.436,92

euros).

It is important to notice that a dependent for whom somebody else (most of the times parents,

adoptive parents and spouses) has already claimed the family allowance will not be allowed to

claim the general tax allowance from their own income that they might have earned or received.

Question 11: What are the preliminary conditions that a person can be considered a dependent under the Personal Income Tax Act? Answer In order for a person to be considered a dependent according to the Personal Income Tax Act

she/he has to fulfill at least one of the following conditions apart from others described in the

answers below:

- she/he needs to have a permanent or temporary home in Slovenia, registered with local

public authority OR

- she/he has to be a citizen of the Republic of Slovenia OR

- she/he has to be a citizen of the European Union OR

- she/he has to be a resident of the country with which Slovenia has concluded a Double

Taxation Agreement (DTA)

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Question 12: When is an immigrant worker who came to work to Slovenia temporarily entitled to claim the tax allowances? Answer Immigrant workers who came to Slovenia temporarily have to become residents of Slovenia for

tax purposes in order to be entitled to allowances. They can also claim the majority of

allowances if they are nonresidents of Slovenia, but they are residents of EU/EEA country and

they earn at least 90 % of all their taxable income in Slovenia. More details about this special

case are described in the answer to the question no. 5 and 6. Family allowance for dependents

who stayed in immigrant workers’ home countries however, can only be claimed by those

workers whose dependents satisfy the conditions described in answers below, who are citizens

of the EU or who are residents of the country with which Slovenia has concluded a DTA,

because these agreements enable for the exchange of information which confirms that

dependents actually fulfill the conditions under which the allowance for them can be claimed.

Question 13: Who is a dependent child under the Personal Income Tax Act in Slovenia? Answer Dependent child of a taxpayer is:

- a child up to 18 years of age

- a child up to 26 years of age, but under the following conditions: goes to high school or

university continuously or with up to a year of deferral or interruption, not employed,

does not have her/his own source income or her/his income is lower than the amount of

the allowance for every other dependent family member – from the year of 2013

onwards this is 2.436,92 euros).

Her/his own income is all income covered by the Personal Income Tax Act except for

family pension, income earned holding the status of a student, stipend, family rents and

certain social security transfers like child addition, addition for a big family, addition for

special care and protection, unemployment benefit and parenting addition at birth.

- a child more than 26 years of age if she/he satisfies the conditions mentioned above

and if she/he enrolls in school before the age of 26 years; she/he is a dependent for the

period of 6 years after the day of enrollment into an undergraduate program and for 4

years after the day of enrollment into a graduate program

- a child above 18 years of age if she/he is unemployed, if she/he lives with her/his

parents and if she/he is registered with the Employment Service of Slovenia without

her/his own source of income or her/his income is lower than the amount of the

allowance for every other dependent family member – from the year of 2013 onwards

this is 2.436,92 euros). In this case her/his own income is all income covered by the

Personal Income Tax Act.

- a child that is entitled to addition for special care and protection in accordance with the

Parental Protection and Family Benefit Act

- a child that is entitled to addition for help and service in accordance with the Pension

and Disability Insurance Act

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The allowance explained in the last two points above can be claimed for children up to 18

years of age or up to 26 years of age if they continue attending school and even past this

age if their school program on a higher education level lasts for more than 5 or 6 years. If

they could not finish their education on time due to illness or injury allowance for them can

also be extended past 26 years of age limited to the period in which the schooling was

allowed to be postponed.

- a child that is in accordance with the Act Concerning Social Care of Mentally and

Physically Handicapped Persons unfit to work without age limitation

A child is a taxpayer’s own child, adoptive child, stepchild or a child of a taxpayer’s common

law partner and in certain circumstances a grandchild (if the taxpayer is entitled to an

allowance for the child’s parents or on the basis of a court ruling) and any other children if a

taxpayer takes care of them on the basis of a court ruling.

Question 14: Who are other dependent family members under the Personal Income Tax Act? Answer Dependent family member of a taxpayer is:

- a spouse1 who is not employed, does not have a business and does not have her/his

own source of income or is such income less than the amount of the allowance for other

dependent family member – from the year of 2013 onwards 2.436,92 euros; own

sources of income means all types of income covered by the Personal Income Tax Act

- a divorced spouse if in accordance with a court ruling or an agreement adopted under

the Marriage and Family Relations Act a taxpayer is obliged to pay alimony to her/his

divorced spouse

- parents or adoptive parents of a taxpayer if they do not have their own sources of

income or if such income is less than the amount of the allowance for other dependent

family member – from the year of 2013 onwards this is 2.436,92 euros - if they live with

a taxpayer in a common household or if they live in an institution that provides social

care and protection (retirement home) and a taxpayer pays the bill for it; parents and

adoptive parents of a taxpayer’s spouse under the same conditions as mentioned

above if the spouse is not obliged to pay personal income tax under the Personal

Income Tax Act. Own sources of income means all types of income covered by the

Personal Income Tax Act

- member of a farming household, if a taxpayer’s primary source of income is the income

from basic agricultural and forestry activities, if such a member contributes to this

income with her/his work and does not have her/his own sources of income or such

income is less than the amount of the allowance for other dependent family member –

from the year of 2013 onwards this is 2.436,92 euros; under the condition that this

member’s children, spouse, parents or adoptive parents do not claim an allowance for

this person; own sources of income means all types of income covered by the Personal

Income Tax Act.

1 Spouse as it is defined in the Personal Income Tax Act is a person who is married to a taxpayer AND a

taxpayer's common-law partner as it is defined in the Marriage and Family Relations Act.

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Question 15: How am I taxed in Slovenia if I am sent to work to Slovenia from my employer in my home country (country of residence for tax purposes)? Answer If the employer from your home country sends you to work to Slovenia for a limited period of

time (less than 183 days) and Slovenia has concluded a Double Taxation Agreement (DTA)

with your home country it is unlikely you will have to pay income taxes here. The right of the

country to tax you where the work is being carried out and the income is earned (source

country) is usually limited by the Article 15 of most DTAs Slovenia has concluded with other

countries. List and texts of DTAs Slovenia concluded with other countries can be found here.

According to this article the following conditions have to be met to prevent the source country to

tax you even if you carry out work there:

- Presence in Slovenia for less than 183 days (approx. half a year) in any 12-month

period commencing or ending in the tax year concerned,

- Your employer is not a resident of Slovenia,

- Income is not paid out by the employer’s permanent establishment in Slovenia.

It has to be emphasized that this is only the general text of the OECD Model Tax Convention

and you have to check the exact text of the DTA in question to verify the conditions set in it. If

you satisfy all these conditions, you will not be taxed in Slovenia on your earned income as a

sent worker. However, once one of the conditions is not met Slovenia has the right to impose

tax on your income from employment.

Question 16: Who pays social security contributions for me if I am sent to work to Slovenia from my employer in my home country? Answer According to the Article 12 of the Regulation no. 883/2004 on the coordination on social security

systems posted workers continue to be subject to the legislation of the Member State in which

their employer normally carries out its activities as long as the anticipated duration of work in a

host country does not exceed 24 months and the person sent is not meant to replace another

person. Therefore, if you are sent to work to Slovenia from the employer in your home country

for a period of less than 2 years you will not have to pay social security contributions in

Slovenia. Accordingly, you will claim your social security benefits in your home country and not

in Slovenia.

However, according to Article 41, paragraph 2 of the Personal Income Tax Act you will be able

to deduct the amount of social security contributions paid in the country in which you are

included in the social security system from your tax base in Slovenia (if liable to tax). The

deduction can be made if the contributions paid abroad are comparable to the compulsory

contributions in Slovenia and if they are paid into a fund recognized for tax purposes in the

country in which they are being levied. Additional conditions for the deduction are that a person

was not a resident of Slovenia immediately before entering Slovenia to perform work here and

that the contributions were already being paid into the fund before entering Slovenia.

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Question 17: How are dividends taxed in Slovenia? Answer Dividends and any other income based on the ownership share that individuals receive in

Slovenia are taxed at the flat rate of 25% at the time of payment. Being a type of capital income

they are not included in the indicative calculation of the personal income tax, where the tax is

settled on the annual basis.

Question 18: How do nonresidents pay tax on dividends? Answer Nonresidents only pay tax on Slovenian source dividends. Dividends have a source in Slovenia

when they are paid or credited by a resident of Slovenia or by a business unit of a nonresident

situated in Slovenia (i.e. a branch of a foreign company). The liability of withholding the tax on

dividends and other income based on the ownership share lies with the Slovenian entity (also

known as the payer of tax) that calculates the amount of dividends and pays them out.

Nonresidents might be subject to a more favourable tax rate on dividends, if the country of their

residence concluded a Double Taxation Agreement (DTA) with Slovenia and if such an

agreement allows for a lower tax rate on dividends or no tax at all. To determine your tax liability

you have to check a particular DTA.

Question 19: How do I claim a more favourable tax rate on dividends based on the Double Taxation Agreement (DTA)? Answer Nonresidents can claim more favourable tax treatment from the DTA at the time of the payment

of income directly through a special procedure or they can claim a refund of overpaid tax.

A recipient (beneficial owner) of dividends can apply for a relief or exemption from the

withholding tax prior to the receipt of income. Application is made on the KIDO form - Annex no.

1 before the income is paid. Taxpayer entitled to benefits from the relevant DTA (beneficial

owner) files a filled out Annex no.1 form with the payer of income, who sends it to the

competent tax authority.

Whether the taxpayer is entitled to benefits or not has to be decided by the competent tax

authority. The payer of income is only authorized not to withhold the tax or to withhold the tax at

a lower rate upon the official permission from the competent tax authority.

Refund of the tax withheld can be claimed up to the difference between the full amount withheld

and the amount required by the relevant DTA. In case the taxpayer was exempt from tax

according to the DTA the full amount of withheld tax is refunded. Claim of the refund can be

made on the basis of the written application KIDO form - Annex no. 9 to the competent tax

authority.

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Question 20: How is interest taxed in Slovenia if it is earned by a nonresident? Answer Generally, income received in the form of interest by individuals in Slovenia is taxed at the flat

rate of 25% at the time of payment. Being a type of capital income they are not included in the

indicative calculation of the personal income tax, where the tax is settled on the annual basis.

However, for nonresidents the following is important. If Slovenia concluded a DTA with your

country of residence, the rate at which the tax on interest is levied to nonresidents can be lower

or there might be no tax at all. To determine your tax liability you have to check a particular

DTA.

Residents of Slovenia are entitled to a deduction of 1,000 euros from their tax base of income in

the form of interest received from money deposits held in Slovenian or in EU based banks and

certain other savings institutions. This is why they have to file the income tax return for this type

of interest to the competent tax authority by February 28th of the current tax year for the

previous tax year.

Question 21: How is interest defined for tax purposes? Answer Interest defined in the Personal Income Tax Act includes interest from loans, interest from

bonds, interest from money deposits held in banks and certain other savings institutions, other

similar financial claims to debtors, income from financial leasing, income from life insurance and

income obtained on the basis of the distribution of investment fund proceeds in the form of

interest. Furthermore, the concept of interest is broadened to include any compensation that

cannot be classified as the repayment of principal and that is received on the basis of a financial

relationship creating a debt claim, i.e. bonuses, discounts, premiums, risk compensation etc.

Additionally, income from life insurance also includes income from additional pension insurance

not based on the registered pension plan and income from voluntary pension insurance. Interest

from bonds also includes interest from bonds that can be exchanged for equity.

The following types of interest are explicitly excluded from taxation by the Personal Income Tax

Act: interest arising from overpaid taxes or social security contributions, interest accrued on

checking/current/transactional accounts and interest from life insurance in case of death.

Interest from life insurance policy that satisfies all of the following conditions: it does not allow

for the payment of the insured amount at least 10 years after buying the policy, the buyer of

insurance and insured person are the same person and the demand for payment of the insured

amount is not made earlier than 10 years after the purchase of the policy. Furthermore, interest

from a savings contract included into the national real estate savings scheme concluded for a

period of at least 5 years from which a person does not withdraw, 50% of interest on bonds

obtained by people entitled to a compensation in accordance with the Denationalization Act and

interest on participation in the common reserve funds of apartment/condominium buildings are

also excluded from taxation.

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Question 22: How do nonresidents pay tax on interest in Slovenia? Answer Nonresidents only pay tax on the Slovenian source interest defined in the answer to the

question no. 21 above. Apart from the source limitation nonresidents also do not pay tax on

interest from securities that were issued by the state (the Republic of Slovenia) and on interest

from bonds issued by an enterprise incorporated under the law of Slovenia (except bonds

issued in accordance with the Denationalization Act) subject to two conditions: bonds do not

carry the option to exchange them for equity and they are traded in an organized market in EU

Member State or in OECD Member State. Interest has a source in Slovenia when they are paid

or credited by a resident company or entity of Slovenia or by a business unit of a nonresident

(i.e. a branch of a foreign company) of Slovenia.

When the payer of interest has the status of the payer of tax (to simplify this usually means a

legal entity, sole entrepreneur, a business unit of a nonresident – a branch of a foreign company

in Slovenia or an agent) it is required to withhold the tax on interest in the name of the recipient.

If there is no payer of tax who would withhold the tax in the name of the recipient, the recipients

themselves have to file the Interest tax return with the competent tax authority by February 28th

of the current tax year for the previous tax year.

Taxation of savings income in the form of interest payments in Slovenia and in other EU

Member States is dealt with the Council Directive 2003/48/EC (“EU Savings Directive”). The aim

of this Directive is for this type of income to be taxed effectively in the country of the beneficial

owner’s residence. The provisions of the Directive were implemented in Slovenian tax

legislation through Article 33 of the Personal Income Tax Act and Article 347 of the Tax

Procedure Act, where the savings income in the form of interest payments is defined.

Nonresidents from EU Member States will therefore not be taxed on such interest in Slovenia.

However, Slovenia will have to report such income that nonresidents from EU Member States

received in Slovenia to the tax authorities of their country of residence.

Question 23: What is the EU Savings Directive? Answer This directive was adopted with the purpose of effectively taxing the savings income in the form

of interest payments in the beneficial owner’s country of residence. It provides for the system of

automatic exchange of information on interest payments among EU countries (the exchange of

data is due on June 30th each tax year for the previous tax year) the purpose of which is to

insure that EU taxpayers report their savings income in the form of interest payments to the tax

administrations of their own country of residence. In order for the aims of the Directive to be

achieved some non-EU countries like Switzerland and dependent or associated territories of EU

countries overseas concluded agreements with the EU regarding the interest payments to

provide for tax withholding or exchange of information on interest.

Question 24: How do I claim a more favourable tax rate on interest based on the Double Taxation Agreement (DTA)? Answer Nonresidents can claim more favourable tax treatment from the DTA at the time of the payment

of income directly through a special procedure or they can claim a refund of overpaid tax. In

case there is no payer of tax the tax cannot be withheld in the name of the recipient and the

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recipient has to file a tax return (found on the link provided above in answer to question no. 22)

and the benefits from the DTA are claimed in the return itself.

A recipient (beneficial owner) of interest can apply for a relief or an exemption from the

withholding tax prior to the receipt of income. Application is made on the KIDO form - Annex

no. 2 before the income is paid. Taxpayer entitled to benefits from the relevant DTA (beneficial

owner) files a filled out KIDO Form with the payer of income, who sends it to the competent tax

authority.

Whether the taxpayer is entitled to benefits or not has to be decided by the competent tax

authority. The payer of income is only authorized not to withhold the tax or to withhold the tax at

a lower rate upon the official permission from the competent tax authority.

Refund of the tax withheld can be claimed up to the difference between the full amount withheld

and the amount required by the DTA. In case the taxpayer was exempt from tax according to

the DTA the full amount of withheld tax is refunded. Claim of the refund can be made on the

basis of the written application to the competent tax authority. It is made on the KIDO form -

Annex no. 10.

Question 25: How are capital gains taxed in Slovenia? Answer Capital gains in Slovenia are taxed at the flat rate of 25% at the time of payment. Capital gains

are capital income and they are not included in the indicative calculation of the personal income

tax, where the tax is settled on the annual basis.

The rate is lowered after every 5 years of ownership of the capital. So, the rate after 5 years of

ownership is 15%, after 10 years it is 10%, after 15 years it is 5% and after 20 years the rate is

0%.

Capital gains refer to gains earned by alienation of immovable property and financial capital

(securities, ownership or equity shares and investment coupons).

However, for nonresidents the following is important. If Slovenia concluded a DTA with your

country of residence, the rate at which the tax on capital gains is levied to nonresidents can be

lower or there might be no tax at all. To determine your tax liability you have to check a

particular DTA.

Question 26: How do nonresidents pay tax on capital gains in Slovenia? Answer Nonresidents only pay tax on the Slovenian source capital gains. Capital gains earned from

alienation of immovable property have a source in Slovenia when immovable property is

situated in Slovenia or when gains are derived from alienation of ownership share deriving more

than 50% of its value directly or indirectly from immovable property situated in Slovenia. Capital

gains earned from alienation of securities, ownership shares and investment coupons have a

source in Slovenia when securities and ownership shares are issued by the state, the Bank of

Slovenia, the municipalities or any entity incorporated under the law of Slovenia or when the

investment fund managing the alienated investment coupons is formed or established under the

law of Slovenia.

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The procedure of paying a tax on capital gains depends on the type of the capital in question.

The procedures are therefore summarized in answers to the following questions.

Question 27: How do nonresidents pay tax on capital gains from alienation of immovable property in Slovenia? Answers Nonresidents only pay tax on capital gains from alienation of immovable property that is situated

in Slovenia. The tax on capital gains from alienation of immovable property is only levied on

gains from alienated immovable property that was obtained by the taxpayer after 1 January

2002 according to the provision of the Article 153 of the Personal Income Tax Act. Article 13 in

connection with the Article 6 of the most Double Taxation Agreements (DTAs) Slovenia

concluded with other countries gives the right to taxation of capital gains from immovable

property to the source country (country where the property is situated). However, you have to

check a particular DTA if this is true in your case.

Capital gains from alienation of immovable property are determined by the difference in value of

property at the time of alienating the property and at the time of obtaining the property. The

value of property in both cases is set by the amount in the sales contract or in the purchase

contract or in any other contract. However, for tax purposes the amount in the contract will not

be valid if it does not reflect the market value of the property. Value at the time of alienating the

property can be decreased by the expenses for maintenance or investments that a taxpayer

obtaining the property had to pay, by the amount of inheritance and gift tax, by the expenses of

the official evaluation of the property – not more than 188 euros – and the standard expense in

the amount of 1% of the value at the time of alienating the property. Value at the time of

obtaining the property can be increased by those same expenses. Capital loss resulting from

the alienation of one type of capital in a tax year can decrease the taxable amount of the capital

gains from alienation of another type of capital until the tax base reaches zero.

In certain cases the tax liability can be postponed at the time of alienation. Also, taxpayers are

exempt from the tax on capital gains from the alienation of a condominium/apartment or of a

house with the pertaining property when they have actually lived in it for at least 3 years before

the alienation. There is no exemption for the property or a part of the property that was used for

business and there is no exemption for the property that was leased.

Tax on alienation of immovable property is paid on the basis of the tax return that has to be filed

with the competent tax authority in 15 days after the alienation occurs. The date of alienation is

determined by the act of signing the contract or any other legal act (for example court ruling).

The competent tax authority confirms that the tax on capital gains from alienation of immovable

property was paid by the seal on the contract. If the alienation was exempt from tax (for

example if the owner alienated it after 20 years of ownership) the competent tax authority also

confirms the exemption by the seal on the contract. Only after the seal from the competent tax

authority is obtained the owner can enter the property in the Land Register of Slovenia which

secures to the owner the legal protection of rights arising from the property.

Question 28: How do nonresidents pay tax on capital gains from alienation of financial capital (securities and ownership/equity shares and investment coupons) in Slovenia?

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Answer Even if nonresidents alienate Slovenian source financial capital they are not required to pay the

tax on capital gains earned by this alienation, unless the alienated security or equity share

represented a majority share in an entity (defined in the Slovenian Personal Income Tax Act as

10% of voting rights or 10% share in a capital or in a particular class of securities that a legal

entity issued directly or indirectly through an associated enterprise) in the period of 5 years

before the alienation.

Capital gains from alienation of financial capital are determined in the same manner as capital

gains from the alienation of immovable property described in the answer to the question no. 27

above. Furthermore, capital loss resulting from the alienation of one type of capital in a tax year

can decrease the taxable amount of the capital gains from alienation of another type of capital

until the tax base reaches zero.

Certain very specific alienations of the capital are not taxed and in certain cases the tax liability

can be postponed at the time of alienation. Taxpayers are exempt from taxation of capital gains

in the following cases. They are exempt at the first alienation of shares or investment coupons

obtained in the process of denationalization, at the alienation of securities and at the alienation

of a share obtained on the basis of venture capital investment.

A nonresident that alienated a majority share is required to file a tax return in 15 days after the

alienation of capital. If there were more alienations of capital in the previous tax year a

nonresident can report them in a joint tax return filed with the competent tax authority by 28th of

February of the current tax year for the previous tax year. The return must be filed in an

electronic form when there are more than 10 alienations in the previous year, this applies for

tax refund until 2015 . The return must be filed in an electronic form when there are more than

10 transactions in the previous year, for tax refund for 2016 onwards.

However, if a DTA between Slovenia and a country of residence of the owner of alienated

financial capital exists they can claim relief or exemption from such income to be taxed in

Slovenia in a return itself.

Question 29: How do I obtain a notification for the purposes of claiming a tax credit of the already paid tax in Slovenia in my home country (county of residence for tax purposes)? Answer If you are a nonresident of Slovenia and you received income which was taxed in Slovenia in

accordance with the law and the relevant DTA and you want to claim already remitted amount

of tax that you have paid in Slovenia as a tax credit in your own country of residence the

competent tax authority in Slovenia can issue a notification stating how much tax has already

been paid in Slovenia upon request.