In determination of profit, the expenses required to acquire revenue that is taxable under this Act are being recognized. Expenses that are not required to acquire revenue are expenses for which, in respect of the facts and circumstances follows that:
- they are not a direct condition for performing activities and are not a consequence of performing activities;
- they have a private nature;
- and they do not conform to normal business practice.
Non-recognized expenses are:
- income similar to dividends, including payment of hidden profit distribution
- expenses to cover losses from previous years
- costs relating to private life e.g. entertainment, relaxation, sport and recreation, including the pertaining VAT
- costs for forcible collection of taxes or other levies
- penalties pronounced by a competent authority
- taxes paid by an entities partner as a natural person
- deductible VAT from previous years
- interests paid on taxes or other levies not paid on time
- interests paid on loans received from persons whose principal office or place of residence is in a country outside EU with nominal level of tax on profits less than 12.5%
- bribes and other form of pecuniary benefit given to legal and natural persons in order that a specific event might or might not occur in a manner it would otherwise not.
Adjustments or limitations imposed on recognized expenses: representation (entertainment costs and gifts with or without logo) costs and supervisory board costs are limited to 50% of their total amount.
Except in the case of loan recipients that are banks or insurance undertakings, the interest paid on loans received from a shareholder or partner who at any time during the tax period directly or indirectly owns at least 25% of the shares in the equity capital or voting rights of the taxpayer are not being recognized as a deductible expense, if at any time during the tax period the loans exceed four times the amount of the shareholder's in the taxpayer equity capital (loan surplus), unless the taxpayer can proof that he could receive the loan surplus from a non linked person (thin capitalisation rule).
Expenses linked to depreciation may not exceed the level arrived at using straight-line depreciation and the maximum annual depreciation rates:
- 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%
Reimbursement for annual leave, long-service bonuses, severance pay at retirement, solidarity aid, reimbursement of work-related expenses such as the cost of meals during work and for transport to and from work, field allowances, separate living allowances and reimbursement of expenses for work-related travel (per diem allowances, reimbursement of transport costs, reimbursement of accommodation costs) are fully recognized.
Are in the form of deductions from tax base.
R&D allowance - a taxable person can use the reduced tax base in the amount of 100% of the amount invested (but only up to the taxable base) in research and development. Investments referred to in this paragraph are investments in:
Internal research and development activities of a taxable person, including the purchase of research and development equipment which is exclusively and permanently used for the research and development activities of the a taxable person;
Purchase of research and development services (performed by other persons, including associated enterprises, or by other public or private research organizations).
Investment allowance - a taxable person can use the reduced tax base in the amount of 40% of the amount invested in equipment or intangible assets however not exceeding the amount of the taxable base. Equipment does not include furniture and office equipment and motor vehicles except cars and buses on hybrid or electrical drive, and trucks and buses meeting the EURO VI emission requirements.
Employment allowance - if a taxpayer employs disabled persons under the act regulating the vocational rehabilitation and employment of disabled persons may claim a reduction in the taxable base in the amount of 50% of the salaries of such persons but not exceeding the amount of the taxable base, while a taxpayer that employs disabled persons with 100% physical disability or deaf persons 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 employs disabled persons above the prescribed quota, their disability not being a consequence of a workplace injury or occupational disease at the same employer, 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.
A tax relief for employment is granted to a taxpayer that employs a person under the age of 26 or a person above the age of 55 who has been prior to employment at least six months registered as unemployed with the Employment Service of the Republic of Slovenia and has not been employed with this taxpayer or his/her associated enterprise for the last 24 months. Such taxpayer may claim a reduction of the tax base by 45% of the person’s salary, however, only up to the amount of the tax base.
If a taxpayer by a teaching agreement employs an apprentice or a student for performing practical work in a professional education, 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 every month of performing practical work and every individual person who takes place in such professional education.
Voluntary supplementary allowance - A taxpayer employer that finances a pension plan of collective insurance and fulfils the conditions from Pension and Disability Insurance Act may claim a reduction in the taxable base for premiums for voluntary supplementary pension insurance paid in full or in part for the benefit of insured employees to a pension plan provider with a principal office in Slovenia or in an EU member state according to a pension plan approved and entered into a special register in accordance with the regulations regulating voluntary supplementary pension and disability insurance for the year in which the premiums were paid, but not exceeding an amount equal to 24% of the compulsory contributions for pension and disability insurance for an insured employee, and no more than 2,819 EUR annually, but not exceeding the amount of the taxable base for the tax period.
Donations allowance - 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, for payments made to residents of Slovenia or residents who are state members of EU or EEA (however excluding the Principality of Liechtenstein) and are established under special regulations for 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 and representative trade unions up to an amount equivalent to three times the average monthly salary per employee of the taxpayer in the current tax period. The cumulative total of allowances may not exceed the amount of the taxable base.
There is an additional reduction of 0.2% of the taxpayer’s taxable revenue for amounts paid in cash and in kind for cultural purposes and voluntary societies incorporated for protection from natural in other disasters, who work in public interest and are residents of Slovenia or residents of state members of EU or EEA (however excluding the Principality of Liechtenstein) and are established under special regulations for performance of such activities.
There is a system for avoiding legal double taxation: from the tax liability under the tax return for an individual tax period, a resident of Slovenia may deduct an amount equal to the relevant tax on income from sources outside Slovenia (foreign tax) paid thereby under this Act on income from sources outside Slovenia (worldwide income) included in its taxable base. The tax credit may not exceed:
the lower of the amount of foreign tax on foreign income that was final and actually paid or
the amount of tax that would be payable under this Act in respect of foreign income had the tax credit not been allowed.
There are a limited number of legal persons who are exempt from corporate tax for income derived from non-profit activities, for example: institutes, societies, foundations, religious communities, political parties, chambers or representative trade unions.
When calculating the tax base the taxpayer may exempt received dividends and other similar income except hidden reserves (hidden reserves are calculated as a difference between fair value and tax value of assets and liabilities on the day before the entry of winding up in the court register) if the payer is:
liable to pay tax by the Corporate Income Tax Act or
is a resident of an EU member state for tax purposes in accordance with the law of such member state and is not deemed to be a resident outside the EU in accordance with an international treaty on the avoidance of double taxation concluded with a non-member state; and is a taxpayer subject to one of the taxes in connection with which the common system of taxation applying to parent companies and subsidiaries from different EU member states, whereby a company that is exempt from tax or that has the possibility of a choice of taxation should not be deemed to be a taxpayer.
liable to pay tax, comparable with tax according in this Act and is not a resident of a country, or in the case of a business unit not situated in a country in which the general, average, nominal level of tax on corporate profits is less than 12.5%.
If a taxpayer makes capital gain from expropriation in holdings in legal entities he may claim an exemption in the amount of 50% of realised capital gain from the taxable base if the taxpayer participated in stock or management in such way that he is the owner of shares, stock or voting rights in the amount of at least 8 % and for at least six months and has at least one person employed at full-time basis. The loss of expropriation in holdings from the previous paragraph is not recognized in the amount of 50% of its loss.
In the determination of the taxable base under the aforementioned regime of exemption of capital gains and dividends, expenses relating to participation are not recognized in the amount which is equal to 5% of received dividends and capital gain in that tax period.
A venture capital company which has been set up by the Venture Capital Companies Act payes a corporate income tax at a rate of 0% on activities of allowed investments of venture capital in accordance with the Venture Capital Companies Act if the venture company submits a separate tax return just for that part of its activity.
A resident or non-resident taxpayer that performs an activity or business in or through a permanent establishment in Slovenia will be allowed to exclude all the profit from expropriation of capital holdings acquired by investing in a venture capital company if:
the venture capital company is set up in accordance with the Venture Capital Companies Act; and
the status of the venture capital company does not change throughout the period of owning the aforementioned capital holdings.
The loss from the abovementioned expropriation will not be recognised for tax purposes.