Minimum Tax

The Minimum Tax Act (hereinafter ZMD), published on December 22, 2023, in the Official Gazette of the Republic of Slovenia No. 131/2023, introduced the minimum tax into the Slovenian tax-legal system. The purpose of the minimum tax is to ensure a global minimum taxation of profits for large international and domestic groups with an effective tax rate of 15% (minimum tax rate). The law was adopted based on EU Directive 2022/2523 on ensuring a global minimum tax rate for international groups of companies and large domestic groups in the Union, prepared on the basis of the OECD's GLOBE model rules published in December 2021.

The minimum tax system consists of the top-up tax and the domestic top-up tax. Three rules apply for the calculation of the top-up tax:

• QDMTT (Qualified Domestic Minimum Top-Up Tax) – qualified domestic top-up tax

This refers to the application of the domestic minimum tax rate (i.e., at the jurisdiction level where the specific entity operates). If the country where the low-taxed entity is located introduces its domestic minimum tax rate, this rule is applied first. Thus, if a country introduces QDMTT, other international rules can be avoided.

This rule has priority over all other rules.

• IIR (Income Inclusion Rule) – income inclusion rule. If QDMTT is not available (i.e., the domestic jurisdiction does not introduce minimum tax), then the ultimate parent company applies the income inclusion rule (IIR).

This rule taxes under-taxed income of low-taxed entities at the level of the parent company.

• UTPR (Undertaxed Payment Rule) – rule on undertaxed profits. If neither QDMTT nor IIR covers the under-taxed income, then UTPR is used. This rule allows additional taxation in other jurisdictions where related companies operate.

UTPR ensures that under-taxed profits not covered by QDMTT or IIR are taxed at other related companies.

Taxpayers related to minimum tax are Slovenian companies that are part of Slovenian or international groups whose annual revenues, as reported in consolidated financial statements of the ultimate parent company, amount to 750 million EUR or more in at least two of the last four fiscal years.

Obligations of taxpayers for the minimum tax are:

By June 30, 2026, to submit:

o    Informative form for calculating the top-up tax GIR (Globe Information Return). This form must be submitted in the prescribed format and content by every entity in the group[1] located in Slovenia, except if the reporting obligation has been transferred to another entity[2]. The obligation to submit the informative form applies regardless of whether the entity is actually obliged to pay the top-up tax for the relevant calculation period.

o    Calculation of the domestic top-up tax by June 30, 2026. The taxpayer obligated for domestic top-up tax must submit the tax calculation to the tax authority regardless of whether the domestic top-up tax is payable for the period covered.

By July 30, 2026, to submit:

o    Calculation of the top-up tax according to the IIR or UTPR rules. An entity in the group that is obligated under this law for top-up tax based on the Income Inclusion Rule (IIR)[3] or the Undertaxed Payment Rule (UTPR)[4] in Slovenia must submit the tax calculation. The obligation to submit arises only if the entity in the group indeed has an obligation under IIR or UTPR.

The Minimum Tax Act also defines simplifications for calculating the top-up tax, which also apply to the domestic top-up tax, in the form of safe harbors. These are simplifications that allow taxpayers, in certain cases, to avoid complex calculations or to consider the top-up tax in a given jurisdiction (e.g., Slovenia) as zero if certain conditions are met.

Safe harbors are:

• The safe harbor for the domestic top-up tax (QDMTT safe harbor), which meets an additional set of standards to be considered a safe harbor. It simplifies the calculation of obligations under ZMD. When the QDMTT safe harbor conditions are met, the application of top-up tax rules in other jurisdictions is excluded, meaning the top-up tax the group would have to pay under the top-up tax rules is zero. Thus, the QDMTT safe harbor allows the group to perform a single calculation within the QDMTT framework and then rely on the safe harbor rule to reduce the top-up tax to zero in jurisdictions applying the top-up tax rules. This can relieve taxpayers from additional calculations under the top-up tax rules.

• Safe harbor for simplified calculations for immaterial entities excluded from consolidated financial statements due to insignificance. These simplified calculations are used only for the purposes of the safe harbor assessment. If the conditions for safe harbor simplified calculations for the tested jurisdiction are not met (i.e., conditions for the routine income test, the de minimis test, and the effective tax rate test are not fulfilled), then general top-up tax calculation rules apply for that jurisdiction.

• Safe harbor for CbCR for fiscal years up to December 31, 2026; conditions are met if the taxpayer meets one of these criteria:

  • De minimis test: total revenue up to 10 million EUR and profit before tax up to 1 million EUR,

  • Simplified effective tax rate (ETR) test: simplified effective tax rate above transitional rates of 15% for 2023 and 2024, 16% for 2025, and 17% for 2026, and

  • Routine profit test: profit before tax is less than or equal to the amount of the substance exclusion of income.

Regardless of meeting the safe harbor conditions, a taxpayer located in Slovenia must submit a domestic top-up tax calculation.

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[1] A " entity in the group" is any legal entity that is part of an international group of companies or part of a large domestic group of companies. The form must be submitted in xml format.

[2] Taxpayers for the domestic top-up tax who are part of the same international group or large domestic group may designate one filing entity among all entities to submit the domestic top-up tax return on behalf of all constituent entities located in Slovenia.

[3] A entity in the group liable for the top-up tax under the Income Inclusion Rule (IIR) is the ultimate parent entity located in Slovenia or an intermediate parent entity located in Slovenia.

[4] A entity in the group liable for the top-up tax under the Undertaxed Payment Rule (UTPR) is a constituent entity located in Slovenia if the ultimate parent entity is located in a jurisdiction that does not apply the qualified income inclusion rule or if the ultimate parent entity is located in a low-tax jurisdiction.