Tax and other legal changes for 2025

On November 14, 2024, Slovenia's National Assembly adopted amendments to several tax laws aimed at boosting competitiveness, attracting labour and encouraging innovation and investment. Following a veto on certain provisions, some of the amendments did not enter into force until November 26, 2024, or December 6, 2024. Below is a summary of some of the main tax and other legal changes, most of which will be effective starting January 1, 2025.

1.    Corporate Income Tax Act

a)    Restriction on the deductibility of interest

The thin capitalization provision (Art 32 of the Corporate Income Tax Law), which in 2024 limits the deductibility of interest expenses in addition to the EBITDA limit, will be deleted. The thin capitalization provision restricted the deductibility of interest on debt capital that exceeds the ratio of debt to equity by 4:1. The EBITDA limit introduced for 2024 will be relaxed in such a way that, in addition to the 30% EBITDA limit for the interest surplus, the absolute amount of the interest surplus will be increased to EUR 3 million. The higher of the two values will apply. The EBITDA limit does not apply – as often assumed – to interest from affiliated companies, but to all companies with a direct or indirect majority shareholder of at least 25%. The interest surplus is calculated as the difference between financial income and financial expenses.

b)    Restriction on the ability to carry forward losses

Until December 31, 2024, the ability to carry forward losses is unrestricted. From January 1, 2025, the deductibility of losses will be subject to a restriction. New losses from January 1, 2025, can be carried forward and offset for a maximum of five years. Losses incurred before the new provisions come into force, i.e., "old losses", can be offset against profits over the next five years.

c)     Tax benefits for the "digital and green transition"

Numerous benefits for the digital and green transition were introduced for 2022. 40% of the investment amount could be deducted from the tax base. However, the issue was the lack of carryforward ability and the absence of a mechanism for investments that spanned several years. The benefit had to be claimed in the year of acquisition. From January 1, 2025, investments in the digital and green transition will be eligible for a carryforward period of 5 years. Furthermore, the benefit requires the existence of a tax base.

d)    Abolition of the special flat-rate expense system for corporate tax entities

The special system for determining the tax base using flat-rate expenses is being abolished (corporate tax entities will no longer have the option to determine the taxable base using flat-rate expenses).

2.    Value Added Tax Act

a)    Higher threshold for mandatory VAT registration

The annual turnover threshold for mandatory VAT registration is increased from 50,000 EUR to 60,000 EUR. Companies with an annual turnover between 50,000 EUR and 60,000 EUR will consequently be able to opt out of the VAT system.

b)    Application of the cross-border VAT exemption

A VAT exemption for services to other EU member states is introduced for small businesses if the small business has not exceeded a turnover of 100,000 EUR in the current and previous year within the EU. A small business that meets the legal requirements and wants to claim the VAT exemption for services in another EU member state must notify the tax administration in advance, as a prerequisite for the tax-free delivery/service. The tax authority will then provide the small business with an individual identification number for enabling tax-free deliveries/services. The individual identification number will end with “-EX” and obligates the business to submit quarterly reports.

The VAT exemption is also introduced for foreign EU businesses that make sales exceeding 60,000 EUR in Slovenia. Until now, foreign businesses were not able to claim the small business regulation in Slovenia. Entrepreneurs from third countries remain excluded from the application of the small business regulation.

c)     VAT grouping

Legally independent businesses who are financially, economically, and organizationally closely connected and not in a crisis can form a VAT group. The provisions regarding VAT grouping can be applied from January 1, 2026.

A financial connection exists if there is a 50% or more shareholding. An economic connection exists if the taxpayer:

• predominantly carries out the same activity, or

• carries out activities that are interdependent or complementary, or

• carries out activities that are entirely or partially for the benefit of other taxpayers.

An organizational connection exists if the entrepreneurs are entirely or partially under a unified management or a unified business strategy.

d)    VAT rate for sweet beverages

Until now, a reduced VAT rate of 9.5% applied to sweet beverages. From January 1, 2025, the standard VAT rate of 22% will apply to beverages to which sugar or sweeteners are added, as well as concentrates for preparing such beverages (e.g., energy drinks, carbonated drinks, drinks with added sugar or sweeteners, fruit drinks, chocolate, vanilla or hazelnut milk, coffee drinks, etc.).

e)    Changes to the record-keeping obligations

From July 1, 2025, taxable persons will be required to submit records of VAT liabilities and claimed input VAT ("book of outgoing and incoming invoices") to the tax authority within the statutory period, i.e., by the end of the month following the reporting period. Until the legal amendment comes into effect, the book of outgoing and incoming invoices must only be presented upon request by the tax authority. Based on the submitted records, the tax authority will prepare a pre-filled VAT return for taxable persons. This will be made available to taxable persons via the online tax portal if the book of outgoing and incoming invoices is submitted at least three days before the VAT return submission deadline.

f)      Deduction of VAT under cash accounting

A new rule is being introduced for taxable persons subject to accrual accounting when they receive goods or services from businesses operating under cash accounting. These businesses will only be entitled to deduct input VAT after the payment of the incoming invoice. Businesses subject to cash accounting will be required to clearly state on the invoice: "Posebna ureditev – plačana realizacija.”

g)    Limitation on the refund of input VAT credit

The carryover of input VAT credit to subsequent VAT periods and the ability to request refunds of input VAT credits will be limited to five years. This limitation applies to VAT periods starting from January 1, 2025. For existing input VAT credits, the carryover and refund will be restricted to December 31, 2030.

3.    Personal Income Tax Act

a)    “Relocation tax incentive” for employees

Certain individuals earning income from employment will be granted a 7% reduction in income tax for a period of 5 years if they become tax residents in Slovenia. This incentive will apply to individuals who have not earned income from employment or other activities ("commercial income") in Slovenia in the previous two years, are under 40 years of age, and earn at least double the average Slovenian wage.

b)    Encouraging employee ownership

For employees of innovative start-up companies, subject to appropriate registration, the taxation of company shares granted to employees will be deferred to the point of sale. Taxation will also occur if 10 years have passed since acquisition, the employment relationship ends, or the employer is liquidated, restructured, or no longer subject to taxation in Slovenia. The taxable base for the benefit in kind is the value of the shares at the time of their granting.

c)     Benefit in kind for electric vehicles

Until the end of 2029, the private use of electric vehicles will not be subject to benefit in kind taxation. Thereafter, the benefit in kind will be calculated at 0.75% of the purchase price of the electric vehicle. The purchase price will be reduced in accordance with the general depreciation rule (a 15% reduction annually until the fourth year, followed by 10% annually, with a residual value of 10%).

The provision of electric energy for charging electric vehicles, as well as the use of company bicycles with a gross purchase price of up to €2,000, will now be exempt from benefit in kind taxation.

d)    Benefit in kind for liability insurance for board and supervisory members

The taxable base for inclusion in liability insurance is set at 1% of the employee's monthly gross salary. In cases where there is no employment relationship, 1% of the taxable income, but at least 2% of the Slovenian monthly average salary, must be applied. Benefit in kind taxation must be conducted by December 31 or the balance sheet date. For irregular payments, any months not yet subject to benefit in kind taxation must also be included.

e)    Changes to the flat-rate expense system for sole proprietors

Income earned by sole proprietors who determine their tax base through expense flat-rate deductions will be subject to increased taxation. Eligibility will furthermore depend solely on whether the sole proprietorship requires compulsory social insurance. If the sole proprietorship establishes compulsory insurance ("full-time sole proprietors"), an 80% expense flat-rate deduction can be applied to revenues up to 60,000 EUR. Sole proprietors who are covered by compulsory insurance due to an employment relationship ("part-time sole proprietors") may claim deductions at varying rates for revenues up to 30,000 EUR.

Part-time sole proprietors
Revenue	Expense flat-rate deduction
up to 12,500 EUR	80%
12,500 EUR to 30,000 EUR	40% on revenue over 12,500 EUR
over 30,000 EUR	0% on revenue over 30,000 EUR

Full-time sole proprietors
Revenue	Expense flat-rate deduction
up to 60,000 EUR	80%
over 60,000 EUR	0% on revenue over 60,000 EUR

Flat-rate deductions are not permitted if the average revenue over two consecutive years exceeds 30,000 EUR for part-time sole proprietors or 60,000 EUR for full-time sole proprietors. If the eligibility requirements are not met in both years, the average revenue threshold is 45,000 EUR.

From January 1, 2025, an enhanced disclosure requirement will be introduced for business relationships with affiliated companies and individuals with whom there is an employment relationship.

f)      Loss carryforward, other tax benefits

Until December 31, 2024, loss carryforwards are unrestricted. Starting from January 1, 2025, the ability to carry forward losses will be limited to 5 years. Losses incurred up to December 31, 2024, referred to as "old losses," can be carried forward for 5 years, i.e., until December 31, 2029.

The limitation on loss offsetting to 50% of the taxable base, or 63% of the taxable base when claiming other tax benefits (e.g., investment benefits), remains unchanged.

The tax benefit for investments in the "digital and green transition" was not eligible for carryforward until December 31, 2024. To be claimed, it required a positive taxable base. Starting from January 1, 2025, a five-year carryforward period will be introduced. Under the benefit for the digital and green transition, 40% of the investments will reduce the taxable base.

Donations to NGOs dedicated to protecting against natural disasters and other environmental catastrophes in the public interest will be included in the list of eligible donations. Donations up to 0.2% of taxable revenue to such organizations will reduce the taxable base.

4.    Act on the tax certification of invoices

a)    Vending machine sales

From January 1, 2026, the exemption from the obligation to issue invoices will be extended to all types of vending machines in accordance with the Value Added Tax Act, so that - with some exceptions - both vending machines for the sale of goods and for the sale of services are covered. At the same time, mandatory reporting of sales data to the tax authority in the same way as already exists under tax invoice certification will be introduced.

5.    Act on Mass Valuation of Properties

In 2025, property owners will receive the values (“tax market values”) of their properties in writing for the last time. As is currently the case, access to the public register will be available at any time online (www.e-prostor.gov.si).

6.    New Standard Classification of Activities (SKD 2025)

Starting on January 1, 2025, Slovenia will implement a new version of the Standard Classification of Activities, SKD 2025, which will replace the current SKD 2008. The most significant changes are expected in the areas of trade and information and communication activities.

AJPES will automatically update the main activity of in the Business Register of Slovenia for cases where the activity changes from SKD 2008 to SKD 2025 on a 1:1 basis. In cases where this cannot be done automatically (because the activity changes from one to multiple activities), businesses will need to report the correct main activity via an online application, which will be available on the AJPES portal.

7.    Changes in corporate law

Starting from January 1, 2025, new size criteria for companies will apply in corporate law. These criteria will be applicable to financial years beginning in 2024. It should be emphasized that the following criteria will apply for mandatory audits:

Balance sheet total: 5 million EUR

Revenue: 10 million EUR

The employee threshold remains unchanged at 50. The mandatory audit obligation arises, if two of the three listed size criteria are met.

For the first time, large companies (balance sheet total > 25 million EUR, revenue > 50 million EUR, more than 250 employees) will now be required to include a sustainability report in their annual financial statements, for financial years starting on or after January 1, 2025, which will also be subject to the mandatory audit.

By January 1, 2026, all companies will have to visibly display a sign at their business address stating the company's name and registered seat.

8.    Increase in social security contributions

Starting from July 1, 2025, social security contributions will be supplemented by a new contribution. The Long-Term Care Act introduces a mandatory social security contribution to finance long-term care for elderly people. The contribution rate will be 1% for both employers and employees, so from July 1, 2025, employer contributions will be 23.10% and employee contributions will be 17.10%. No maximum contribution base will be introduced for income from dependent work.

9.    Billing of network fees

Starting from October 1, 2024, new criteria for the billing of network fees applies to both private and business customers. A 15-minute interval is introduced for billing, with the year divided into two seasons (November to February and March to October), and time slots are considered, with billing based on agreed and excess consumption.

Customers have access to an online portal (www.mojelektro.si) where they can view their consumption and change the above parameters (e.g., changing consumption data in different time slots). The more specific and accurate the consumption data is defined, the lower the network fee will be.