Slovenia

Corporate - Significant developments

Last reviewed - 10 January 2020

As of 1 January 2020, the amendment CIT-2R, which regulates corporate taxation, will come into effect. The CIT-2R limits investment allowances and transferred tax loss allowances to 63% of the tax base. Moreover, the new amendment to the Tax Procedure Act (TPA-2M) will also come into effect from 2020.

Directive (EU) 2016/1164 - ATAD I

The new CIT-2R act also transposes into the Slovenian legislation the Directive (EU) 2016/1164 (better known as ATAD I) on rules against tax avoidance practices. Accordingly, the new act will regulate two new areas; exit taxation and hybrid discrepancies.

The new regime of exit taxation for cross-border situations provisions when a taxpayer must disclose hidden reserves for transferred assets and include them in the tax base. The proposal also sets out conditions when and how a taxpayer, who is required to include hidden reserves in his tax base, can opt for a tax deferral; the proposed amendment predicts certain cases where a five-year payment instalment is allowed.

The envisaged amendment to the CIT-2 also incorporates rules regarding hybrid discrepancies (i.e. discrepancies arising from reciprocal interaction between legal systems). The special feature of the CIT-2R chapter, which regulates hybrid disagreements, is that in this part the term 'related party' is defined differently than in the other parts of Slovene legislation; a higher percentage of participation (50%) is defined for hybrid discrepancies.

Relating to the ATAD I actions in the area of interest deduction, no amendments are anticipated until 2024. Thus, provisions of thin capitalisation, determined in ratio 4:1 debt to capital, remain intact.

Reporting obligation for cross-border arrangements - DAC6

The Directive (EU) 2018/822 (better known as DAC6), which has introduced new reporting obligations regarding cross-border arrangements, has been implemented into the Slovene legislation with the amendment to the Tax Procedure Act (TPA-2).

The main purpose of the new TPA-2L provisions, which came into effect on 1 July 2019, is to increase the transparency of cross-border transactions and prevent the so-called erosion of the national tax base, where taxable profits are transferred to jurisdictions with more favourable tax regimes. The TPA-2L amendment follows the Directive almost to the line; the only local specifics are provisions regarding professional secrecy and penalties for lack of reporting. However, it is important for taxpayers to be aware that, in certain cases, even though they use an external intermediary, they may also be potentially liable for the obligatory reporting.