Slovenia

As of 1 January 2020, the amendments of the Tax Procedure Act (TPA-2M) and Corporate Income Tax Act (CITA-2R) came into effect. The new CIT Act, which regulates corporate taxation, limits utilisation of investment allowances and carried forward tax losses up to 63% of the tax base in a given fiscal year.

Directive (EU) 2016/1164 - ATAD I

The CIT Act also transposed into the Slovenian legislation the Directive (EU) 2016/1164 (better known as ATAD I) on rules against tax avoidance practices. Accordingly, the Act regulates two new areas: exit taxation and hybrid discrepancies.

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

The CIT Act currently in force also incorporates rules regarding hybrid discrepancies (i.e. discrepancies arising from reciprocal interaction between legal systems). The special feature of the new CIT Act chapter, which regulates hybrid discrepancies, 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. As of 1 January 2022, the updated provisions defining reverse-hybrid mismatches shall apply. 

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.

The main purpose of the Tax Procedure Act 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.