Tax treatment of payments to seconded employees
There is a reduction of the tax base for PIT for employees that are on a secondment in a foreign country, as follows:
- In the case of an uninterrupted secondment of up to 30 days (up to 90 days for drivers in international traffic), the reimbursements for food are excluded from the tax base up to the amount that applies to temporary absence (e.g. subsistence allowance). When considering secondments that last beyond 30 days (90 days for drivers in international traffic), the mentioned costs are not included in the taxable base in the amount of reimbursement for food during work, increased for 80%.
- Reimbursements for the costs of travel are not included in the taxable base, whereas the reimbursements of the costs of travel to and from the workplace, in the foreign country, are not included in the taxable base in the amount that applies to the transport to work and from work. Reimbursements of costs of travel to and from the place of secondment at the start or at the end of the secondment are not taxed in the amount and under the conditions that apply to temporary duty.
- Reimbursements of costs for accommodation are not included in the taxable base in the amount of actual costs, given that the uninterrupted secondment is no longer than 90 days.
Moreover, seconded workers are entitled to a special tax base, which does not include 20% of the salary or maximum EUR 1,000 in a single month, under the following conditions:
- The employee is on a secondment in a foreign country or Slovenia.
- The secondment lasts more than 30 days without interruptions.
- The distance from the usual place of residence to the place of work is more than 200 km, considering the shortest road connection.
- The contract of employment sets down the salary of the employee on a secondment in the amount of at least 1.5 times the last known average wage of the employees in Republic of Slovenia.
- The employee on the secondment was not a tax resident of the country of secondment in the last five years before the secondment.
The mentioned exclusion is temporary and can only apply to income that has been paid out in a maximum of 60 months in the time period of ten years from the first secondment.
Taxation of the business performance payment
The changes to the PIT Act are bringing a more beneficial taxation of the business performance payment. The business performance payment is excluded from the taxable base in the amount of one average monthly wage of the employees in Slovenia or in the amount of one average salary of the employee (if more beneficial for the employee). It can be paid in cash as well as benefits-in-kind (e.g. company shares).
Such a treatment is possible if the right for business performance payment to all entitled employees is specified in the employer’s general act or the collective bargaining agreement.