On Monday, in a correspondence session, the government approved a legislative package of tax changes that largely reverses the tax reform prepared by the Janez Janša government in the spring. The Ministry of Finance is announcing major changes to the tax legislation for next year, which would then come into force in 2024. The government published its initial proposals for legislative changes at the beginning of August, but after talks with the social partners, it has made some further adjustments to them. This led to the approval of a higher threshold for sole traders that are paying normalised taxes, which will now need to be approved by MPs.
A few days ago, we reported that the government of Robert Golob had discussed the tax changes that largely repeal measures from the tax reform prepared by the government of Janez Janša, and the newspaper Finance reported on it in more detail. If approved by the National Assembly, the changes will enter into force next year, they announced. And then, on Tuesday, the government approved a package of five bills and sent them to the National Assembly for consideration. These are the bills on income tax, excise duties, tax clearance of accounts, tax procedure and financial administration. The first three will be considered by the National Assembly under the urgent procedure, following a proposal by the ministers, Siol web portal reported.
And while the government has reached an agreement with the social partners on some of the proposed tax changes, this has not been the case for the proposed changes to the income tax legislation. Employers have, therefore, once again called on the government to withdraw the amendments to the Income Tax Act from the process and leave them for next year – which is also when the Ministry of Finance is forecasting a more comprehensive tax reform. At the correspondence meeting, the government took further action on the amendments to the draft rebalancing of this year’s state budget, without endorsing the proposed amendments. We have already summarised the main tax changes in previous articles – there is only one change that is a bit more prominent this time: they have confirmed a higher threshold for sole traders with normalised expenditure, who will be paying the same amount in taxes as before.
A higher limit for sole traders with normalised expenditure
The government has thus approved, among other things, a proposal for the Income Tax Act, which increases the annual income limit, up to which nothing would change for sole traders with normalised expenditure if they have at least one person fully insured for at least nine months continuously, from the previously proposed 25 thousand euros to 35 thousand euros. An entrepreneur with a turnover of 35 thousand euros would have to pay 1,400 euros of advance on income tax. However, an entrepreneur who generates 60 thousand euros in revenue per year would have a 2,000 euros higher tax liability under the proposal – 40 percent of normalised expenses will be recognised on an additional 25 thousand euros in revenue. The Ministry of Finance’s notes also show that entrepreneurs with a turnover of 100,000 euros will have a 5,200 euros higher tax liability. And when it comes to those who are sole traders as a complementary business activity, the changes made in the previous proposal – which we have already written about – have stayed the same. To briefly recap, the general allowance has been raised to 5,000 euros, the tax threshold for sole traders with normalised expenditure has been raised, the letting of property is once again taxed at 25 percent, and issuing invoices is compulsory again. A tax relief for young people up to the age of 29 is also to be introduced, reducing the tax base on income from employment by 1,000 euros.
The proposed amendment to the Tax Procedure Act introduces, among other things, changes to the disclosure of certain information to the beneficiary that is needed to fulfil the obligations and for the issuing of documents via the eTaxes web portal, which should now be possible without a qualified digital certificate, Siol reports. According to the proposal, the amendment to the Financial Administration Act will abolish the changes adopted by the previous government, including those relating to the position of directors of financial offices, collegial decision making in the most complex cases of tax proceedings, the measure of assigning a case to another inspector, and the financial investigation. In addition, it should now be possible to monitor the movement of goods by means of technical aids in case of suspicion of the most serious excise offences. Meanwhile, by amending the Excise Duty Act, the government intends to change the system under which farmers can get a delayed refund of 70 percent of the excise duty on diesel fuel they need for work. Under the proposal, they will get a 76-percent reduction in excise duty, already when they are refuelling.
Sara Kovač
