VAT (value added tax) will be introduced in Slovenia on 1 July this
year and will be calculated using two rates the general rate will be
19% and the reduced rate will be 8%. VAT will replace the current
sales tax. It will be paid by every legal or natural person in
Slovenia performing an independent activity, regardless of the purpose
and results of this activity, providing that annual turnover exceeds
SIT 5 million, and by farmers whose annual cadastral income exceeds
SIT 1.5 million. According to initial estimates there will be around
50,000 such taxpayers.
Basic principles
The taxpayer will have to charge his client value added tax for his
goods and services. However, the VAT payer will be allowed to
subtract, as an input tax for his other tax liabilities, the VAT which
he paid to another taxpayer positioned ahead of him in the tax chain
for those goods and services for which he himself is liable for VAT
payment. The taxpayer will also be allowed to subtract input VAT for
goods and services used for operations outside Slovenia, on condition
that the right to such a deduction of input VAT would have been
recognised if this activity had been performed inside the country.
Input VAT will be deducted only if it is stated in the invoices or
customs declarations for the imported goods for the tax period during
which the taxpayer received these invoices or declarations. The
technical implementation of VAT is therefore based directly on issued
and received invoices. Failing to issue invoices or delaying their
issuing, and delayed VAT declarations, are criminal offences. The
penalties for these offences range between SIT 100,000 and SIT 6
million.
The taxpayer must charge the VAT when the invoice is issued. If the
invoice is not issued at the prescribed time, it will be calculated
that the VAT was payable on the eighth day after delivery of the goods
or the provision of the service.
Tax liability can occur at the time of a paid advance payment. Only
those domestic taxpayers will be entitled to VAT rebate who have
declared an input VAT higher than their output VAT in their monthly or
quarterly tax statements. Foreign legal or natural persons will be
entitled to a tax rebate for the purchase or import of goods, and for
the provision of services, only in special cases prescribed by the law
and when goods purchased in Slovenia are exported.
Tax rebate
The amount of VAT rebate can, for domestic taxpayers, be counted as
an advance payment for future tax periods or, if requested by the
taxpayer who submitted his VAT account statement, the Ministry of
Finance will recover the tax within 60 days, after which the taxpayer
will be entitled to penal interest.
Reduced rate
As mentioned above, VAT is calculated using the general rate, which
is 19% of the tax base. The reduced tax rate will be used for VAT for
trade in goods and services related to: human and animal food
products; seeds and seedlings; water supply; medicines, medical and
orthopaedic appliances and accessories; the public transport of
passengers and luggage; written, video or audio media; authorial
rights and services in literature, arts and sciences; certain artistic
creations; collections and antiques; tickets for exhibitions, cinema,
theatre and musical events, circuses, fairs and sports events;
construction, refurbishment or maintenance of housing facilities;
accommodation in hotels, guesthouses and camps; public sanitary
services; and, from 1 July 2005, the wine trade.
Services
Services are considered to be the performance, abandonment or
permission of an activity other than trade in goods, performed by the
taxpayer as part of his activities in Slovenia for payment. Services
are also the transfer, licensing, use or waiving of authorial rights,
patents or other property rights. VAT for services will be paid in
Slovenia if the specific service was provided in Slovenia. If it is
not considered that the service was provided in Slovenia, this will be
regarded as an exported service and will subsequently be exempt from
VAT payment. Any import of goods into Slovenia will also be subject to
taxation, unless the specific trade or service is exempt from VAT. It
will be considered that a service was provided in Slovenia if the main
office of the contractor of the service or his permanent residence
from which the service was rendered are located in Slovenia, if the
head office of the client is located in Slovenia, if the service was
actually provided in Slovenia, or if the real estate directly
connected to the service is located in Slovenia. VAT will not be paid
for banking, insurance and games of chance, for which a sales tax
calculated differently will be paid.
1999 - a period of two tax systems
The most important part will be the transition to the new
system. Future taxpayers must submit a statement for registration to
the Slovene Tax Administration. TARS will then issue them with a
registration certificate. The crucial point will mainly be those
calculations done on 30 June 1999, when the current sales tax will
still be in force. Invoices which were issued and for which the goods
or services were not delivered by 30 June 1999 will be null and void.
The tax base for calculating VAT will be the value of the delivery
calculated for the period after 1 July 1999. Payers of the current
sales tax will have to prepare a final sales tax statement for the
period between 1 January 1999 and 30 June 1999, and submit it to TARS
by 20 August 1999 at the latest. At the same time they will submit
their payment orders for additional charges or for a request for the
rebate of overpaid taxes. A list of issued invoices and of invoices
unpaid by 30 June 1999 must be attached to the sales tax
statement. The sales tax will have to be paid by the end of 1999.