Under pressure from workers who earn their income in Austria but are formally residents of Slovenia, the government on Thursday decided to change taxation for people on temporary or permanent work in Austria.
Under the proposed protocol to the convention with Austria on the avoidance of double taxation, the government proposes that income earned in Austria be taxed there, State Secretary Andrej Sircelj told the press after the cabinet session on Thursday.
Sircelj is hopeful that the two countries would sign the relevant accord this year, whereupon Slovenia will propose that it be retroactively applied to 2006. The proposed protocol comes after months of pressure on the government from a civil initiative from the town of Apace in northeast Slovenia which claims to represent thousands of people from the region working in Austria. The initiative contested tax legislation, saying that their income was taxed twice - in Austria and then in Slovenia (where taxes are higher).
Yet tax legislation in Slovenia is based on the principle of worldwide taxation, meaning that residents' income is taxed in Slovenia regardless of where it is earned.
The affected workers have so far had to pay the difference between the tax they pay in Austria and what they would have to pay in Slovenia, but under the new system they will only pay Austrian taxes.
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