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Legislative Developments in 2024
The year 2024 will, in legislative terms, involve the continued consideration and preparation of planned reforms, which were largely disrupted in 2023 by the catastrophic floods in August. European acts and directives have introduced some significant changes.
Below, we summarize some of the key changes introduced by the new Law on Reconstruction, Development, and Provision of Financial Resources, the Law on Minimum Tax, the amendment to the Value Added Tax Act, the amendment to the Employment Relationships Act, the amendment to the Financial Operations, Insolvency Proceedings, and Compulsory Dissolution Act, among others, which will affect business operations and employee income in the Republic of Slovenia.
1. Tax and Accounting Developments
1.1. Temporary increase in corporate income tax (CIT) from 19% to 22%
In an urgent procedure, the National Assembly on 13. 12. 2023, the National Assembly adopted the Law on Reconstruction, Development, and Provision of Financial Resources in an urgent procedure. This law establishes measures for the reconstruction and development of affected areas following the severe floods in August, aiming to ensure greater safety from the future impacts of floods and landslides in these regions.
The law, among other provisions, introduces a temporary increase in corporate income tax (CIT): for the years 2024, 2025, 2026, 2027, and 2028, the CIT will be levied at a rate of 22%. The 3% difference will be considered a dedicated revenue for the reconstruction budget fund. In the 2023 CIT return, the monthly or quarterly advance payment for CIT for 2024 will be determined by using the tax base for 2023. The advance payment will be calculated using the 22% tax rate.
Companies that calculate deferred tax assets will also apply the 22% tax rate when calculating deferred taxes in the balance sheet as of December 31. 12. 2023.
1.2. Introduction of the new minimum tax
The Law on Minimum Tax has been approved, introducing a new top-up tax for entities based in Slovenia that are part of large domestic groups and international corporate groups with annual revenues exceeding 750 million euros in at least two of the four preceding fiscal years.
Entities within the aforementioned groups, located in Slovenia, will be taxed by paying a top-up tax of 15% on excess profits in each jurisdiction where they operate, starting with fiscal years ending after December 31. 12. 2023. The top-up tax applies if the effective tax rate is lower than the minimum rate of 15%.
1.3. Changes in VAT Legislation and Payment Oversight
The Act Amending the Value Added Tax Act (ZDDV-1) transposes Council Directive (EU) 2020/284 into the legal order of the Republic of Slovenia, introducing certain requirements for payment service providers. Banks and other payment service providers are now required to keep records of those recipients of cross-border payments who receive more than 25 payments per quarter. These data will have to be submitted by the providers to the Financial Administration, which will then forward them to the European Commission’s payment information system.
The law also includes certain changes regarding the period of validity for the application of the reverse charge mechanism for trading greenhouse gas emission allowances and changes regarding the exemption of services provided in the public interest in accordance with Article 42. členom ZDDV-1.
1.4. New Slovenian Accounting Standards (SRS) have been adopted
The Slovenian Accounting Standards (SRS) have been updated to align with the International Financial Reporting Standards (IFRS). Some key changes that came into effect on January 1, 2024, include: –
- Amendment of the introduction to the SRS (supplementing certain explanations),
- New chapter: Non-current assets held for sale,
- Newly revised SRS 3: Financial Investments, etc.
The fundamental rules for measuring and valuing economic categories have not changed in the new SRS (2024); the new standards are merely an upgrade to the existing SRS (2016). Companies will primarily need to reclassify their financial investments and adjust their accounting policies.
2. Other Developments in the Economy
2.1. New Sustainability Reporting Rules in Preparation
In the future, more companies will be required to report on sustainability, and the reporting criteria will be more detailed. An amendment to the Companies Act is in preparation, which envisages the introduction of new rules in three phases from 2024 to 2028. The upcoming changes include:
- Sustainability reporting for all large companies and all companies listed on organized markets (excluding micro-enterprises),
- Audit of the reported information,
- More detailed reporting requirements and reporting in accordance with mandatory EU standards.
2.2. The amendment to the Financial Operations, Insolvency Proceedings, and Compulsory Dissolution Act (ZFPPIPP) introduces the concept of imminent insolvency.
The amendment to the Financial Operations, Insolvency Proceedings, and Compulsory Dissolution Act (ZFPPIPP) establishes a new concept of imminent insolvency (a situation that arises when: if it is likely that the company will become insolvent within a one-year period), abolishes the simplified compulsory settlement procedure, and also introduces stricter obligations for management when the company is insolvent or when insolvency is imminent.
The amendment also establishes an additional obligation for accountants, auditors, or other persons providing business-related services to the company. If, in the course of their activities, they determine that a situation of imminent insolvency or insolvency has arisen, they must inform the company’s management in writing.
2.3. Obligations Regarding Whistleblower Protection
The Whistleblower Protection Act (ZZPri) introduces measures and establishes procedures for the protection of whistleblowers, i.e., individuals who report or publicly disclose information about violations in their work environment, regardless of whether it is in the public or private sector.
Obligated entities in the private sector that must comply with the Whistleblower Protection Act (ZZPri) are:
- Entities with 50 or more employees;
- Entities with 10 or more employees if they operate in the fields of environment or health.
The main obligations imposed on private sector entities by the Whistleblower Protection Act (ZZPri) are:
- Appointment of a confidential adviser (whistleblower officer);
- Designation of an address for receiving reports (in physical or electronic form) and the obligation to record the report;
- Adoption of an internal act that establishes an internal reporting channel and describes the specifics of handling reports in a manner that ensures the whistleblower’s identity is not disclosed.
2.4. The regulation of energy prices for business customers will expire at the end of 2023.
Starting in 2024, a slightly modified regulation of electricity prices came into effect. Prices will be capped for households throughout the year, but only for 90% of consumption. Households will also continue to be exempt from paying the contribution for supporting renewable energy sources (RES and CHP) in 2024. The regulation of energy prices for business customers will expire at the end of 2023.
Mid-2024 will bring changes to the calculation of network charges and connection power. Until June 1, 2024, these will be billed according to the old system, with slightly higher tariffs. After June 1, 2024, network charges will be paid based on time blocks. – –
3. Amendment to the Employment Relationships Act
The amendment to the Employment Relationships Act (hereinafter “ZDR-1”) introduces new rights for caregivers and victims of domestic violence, the right to disconnect, subsidiary liability in the construction industry, and more. The changes are largely brought into Slovenian law by Directive 2019/1152/EU and Directive 2019/1158/EU. Below, we summarize some of the key changes in the Employment Relationships Act:
a) Longer period for transferring annual leave
An employee will have the right to use all annual leave not taken in the current calendar year, or by June 30 of the following year due to absence caused by illness or injury, maternity leave, or leave for child care and protection, by March 31 of the year following the year in which the annual leave could be transferred, instead of only until December 31 of the following year.
b) New extraordinary termination reasons and written warning before termination for cause
The amendment to ZDR-1 introduces two new reasons for extraordinary termination. An employee can terminate the employment contract extraordinarily if the employer has not paid the salary or wage compensation for at least two months, or if the employer has failed to pay the salary or wage compensation twice consecutively or within a six-month period by the legally or contractually agreed deadline.
The statutory period of validity for a written warning before termination for cause has been shortened from 1 year to 6 months. A new procedure is introduced following the issuance of a written warning. An employee may request within 3 working days of receiving the written warning that the employer allows them to respond to the violations within a reasonable period, not exceeding 30 days. The employer must then provide the employee with a written and reasoned decision within 8 days after the employee’s response.
c) Proportionality of probationary work in fixed-term contracts
Probationary work can generally last up to a maximum of 6 months. The amendment to ZDR-1 adds that in fixed-term contracts, the probationary period must be determined proportionally to the duration of the contract and the nature of the work.
d) Rights of caregivers and workers who are victims of domestic violence
The amendment to ZDR-1 introduces new rights for caregivers, such as 5 unpaid days of caregiver leave, the right to propose the conclusion of a new fixed-term employment contract with reduced working hours, and the right to special protection against dismissal for caregivers.
For workers who are victims of domestic violence, the amendment introduces the right to special protection in the employment relationship due to participation in procedures that enhance their safety. They are now entitled to 5 working days of paid leave for arranging protection, legal, and other procedures, etc. They also have the right to propose the conclusion of a fixed-term employment contract with reduced working hours and the right to special protection against dismissal. Night and overtime work can only be performed with their prior written consent.
e) Right to Disconnect
The employer must ensure the right to disconnect for employees by the end of the transition period. This means that the employer must implement appropriate measures to ensure that employees are not available during rest periods and justified absences from work.
f) Subsidiary Liability in the Construction Industry
The amendment to ZDR-1 introduces subsidiary liability of the subcontractor’s contractor (client) for the non-payment of wages to an employee employed by the subcontractor.
g) Written Response of the Employer to Employee Proposals
- Employee’s Proposal for Contract Modification
When an employee submits a proposal for a contract modification (e.g., from a fixed-term to an indefinite-term contract, from part-time to full-time work), the employer must respond to the proposal within 30 days of receipt.
- Employee’s Proposal for a Different Work Schedule or Remote Work
When an employee, due to the need to balance professional and family or private life, proposes a different work schedule or a remote work arrangement, the employer must provide a written justification for their decision within 15 days.
- Reduced Working Hours for Parents of Children up to 8 Years Old
The amendment to ZDR-1 also stipulates that an employee who cares for a child up to 8 years old can propose the conclusion of a fixed-term employment contract with reduced working hours. The employee can propose this change based on contractual freedom, meaning that the employer is not obliged to agree to the proposal for justified reasons but must provide a written justification for their decision within 15 days.
4. Changes in Payroll Calculation and Employee Secondment
4.1. Transformation of Supplemental Health Insurance into Mandatory Health Contribution
As of December 31, 2023, voluntary supplemental health insurance will be abolished, and starting January 1, 2024, it will be replaced by a mandatory health contribution. – – mandatory health contribution (OZP).
For the period from January 2024 to February 2025, inclusive, the mandatory health contribution is 35 EUR per month. The mandatory health contribution is adjusted annually.
The main employer or payer, from whom the insured person receives the sole or predominant part of income from employment, calculates and withholds the mandatory health contribution upon salary payment and reports the deduction to the Financial Administration of the Republic of Slovenia (FURS) using the electronic form REK-O or using form OPSVT (for employees employed by a foreign employer).
4.2. The SPOT portal now allows access to the electronic certificate of blood donation (ePODK).
As of January 1, 2024, the Electronic Certificate of Blood Donation is available to employers, their representatives, or authorized persons on the SPOT portal. –
4.3. Sick leave is again 30 days at the expense of the employer.
Effective January 1, 2024, the burden of financial compensation for sick leave is shifting back to the employer or independent contributor for a longer duration, specifically from 20 to 30 days. This change applies to periods of incapacity starting from January 1, 2024, encompassing reasons such as illness, non-work-related injury, or injury caused by a third party outside of work. This adjustment marks a significant reevaluation of the distribution of responsibilities between employers and the social security system concerning sick leave compensation. It underscores the necessity for employers and independent contributors to factor in this extended responsibility when managing their workforce and financial planning. This measure aims to balance the distribution of costs associated with sick leave and ensure greater financial stability within the social security system while aligning with broader legislative objectives. –
4.4. Change in the Basis for Calculating and Paying Contributions for Posted Workers
From January 1, 2024, there will be a significant change in the basis for calculating and paying contributions for posted workers. The entire salary and all other benefits based on employment, including benefits and reimbursements of work-related expenses paid in cash, vouchers, or in kind, will be included in the contribution calculation base for the salary payments of posted workers, regardless of whether the posting lasts for more than 12 or less than 12 months. In accordance with Article 13 of Regulation (EC) No 883/2004 or assignments to third countries.
This means that in the case of assignments to work abroad, the exception regarding the determination of a lower base for the calculation and payment of contributions for employees is abolished. Until now, the portion of the salary received exclusively for assignments to work abroad was not included in the base for calculating contributions for these employees. Consequently, for posted workers, this also meant a lower pension base compared to those who received the same gross salary for work in Slovenia.
The new regulation regarding the base for calculating contributions will increase employers’ costs. With unchanged gross income, it will also affect the net wages of employees, which will decrease in this case.
4.5. Abolition of Automatic Adjustment of the Insurance Base for Posted Workers
Slovenian employers must obtain a certificate A1 from the Health Insurance Institute of Slovenia (ZZZS) for each worker they intend to post to work abroad (EU, Iceland, Norway, Switzerland, etc.). Based on the issued A1 certificate from ZZZS, the worker’s insurance base is then changed from 001 (workers in employment in the territory of the Republic of Slovenia) to insurance base 002 (workers posted to work abroad).
From January 1, 2024 onwards, the Law on the Cross-Border Provision of Services abolishes the automatic change of the insurance base to 002. This means that at the beginning and end of the posting, the employer will now have to independently arrange the deregistration and registration of the worker into the appropriate insurance base using forms M-1 and M-2.
