August 5, 2022
The Finance Ministry of Slovenia stated that the most recent income tax reform, which was implemented by the previous government in the spring, has a major impact on public revenue. The reforms would take effect in 2019. The government of Slovenia intends to reverse the reduction in the highest earners’ tax rate and the expansion of general tax relief.
The general tax relief was increased from EUR 3,500 to EUR 4,500 and should increase to EUR 7,500 by 2025 as a result of the income tax act revisions that were passed in March and went into effect retrospectively from the start of the year. Additionally, they lowered the wealthiest earners’ tax rate from 50% to 46%.
Yet the ministry intends to cancel everything. According to its proposal, the general tax relief will only increase to EUR 5,000 on January 1, 2023, with no additional increases planned.
Due to inflation and increased living expenses, the government suggests raising the general tax relief by just EUR 500 rather than EUR 1,000.
Additionally, it suggests raising the income threshold from 13,716 to 15,000 euros for which additional general tax reduction is still recognized.
Young people up to the age of 26 are recommended to receive a special tax break.
Rent income will once again be taxed as it was prior to 2020, with the top tax rate returning to 50% from its current 45 percent.
The capital tax, which was reduced from 27.5 percent to 25 percent this year, shouldn’t be modified.
However, the adjustments will have an impact on company taxation and are expected to increase tax revenue to the national budget by 90 million euros.
The general tax relief improvements would add 180 million euros and 170 million euros, respectively, to the budget in 2024 and 2025, according to the ministry.
Employees earning the minimum wage will receive 316 euros more annually than they did this year. They would receive EUR 157 more if the law were to remain as it is. Less will be given to those with higher salaries than under the existing rules, but they will still earn more than they will this year. According to the minister, people making the average wage would receive an additional EUR 130 per year, and those making twice the average salary will receive an additional EUR 165 per year.
Source: Total Slovenia News
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