Change of the PIT brackets and other tax changes in 2017
Based on the latest amendments to the Personal Income Tax Act (ZDoh-2R) the current third PIT bracket (41%) is divided into two PIT brackets, resulting in a total of five PIT brackets. A new third PIT bracket (34%) applies to an annual net tax base ranging from EUR 20,400.00 EUR to EUR 48,000.00 (annual net tax base equals annual gross income less social security contributions borne by the taxpayer), whereas the fourth PIT bracket (39%) starts at an annual net tax base of EUR 48,000.00 to EUR 70,907.20. The amendment thus lowers the previous 41% PIT bracket (to 34% or 39%), which is expected to result in a lower tax burden on wages of higher educated employees.
Furthermore, the amendment increases the income tax threshold for eligibility to a higher general tax relief. From 2017 onwards the income tax threshold for eligibility to a higher general tax relief in the amount of EUR 6,519.82 has been raised by EUR 300.00 (from the current EUR 10,866.37 to EUR 11,166.37).
Last but not least, ZDoh-2R provides for a more favourable taxation of employee performance bonuses (e.g. Christmas bonus, thirteenth salary, annual bonus, etc.). Business performance bonuses are exempt from the PIT up to 70% of the last known average wage in Slovenia. Consequently, performance bonuses up to approx. EUR 1,100.00 gross will be tax free; nevertheless, social security contributions still have to be settled. Such favourable tax treatment applies only: (i) in cases of annual business performance bonuses; (ii) if such bonus is paid to all eligible employees in a company; and (iii) if the right to such a bonus is governed by the employer’s internal acts or in the collective agreement (note: not applicable to clauses in individual employment agreements).
The main change in the field of corporate taxation is an increase of in the overall CIT rate from 17% to 19%. In addition, the amendment to the Corporate Income Tax Act (ZDDPO-2N) abolishes deductions for donations to political parties from the fiscal year 2017 onwards.
