INDIVIDUAL TAXATION

INCOME TAX

Permanent residents of Slovenia are liable to pay tax on their worldwide income. All kinds of income are aggregated and are taxed at progressive rates. There are several categories of income in Slovenia:

• Employment income
• Business and professional income
• Income from primary agricultural and forestry income
• Income from renting movable and immovable property, and from intellectual property
• Income from capital
• Other income

Dividends, interest and capital gains (passive income) are taxed separately at flat rates (schedular taxation).

Taxable income is generally computed by deducting income-generating expenses from the gross income.

INCOME TAX RATES 2010
TAXABLE INCOME, €	TAX RATE
Up to €7,528.99	16%
€7,528.99 – €15,057.96	27% on band over €7,528.99
Over €14,375.20	41% on all income over €15,057.96
Source: Global Property Guide

In 2010, the amount of the general tax allowance varies based on the level of the taxpayer’s aggregate annual income of the tax year as follows:

GENERAL TAX ALLOWANCES
TAXABLE INCOME, €	TAX RATE
Up to €8,694.22	€5,194.99
€8,694.22 - €10,055.96	€4,147.50
Over €10,055.96	€3,100.17
Source: Global Property Guide

Residents are also entitled to the following allowances and deductions:

• €1,334.18 for taxpayers over 65 years old
• €16,575.94 for persons with 100% disability
• €3,100.170 student allowance, subject to certain conditions
• €2,287.48 for support of the first dependent child or dependent family member (including spouse and divorced spouse receiving alimony); a higher tax allowance is granted for every additional dependent child.

Rental Income Tax

Rental income is subject to 25% final withholding tax. Taxable income is gross rental income less income-generating expenses, and it can be computed in two ways:

• Deduct actually incurred income generating expenses, such as maintenance and repair costs, management fees (supporting documents must be presented)
• Claim standard deduction of 40% of gross rent, if certain conditions are fulfilled

CAPITAL GAINS TAX

Capital gains are taxed at a flat rate of 20%. However, the rate is reduced by 5 percentage points for every 5-year holding period, which effectively means that properties held for 20 years or more are exempt from capital gains taxation. The applicable rates are as follows:

CAPITAL GAINS TAX RATES
HOLDING PERIOD	TAX RATE
Up to 5 years	20%
5 years – 10 years	15%
10 years – 15 years	10%
15 years – 20 years	5%
20 years or more	0%
Source: Global Property Guide

Taxable capital gains are computed by deducting acquisition costs and incidental costs from the gross selling price, which is at least the market value of the property.

Capital gains derived from the disposal of the following assets are exempt:

• Any immovable property acquired before 01 January 2002 (or sold after a holding period of 20 years)
• Immovable property used as a permanent home of the taxpayer for at least 3 years preceding the disposal of the property

PROPERTY TAXES

Property Tax

Property tax is levied on property owners. The tax is levied on the property value as determined by law. Property tax is levied at progressive rates, from 0.10% to 1.50%, and is set by local municipalities.