Unofficial and unauthorized translation

Unofficial and unauthorized translation


Pursuant to the first paragraph of Article 153 of the Rules of Procedure of the National Assembly of the Republic
of Slovenia, the Legislative and Legal Service has drawn up an unofficial consolidated version of the Corporate
Income Tax Act comprising:
– the Corporate Income Tax Act – ZDDPO-2 (Uradni list RS [Official Gazette of the Republic of Slovenia], No.
117/06 of 16 November 2006),
– the Act Amending the Corporate Income Tax Act – ZDDPO-2A (Uradni list RS, No. 65/08 of 6 June 2008),
– the Act Amending the Corporate Income Tax Act – ZDDPO-2B (Uradni list RS, No. 76/08 of 25 July 2008),
– the Act Amending the Corporate Income Tax Act – ZDDPO-2C (Uradni list RS, No. 5/09 of 23 January 2009),
– Act Amending the Corporate Income Tax Act –ZDDPO-2D (Uradni list RS, No. 96/09 of 27 November 2009),
– Act amending the Tax Procedure Act – ZDavP-2B (Uradni list RS, No. 110/09 of 29 December 2009 and 1/10 of 8
January 2010 – correction)
and
– Act Amending the Corporate Income Tax Act –ZDDPO-2E (Uradni list RS, No. 43/10 of 31 May 2010).


Ref. No.: 435-02/10-15/1
Date: 03 June 2010
EPA 1088-V

Božo Strle
Head of the Legislative and Legal Service




                                     CORPORATE INCOME TAX ACT

                                  UNOFFICIAL CONSOLIDATED TEXT
                                         (ZDDPO-2-NPB6)

                                               I. GENERAL PROVISIONS

                                                         Article 1

                                                  (Contents of the Act)

(1) This Act regulates the system and introduces the liability to pay corporate income tax.

(2) This Act shall transpose the following Directives of the European Community into the legislation of the
Republic of Slovenia:
– Council Directive 90/434/EEC of 23 July 1990 on the common system of taxation applicable to mergers,
divisions, transfers of assets and exchanges of shares concerning companies of different Member States
(OJ L 225 of 20 August1990, p. 142), as last amended by Council Directive 2005/19/EC amending Directive
90/434/EEC 1990 on the common system of taxation applicable to mergers, divisions, transfers of assets and
exchanges of shares concerning companies of different Member States (OJ L 58 of 4 March 2005, p.19);
– Council Directive 90/435/EEC of 23 July 1990 on the common system of taxation applicable in the case of
parent companies and subsidiaries of different Member States (OJ L 225, 20 August 1990, p. 6), as last amended
by Council Directive 2003/123/EC amending Council Directive 90/435/EEC on the common system of taxation
applicable in the case of parent companies and subsidiaries of different Member States (OJ L 7 of 13 January
2004, p.41);
– Council Directive 2003/49/EC of 3 June 2003 on a common system of taxation applicable to interest
and royalty payments made between associated companies of different Member States (OJ L 157 of 26
June 2003, p.49).

                                                         Article 2

                                              (Entitlement to tax proceeds)

Corporate income tax (hereinafter: tax) under this Act shall be revenue for the state budget.

                                            II. TAXPAYER AND TAX LIABILITY

                                                         Article 3

                                                        (Taxpayer)




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(1) Taxpayers shall be legal entities of domestic and foreign law (hereinafter: taxpayer).

(2) Without prejudice of the first paragraph of this Article, a taxpayer shall also be a company and/or any
association of persons, including a civil law company subject to foreign law, which does not have legal personality
and is not considered a taxpayer subject to the Act regulating personal income tax.

(3) Unless otherwise stipulated by this Act, the Republic of Slovenia and local authorities shall not be
considered taxpayers.

                                                          Article 4

                                                  (Scope of tax liability)

(1) Residents of the Republic of Slovenia (hereinafter: residents) shall be liable to pay tax on all income
originating in the Republic of Slovenia (hereinafter: Slovenia) and on all income originating outside Slovenia.

(2) Non-residents of Slovenia (hereinafter: non-residents) shall be liable to pay tax on income originating in
Slovenia.

(3) The income of residents or non-residents, stipulated by this Act, shall be taxable within the scope and in
the manner stipulated by this Act.

                                                          Article 5

                                               (Resident and non-resident)

(1) A resident shall be a taxpayer as referred to in Article 3 of this Act who meets one of the following
conditions:
1. The resident's registered office is located in Slovenia.
2. The resident's place of effective management is located in Slovenia.

(2) A non-resident shall be a taxpayer as referred to in Article 3 of this Act who meets neither of the conditions
referred to in the first paragraph of this Article.

(3) The minister competent for finance shall define the method of establishing the place of effective
management, while taking into account that the place of effective management is the place where key
administrative and business decisions needed for the management of business operations are taken and which is
usually the place where persons or a group of persons holding leading positions, for example management, take
decisions, or the place where the activities to be performed by a person as a whole are planned and that in the
procedure of establishing all the important facts and circumstances of a certain case are taken into account.

                                                          Article 6

                                              (Non-resident’s business unit)

(1) A non-resident’s business unit (business establishment) subject to this Act shall be the place of business,
i.e. the place in or through which the non-resident’s activities and/or business in Slovenia are conducted in whole
or in part.

(2) The following, in particular, shall be deemed the non-resident’s business unit:
1. Office, branch, factory, workshop, mine, quarry or other place where natural resources are obtained or
exploited;
2. A construction site, a project involving construction, assembly or mounting, or the related supervision, if
the duration of the activities and/or business concerned exceeds 12 months.

(3) An agent that acts on behalf of a non-resident in all the activities and/or business for the non-resident shall
also be considered the non-resident's business unit, if the agent holds and normally applies a power of attorney
to conclude contracts on behalf of the non-resident, unless the agent’s activities are limited to those referred to in
Article 7 of this Act, due to which the place of business in question would not be deemed the non-resident's
business unit.

(4) A non-resident's business unit shall be an agent that, on his/her own behalf, acts for the non-resident as a
stockbroker within the framework of his/her regular activities, an agent holding a general power of attorney or
any other independent agent where the agent in whole or in part acts on behalf of the non-resident and where the
conditions and circumstances pertaining to commercial and financial relations between the non-resident and
agent in question differ from those prevailing in relations between non-associated enterprises.

(5) A construction site, a project involving construction, assembly or mounting, or the related supervision, if the
duration of the activities concerned exceeds twelve months, shall be deemed the non-resident’s business unit
from the day of commencement of activities and/or business, including preparatory works.




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                                                           Article 7

                                     (Place of business that is not a business unit)

Without prejudice to Article 6 of this Act, a place of business shall not be deemed a non-resident’s business
unit if the non-resident:
1. Only uses the premises in question for warehousing, exhibiting or supply of goods belonging to him;
2. Only maintains inventories of goods belonging to him for the purpose of warehousing, exhibiting or
supply;
3. Only maintains inventories of goods belonging to him for the purpose of processing by third parties;
4. Only maintains the place of business in question for the purpose of purchasing goods, or collecting
information for himself;
5. Only maintains the place of business for the purpose of engaging in any other preparatory or auxiliary
activity and/or business for himself;
6. Only maintains the place of business in question for the purpose of any combination of activities and/or
business referred to in points 1 through 5 of this Article, provided that the general activity and/or business of the
place of business which is a consequence of that combination is of a preparatory or auxiliary type.

                                                 III. SOURCE OF INCOME

                                                           Article 8

                                                     (Source of income)

(1) Income shall be considered to have its source in Slovenia when it is possible to determine the source of
income in Slovenia according to any stipulation of the second through fourteenth paragraph of this Article.

(2) Income of a resident, excluding income earned in a business unit or through a business unit of that
resident located outside Slovenia, and/or excluding income which is, in accordance with the stipulations of the
fourth through fourteenth paragraphs of this Article, income with a source outside of Slovenia, shall be considered
to have a source in Slovenia.

(3) A non-resident’s income earned either in a business unit of that non-resident or through a business unit of
that non-resident, shall be considered to have its source in Slovenia if the business unit is located in Slovenia;

(4) Income from immovable property and from the rights pertaining to immovable property shall be considered
to have its source in Slovenia if the immovable property concerned is situated in Slovenia, and income from
agricultural and forestry activities shall be considered to have its source in Slovenia if the activity is performed on
land situated in Slovenia;

(5) Income from exploitation or the right to exploitation of deposits of ores, sources or other natural resources
shall be considered to have its source in Slovenia, if the deposits of ores, sources or other natural resources are
located in Slovenia.

(6) Dividends, including income similar to dividends and income from holdings sourced in financial instruments
and/or of all types financial investments such as securities and ownership shares, shall be considered to have
their source in Slovenia if issued by companies, cooperative societies or other types of organisations set up in
accordance with the regulations of Slovenia, Slovenia, local authorities or the Bank of Slovenia, and/or from
holdings in companies, cooperative societies and other types of organisations set up in accordance with the
regulations of Slovenia.

(7) Interest shall be considered to have its source in Slovenia if borne by a resident or non-resident through
his/her business unit in Slovenia.

(8) Income from the use or the right to use copyrights, patents, brand names and other property rights, and
income from other similar rights shall be considered to have its source in Slovenia if borne by a resident or a nonresident
through his/her business unit in Slovenia.

(9) Profit from disposal of a resident’s or non-resident’s business unit in Slovenia shall be considered to have
its source in Slovenia.

(10) Profit from disposal of the immovable property referred to in the fifth paragraph of this Article shall be
considered to have its source in Slovenia.

(11) Profit from disposal of the financial instruments and/or investments referred to in the sixth paragraph of
this Article shall be considered to have its source in Slovenia.

(12) Income from services provided by performing artists or sportsmen, belonging to another person, shall be
considered to have its source in Slovenia if such services are provided in Slovenia.

(13) Income from all types of services paid to persons who have the seat or place of effective management in



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countries where the general and/or average nominal corporate profit tax rate is lower than 12.5% and these
countries are not EU Member States shall be considered to have its source in Slovenia if borne by a resident or
non-resident through his/business unit in Slovenia or was paid out by the resident or non-resident through his/her
business unit in Slovenia.

(14) The profit referred to in paragraph ten of this Article shall also constitute the profit from disposal of equity
holdings and the rights arising from equity holdings in a company, cooperative society or other type of
organisation if over one half of the value thereof arises directly or indirectly from immovable property and the
rights pertaining to immovable property located in Slovenia.

(15) The Ministry of Finance and the Tax Administration of the RS publish on their website a list of countries
where the general and/or average nominal corporate profit tax rate is lower than 12.5% and where these
countries are not the EU Member States referred to in the thirteenth paragraph of this Article.

(16) Stipulations of this Act conditioning the rights and liabilities of taxpayers in relation to the seat and place
of effective management in the countries referred to in the thirteenth paragraph of this Article shall enter into force
on the day following the publication of the country’s name in the list referred to in the fifteenth paragraph of this
Article.

(17) Income subject to this Act not originating in Slovenia shall be considered income originating outside
Slovenia.

                                                       IV. EXEMPTIONS

                                                            Article 9

               (Tax exemption applicable to taxpayer established for performing non-profit activities)

(1) Taxpayer such as institutions, associations, institutes, religious communities, political parties, chambers,
representative trade unions shall not pay tax subject to this Act, provided that:
1. They are, pursuant to a special act, established for performing non-profit activities; and
2. Actually perform their operations according to the purpose of their establishment and operation.

(2) Without prejudice to the first paragraph of this Article, the taypayer referred to in the first paragraph of this
Article shall pay tax subject to this Act on income from profit activity.

(3) Without prejudice to the first paragraph of this Article, a legal entity, as a public institution established to
provide mandatory stock of oil and petroleum products according to the Act regulating commodity reserves shall
not pay tax under the second paragraph of this Article for the activity of provision of the mandatory stock of oil
and petroleum products.

(4) The Minister responsible for finance shall define profit and/or non-profit activity in detail for the purpose of
this Article, taking into account that profit activity is performed in the market to gain profit and that through
performing profit activity the taxpayer under this Article compete in the market with other persons under this Act
and the Minister responsible for finance shall define in detail the type of the legal entity of taxpayer under this
Article.

                                 V. TAX PERIOD AND INCOME SUBJECT TO TAXATION

                                                           Article 10

                                                         (Tax Period)

(1) Tax shall be imposed on a taxpayer’s income as laid down in this Act during the tax period, which shall be
the same as the calendar year.

(2) Notwithstanding the first paragraph of this Article, a taxpayer may choose to have the tax period be the
same as the financial year, which differs from the calendar year, where the tax period shall not exceed a period of
12 months.

(3) The taxpayer referred to in the second paragraph of this Article shall be obliged to notify the Tax Authority
of his/her choice. The tax period thus chosen shall not be changed for at least three years.

                                                           Article 11

                                                (Income subject to taxation)

(1) According to this Act, the following income shall be subject to taxation:
1. A resident’s or a non-resident’s profit, earned by the activity and/or business performed by him/her
either in or through a business unit in Slovenia;
2. A resident’s or a non-resident’s profit, subject to withholding tax under Article 70 of this Act.


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                                                       VI. TAX BASE

                                                   1. General provisions

                                                         Article 12

                                                         (Tax base)

(1) The tax base of a resident and non-resident in respect of activities and/or business performed either in or
through a business unit in Slovenia shall be the profit established in accordance with the provisions of this Act.

(2) Profit shall be the surplus of revenue over expenses as laid down in this Act.

(3) In establishing the profit, the revenue and expenses determined in the profit and loss statement or the
annual report corresponding to the profit and loss statement, and declaring revenue, expenses and profit or loss
shall, subject to the law and the accounting standards established on the basis thereof, be taken into account.,
unless otherwise provided in this Act

(4) The profit of a non-resident's business unit in Slovenia shall be profit that can be attributed to that business
unit. The profit which can be attributed to the place of establishment shall be the profit that can be expected to be
earned by that place of establishment as if it were a taxpayer performing the same or similar activity and/or
business. Income earned by performing an activity and/or business in a non-resident’s place of establishment or
through a non-resident’s place of establishment in Slovenia, and the actual expenses which are incurred for the
purposes of that place of establishment, including executive and general administrative expenses, shall be
attributed to that place of establishment whether incurred in Slovenia or elsewhere.

(5) The tax base for withholding tax on the income listed in Article 70 of this Act shall be each individual
income.

                                                         Article 13

                    (Elimination of double taxation and elimination of less than single taxation)

(1) Resident’s revenue and non-resident’s revenue in respect of activities and/or business performed in a
business unit or through a business unit in Slovenia which is included in the tax base of the current tax period or
was included in the tax base of past tax periods shall not be included again in the tax base of the current or future
tax periods.

(2) Resident’s expenses and non-resident’s expenses in respect of activities and/or business performed in a
business unit or through a business unit in Slovenia which are included in the tax base of the current tax period or
were included in the tax base of past tax periods shall not be included again in the tax base of the current or
future tax periods.

(3) Resident’s revenue and non-resident’s revenue in respect of activities and/or business performed in a
business unit or through a business unit in Slovenia which originates from expenses not recognised for tax
purposes in the past tax periods shall be exempt from the tax base, however only up to an amount not exceeding
the amount of expenses not recognised for tax purposes in the past tax periods.

(4) The taxpayer shall provide and store data on revenue and expenses under the first through third
paragraphs of this Article which were included in the tax base and/or which reduced the tax base.

                                                         Article 14

              (Tax base in case of changes in accounting policy and in case of rectification of errors)

In establishing the tax base and/or in the recognizing the revenues and expenses of a taxpayer, amounts
representing differences arising from changes in accounting policy and rectification of errors in taxable revenue
and expenses recognised for tax purposes under this Act, for which the retained earnings or other capital
components are calculated shall , be included in the tax base in the period of change in accounting policy and
rectification of errors in such a way that they increase or reduce the tax base.

                                                         Article 15

                                       (Tax base in revaluation to higher values)

When establishing the tax base and/or recognizing the revenue and expenses of a taxpayer, the amount of
revaluation surplus, resulting from revaluation of economic categories to higher fair values, and which is
transferred to the retained earnings or other equity items by taxpayer, shall be included in the tax base in the
year of such transfer. For assets which are being depreciated the revaluation surplus shall be transferred to the
retained earnings and to the tax base in proportion to the accounted depreciation according to Article 33 of this



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Act from the revaluated part of these assets.

                                                          Article 16

                                                      (Transfer prices)

(1) An associated enterprise shall be a taxpayer – resident or non-resident and a foreign legal entity or a
foreign person without legal personality who is not a taxpayer (hereinafter: foreign person), when:
1. The taxpayer directly or indirectly holds at least 25% of the value or number of shares or equity holdings,
shares in managing or control and/or voting rights of a foreign person, or controls the foreign person on the basis
of a contract or the transaction conditions differ from the conditions that have been or would be reached between
non-associated enterprises in equal or comparable circumstances; or
2. The foreign person directly or indirectly holds at least 25% of the value or number of shares or equity
holdings, shares in managing or control and/or voting rights of the taxpayer, or controls the taxpayer on the basis
of a contract or the transaction conditions differ from the conditions that have been or would be reached between
non-associated enterprises in equal or comparable circumstances; or
3. The same person at the same time directly or indirectly holds at least 25% of the value or number of shares
or equity holdings, shares in managing or control and/or voting rights of the taxpayer and the foreign person or of
two taxpayers, or controls the them on the basis of a contract or the transaction conditions differ from the
conditions that have been or would be reached between non-associated enterprises in equal or comparable
circumstances; or
4. The same individuals or their family members directly or indirectly hold at least 25% of the value or number
of shares or equity holdings, shares in managing or control and/or voting rights of the taxpayer and foreign
person or of two residents or control them on the basis of a contract, or the transaction conditions differ from the
conditions that have been or would be reached between non-associated enterprises in equal or comparable
circumstances.

(2) A family member shall be considered: a person’s spouse or person with whom the individual lives in a longterm
relationship that, under the Act governing marriage and family relations, has the same legal consequences
as marriage; a partner with whom the individual lives in a registered same-sex partnership under the Act
governing same-sex partnership registration; children, adopted children, step-children or children of the person
with whom the individual lives in a long-term relationship that, under the Act governing marriage and family
relations, has the same legal consequences as marriage; children of a partner with whom the individual lives in a
registered same-sex partnership under the Act governing same-sex partnership registration; or parents or
adoptive parents of a individual.

(3) In establishing a taxpayer’s revenue, it shall be taken into account transfer prices with associated
enterprises as regards assets, including intangible assets and services, however at least the amount established
by taking into account the prices of such or comparable assets and services which, in equal or comparable
circumstances, have been reached or would be reached on the market among non-associated enterprises
(hereinafter: comparable market prices).

(4) In establishing a taxpayer’s expenses, it shall be taken into account transfer prices with associated
enterprises as regards assets, including intangible assets and services, however up to the amount established by
taking into account comparable market prices.

(5) The comparable market prices referred to in the third and fourth paragraphs of this Article shall be fixed by
using one of the following methods or any combination of the following methods:
1. Comparable uncontrolled price method
2. Resale price method
3. Cost plus method
4. Profit split method and/or
5. Transactional net margin method

(6) The Minister responsible for finance shall regulate the implementation of this Article in detail.

                                                          Article 17

                                   (Prices between associated enterprises-residents)

(1) Residents shall be deemed to be associated enterprises:
1. If they are associated in capital, management or control in such a way that one resident directly or
indirectly holds at least 25% of the value or number of shares or equity holdings, shares in managing or control
and/or voting rights of other residents or controls the other residents on the basis of a contract in a manner that
differs from relations between non-associated enterprises; or
2. If the same legal entities or individuals or their family members hold in two residents directly or indirectly
at least 25% of the value or number of shares or equity holdings, shares in managing or control and/or voting
rights and control the two residents on the basis of a contract in a manner that differs from relations between non
associated enterprises;

(2) A resident and an individual performing business shall also be considered associated enterprises if the



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same individual or his/her family members hold in the resident at least 25% of the value or number of shares or
equity holdings, shares in managing or control and/or voting rights and controls the resident on the basis of a
contract in a manner that differs from relations between non-associated enterprises.

(3) According to this Article, family members shall be considered: the person's spouse or person with whom
the individual lives in a long-term relationship that under the Act governing marriage and family relations has the
same legal consequences as marriage; a partner with whom a individual lives in a registered same-sex civil
partnership under the Act regulating same-sex partnership registration; children, adopted children, step-children
or children of the person with whom the individual lives in long-term relationship, under the Act governing
marriage and family relations, which has the same legal consequences as marriage; children of a partner with
whom the individual lives in a registered same-sex civil partnership under the Act regulating same-sex
partnership registration; or parents or adoptive parents of a individual.

(4) In establishing a taxpayer’s revenue, it shall be taken into account transfer prices with associated
enterprises as regards assets, including intangible assets and services, however at least the amount established
by taking into account comparable market prices, established in accordance with the conditions and methods
referred to in Article 16 of this Act.

(5) In establishing a taxpayer’s expenses, it shall be taken into account the transfer prices with associated
enterprises as regards assets, including intangible assets and services, however up to the amount established by
taking into account comparable market prices, established in accordance with the conditions and methods
referred to in Article 16 of this Act.

(6) Without prejudice to the stipulations of the fourth and the fifth paragraphs of this Article, in establishing the
revenue and expenses of a resident relating to transactions conducted between two residents associated
enterprises under this Article, the tax base shall not be increased or decreased, unless one of the residents:
1. In the tax period for which revenue and expenses are established discloses an uncovered tax loss carried
forward from previous tax periods; or
2. Pays tax at a 0% rate or at a special rate, lower than the general tax rate pursuant to Article 60 of this Act; or
3. Is exempt from paying tax under this Act.

(7) The Minister responsible for finance shall define the implementation of this Article in detail.

                                                          Article 18

                  (Data relating to associated enterprises subject to Articles 16 and 17 of this Act)

(1) A taxpayer associated enterprise under Article 16 of this Act shall ensure and store the data related to
associated enterprises, and the scope and type of transactions conducted with them, as well as data on
establishing comparable market prices, within a time limit and in a manner in compliance with the Act regulating
tax procedure.

(2) A taxpayer associated enterprise under Article 17 of this Act shall, on request of the Tax Authority in the
procedure of tax supervision, provide the data related to establishing comparable market prices within a time limit
and in a manner in compliance with the Act regulating tax procedure.

                                                          Article 19

                                        (Interest between associated enterprises)

(1) In establishing revenue, interest charged on loans issued by associated enterprises shall be taken into
account, however, no lower than the level of the most recently published, known or recognised interest rate at the
time of approving the loan, unless the taxpayer proves that in equal or comparable circumstances a loan would
also be issued to a loan recipient which is a non-associated enterprise at an interest rate which is lower than the
recognised interest rate under this paragraph.

(2) In establishing expenses, interest charged on loans received from associated enterprises shall be taken
into account, however, not exceeding the level of the most recently published, known or recognised interest rate
at the time of approving the loan, unless the taxpayer proves that in equal or comparable circumstances he would
also receive a loan at an interest rate above the recognised interest rate under this paragraph from a lender who
is a non-associated enterprise.

(3) Without prejudice to the first and the second paragraphs of this Article, a taxpayer may, in establishing
revenue and expenses under the first and the second paragraphs of this Article take into account charged
interest according to the first and the second paragraphs of this Article, up to the level of the most recently
published interest rate known and recognised at the time of the calculation, when the interest is charged on a
monthly basis and fixed interest rate is agreed and/or up to the level of the average monthly recognised interest
rate when this interest is calculated for a period longer than one month but this period may not exceed one year.

(4) The average monthly recognised interest rate referred to in third paragraph of this Article shall be
calculated as the arithmetic mean of the recognised interest rate of the first and last months of the period for



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which interest is charged.

(5) The recognised interest rate referred to in the first, second and third paragraphs of this Article shall be
determined and published by the Minister responsible for finance prior to the beginning of the tax period to which
it will apply, considering the fact that the interest rate in question has been or would be reached in the market
between non-associated enterprises.

(6) In establishing the revenue and expenses of a resident relating to transactions conducted between two
residents associated enterprises under Article 17 of this Act, the tax base shall not be increased or decreased,
unless one of the residents:
1. For the tax period for which revenue and expenses are established discloses an uncovered tax loss forward from
previous tax periods; or
2. Pays tax at a 0% rate or at a special tax rate, lower than the general tax rate pursuant to Article 60 of this Act; or
3. Is exempt from paying tax under this Act.

                                                          Article 20

                                                        (Provisions)

(1) In establishing the tax base and recognising the expenses of a taxpayer, provisions set according to Article
12 of this Act shall be recognised as expenses in an amount corresponding to 50% of the provisions set, unless
otherwise provided in this Act.

(2) The following shall be considered as provisions pursuant to this Article: provisions given for warranties
given at the sale of products or provision of services, provisions for restructuring, provisions for expected losses
on onerous contracts, provisions for pensions, provisions for jubilee benefits and provisions for termination
benefits. Contingent long-term liabilities shall not be considered provisions.

(3) The elimination or use of the provisions referred to in the first and second paragraphs of this Article that
were not recognised as expenses shall be taken into account in the tax period in the following manner:
– revenue from elimination or use of provisions shall be exempt from the tax base in the part where the
creation of the provisions was not recognised as expenses, and
– expenses from the use of provisions shall be recognised in the part where the creation of the provisions
was not recognised as expenses.

(4) Creating and/or cancelling provisions subject to the first, second and third paragraphs of this Article shall
also involve their adjustment to the present value of expected future expenditures as at the end of the accounting
period.

                                                          Article 21

                                        (Revaluation and write-off of receivables)

(1) Expenses from revaluation of receivables for impairment shall be recognised in the accounted amounts in
accordance with Article 12 of this Act; however, the amounts of these expenses in the tax period shall not exceed
the lower of the following amounts:
– an amount equalling the arithmetic mean of actually written-off receivables in the last three tax periods under the
conditions referred to in the sixth paragraph of this Article, or
– an amount representing 1% of the taxable revenue of the tax period.

(2) In accordance with this Article, receivables shall be short-term and long-term operating receivables that
do not involve accruals and deferrals.

(3) Reversal of impairment of receivables referred to in the first paragraph of this Article shall be taken into
account in a manner that revenue from reversal of impairment which has not been recognized as expense shall
be exempt from tax base.

(4) Without prejudice to the first paragraph of this Article, expenses arising from revaluation and or
recalculation of receivables, which in accordance with the Slovene Accounting Standards are revaluated as a
consequence of a changed exchange rate, shall be recognised as expenses in the total amount.

(5) Expenses arising from the revaluation of receivables which subject to the first paragraph of this Article are
not recognised as expenses shall be recognised at the time of write-off of in the total amount of receivable or in a
partial amount of receivables that has not been paid or settled, subject to the conditions referred to in the sixth
paragraph of this Article.

(6) The write-off of receivables shall be recognised as expenditures on the basis of a final court ruling on a
concluded bankruptcy proceeding or on the basis of a final court ruling on confirmation of a concluded
compulsory settlement in the part where the receivables were not paid and/or were not paid in full. The write-off
of receivables shall also be recognised as expenses on the basis of unsuccessfully completed judicial execution
proceedings or without judicial proceedings for payment of receivables, if the taxpayer provides evidence that the



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cost of judicial proceedings would exceed the amount of the payment of receivables and/or if he/she provides
evidence that all actions that would be taken with the due diligence of a good businessperson have been taken to
secure payment of receivables and/or that all further legal proceedings shall be economically unjustified.

(7) When expenses from the revaluation of receivables for impairment are recognised for tax purposes under
the first paragraph of this Article, the tax base at the time of the write-off of receivables shall be increased by the
expenses recognised for tax purposes arising from the revaluation of receivables of previous tax periods, if the
write-off of receivables is not made subject to the conditions of the sixth paragraph of this Article.

                                                          Article 22

                                          (Revaluation of financial investments)

(1) In determining the tax base, expenses from a revaluation as a consequence of the impairment of short term
and long-term financial investments and/or financial instruments shall not be recognised.

(2) Reversal of impairment referred to in the first paragraph of this Article shall be considered in such a way
that revenue arising from reversal of impairment, which was not recognised as revenue, shall be exempt from the
tax base.

(3) Without prejudice to the first paragraph of this Article, expenses arising from revaluation of financial
investments and/or financial instruments at fair value through profit or loss shall be recognised as expenses in the
accounted amounts, in accordance with Article 12 of this Act.

(4) Expenses arising from a revaluation for impairment, which subject to the first paragraph of this Article shall
not be recognised and have not been reversed as referred to in the second paragraph of this Article, shall be
recognised at the time of disposal, exchange or abolition of the financial investment and/or instrument.

(5) Without prejudice to the first paragraph of this Article, expenses arising from revaluation for impairment of
loans, valued according to the method of amortised cost, shall be recognised as expenses for banks, however
not exceeding the level laid down by the Act regulating banking.

                                                          Article 23

                                                 (Revaluation of goodwill)

(1) Expenses arising from a revaluation for impairment in goodwill shall be recognised in the accounted
amount in accordance with Article 12 of this Act, however not exceeding an amount equalling 20% of the initial
goodwill value.

(2) In accordance with Article 12 of this Act, when the accounted amount due to impairment in goodwill
exceeds the amount recognised as expense in accordance with the first paragraph of this Article, the surplus
amount, which in accordance with the first paragraph of this Article is not recognised as expense, shall be
recognised in subsequent periods in such a way that this transferred amount plus the expense arising from
revaluation for impairment in goodwill in the current tax period shall not exceed an amount equalling 20% of the
initial goodwill value.

                                                         2. Revenue

                                                          Article 24

                               (Exemption of dividends and income similar to dividends)

(1) In determining the tax base of a taxpayer, received dividends or other shares in profit, including the income
similar to dividends referred to in Article 74 of this Act, excluding the hidden reserves referred to in Article 74 of
this Act that were not subject to taxation on the part of the payer, shall be excluded from the tax base of the
recipient, provided that the payer is:
1. A taxpayer under this Act; or
2. according to the tax law of a Member State considered to be resident in that State for tax purposes and,
under the terms of a double taxation agreement concluded with a third State, is not considered to be resident for
tax purposes outside Community and, in addition, shall be subject to one of the taxes to which the common
system of taxation, applicable in the case of parent companies and subsidiaries of different Members States
applies, and which are defined by the Minister responsible for finance, and without the possibility of an option or
of being exempt; or
3. A taxpayer subject to income tax and/or profit tax, comparable to the tax under this Act, and not a
resident of the state, and in the case of a business unit this is not located in a state where the general and/or
average nominal rate of taxation applicable to profits generated by companies is lower than 12.5% and the state
is listed on a published list in accordance with Article 8 of this Act; however, this indent does not apply to a payer
who is a resident of another EU Member State pursuant to second point of this paragraph of this Article.

(2) The provisions of the first paragraph of this Article shall apply to a non-resident recipient, provided that



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his/her participation in the capital or management of the person distributing the profits is connected with the
activities and/or business pursued by the non-resident, either in or through a business unit in Slovenia.

(3) Income referred to in the first paragraph of this Article shall be excluded from the tax base of the
recipient, if on this basis revenue was included in the tax base in previous tax periods.

(4) The implementation of this Article shall be governed by the Act regulating tax procedure.

                                                          Article 25

                                (Exemption of profits from disposal of equity holdings)

(1) In establishing the tax base of a resident or non-resident performing activity and/or business in a business
unit or through a business unit in Slovenia that earns profit from disposal of equity holdings in companies,
cooperative societies or other types of organisations, 50% of that profit shall be exempt from the tax base of the
taxpayer, if the taxpayer who earns profit has participated in capital and/or managing of another person in such a
manner that he/she is the holder of a holding, shares or voting rights amounting to at least 8% and the time of
this participation in capital and/or managing companies, cooperative societies and other types of organisations
lasts at least 6 months and, continuously employed at least one person during that period on a full-time basis.

(2) Losses arising from disposal of equity holdings as referred to in the first paragraph of this Article shall not
be recognised in the amount of 50%.

(3) The stipulations of the first paragraph of this Article shall not apply to profits from investments in ownership
shares of companies, cooperative societies or other types of organisations that have a seat or place of actual
operation of their management established in states where the general and/or average nominal rate of taxation
applicable to the profits generated by companies is lower than 12.5% and the state is listed on a published list in
accordance with Article 8 of this Act and the these states are not EU Member States.

(4) In the case of liquidation or dissolution of a taxpayer or non-resident’s business unit in Slovenia within a
period of 10 years of establishment, at the time of dissolution the tax base of the tax account shall be increased
by the exempt share of profit subject to the first paragraph of this Article for the period of the five previous tax
periods.

(5) A transaction in accordance with Chapter VII of this Act shall not be considered the liquidation or
dissolution of a taxpayer or non-resident’s business unit in Slovenia.

(6) Without prejudice to the first paragraph of this Article, in establishing the tax base of a taxpayer, resident or
taxpayer, non-resident, performing activity and/or business in a business unit or through business unit in Slovenia
that earns profits from disposal of equity holdings, acquired on the basis of venture capital investment
(investments in the form of an increase of the share capital of the company by investments of the taxpayer or
establishment of a company) in a venture capital company, established in accordance with the Act regulating
venture capital companies, the total amount of such profit shall be exempt from the tax base of the taxpayer if this
venture capital company held the status of venture capital company over the whole tax period and if this company
held the status of venture capital company over the whole period of holding such a share of the taxpayer.
Losses arising from the disposal of equity holdings referred to in this paragraph shall not be recognised.

(7) In establishing the tax base of a taxpayer resident or taxpayer non-resident performing activity and/or
business in business unit or through a business unit in Slovenia that earns profit from the disposal of equity
holdings and/or shares in banks in exchange for issuance or transfer of the own ownership shares or another
company’s shares (hereinafter: exchange), the profit or loss arising from this exchange shall be exempt from the
tax base of the taxpayer. When a taxpayer receives payment in cash, a proportional part of the profit or loss equalling
the payment in cash shall be included in the tax base.

(8) The taxpayer referred to in the previous paragraph is liable to value the ownership holdings or shares
received in exchange at the tax value that disposed ownership holdings or shares have in the time of exchange.

                                                          Article 26

                                            (Expenses relating to participation)

(1) In establishing the tax base in accordance with Articles 24 and 25 of this Act, expenses related to
managing and financing investments in the capital of companies, cooperative societies or other types of
organisations allowing income, which is exempt in accordance with Articles 24 and 25 of this Act, shall not be
recognised in an amount equalling 5% of the amount of dividends and profits received within the tax period which
are exempt from the tax base of the taxpayer in accordance with Articles 24 and 25 of this Act.

(2) The taxpayer shall exempt from the tax base the expenses referred to in the first paragraph of this Article
for the tax period in which he/she exempt income under Articles 24 and 25 of this Act from the tax base.

                                                          Article 27



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                               (Exemption of revenue arising from non-profit activities)

In determining the tax base of a taxpayer referred to in Article 9 of this Act, revenue arising from a non-profit
activity and the actual or proportional costs arising from that activity shall be exempt from the tax base.

                                                         Article 28

              (Exemption of income from write-off of debts in the compulsory settlement procedure)

Revenue arising from write-off of debts in the compulsory settlement procedure, in the part related to the
creation of reserves in compliance with the Act regulating financial operation of enterprises, shall not be included
in the tax base.

                                                        3. Expenses

                                                         Article 29

                                                          (General)

(1) In determining profit, expenses required to acquire revenue that is taxable under this Act shall be recognised.

(2) Expenses that are not required to acquire revenue are expenses for which, in respect of the facts and
circumstances, it follows that::
1. They are not a direct condition for performing activities and are not a consequence of performing
activities;
2. They are of a private nature;
3. They do not conform with normal business practice.

(3) Expenses shall be deemed not to conform with normal business practice if they are not customary in the
operation of the individual activity in respect of past and other experience and in comparison with other activities
as well as facts and circumstances, with the exception of expenses incurred by extraordinary and infrequent
events such as natural disasters, or as a result of other extraordinary and infrequent events.

                                                         Article 30

                                               (Non-recognised expenses)

(1) The following shall not be recognised as expenses:
1. Income similar to dividends, including hidden profit distribution;
2. Expenses for covering losses from preceding years;
3. Costs relating to private life, such as those for entertainment, holidays, sports and recreation, including
the respective value added tax;
4. Costs relating to compulsory collection of taxes and other levies;
5. Penalties imposed by the responsible authority;
6. Taxes paid by a partner as an individual;
7. Value added tax which in accordance with the Act regulating added value tax was not claimed by the
taxpayer as a tax credit although he/she had the right in accordance with the Act regulating the value added tax;
8. Interest:
a) On late payment of taxes or other levies;
b) On loans received from persons whose registered office or place of actual activities of management or
place of residence is in states, unless EU Member States, where general and/or average nominal tax rate
applicable to profits is below 12.5% and the state is listed on a published list in accordance with Article 8 of this
Act.
9. Donations;
10. Bribes and other types of pecuniary benefits given to individuals or legal entities in order either to bring
about or prevent a certain event which otherwise would not occur, for example that a certain act is performed
faster or more favourably or is omitted.

(2) The costs referred to in point 3 of the first paragraph of this Article shall be the following:
1. Costs relating to the private lives of the owners and/or associated enterprises referred to in Articles 16
and 17 of this Act, including the costs of assets owned or leased by the taxpayer relating to the private lives of
such persons;
2. Costs relating to the private lives of other persons, including the costs of assets owned or leased by the
taxpayer relating to the private lives of such persons, with the exception of costs for providing benefits and other
payments related to employment when they are subject to taxation according to the Act regulating the personal
income tax.

(3) Without prejudice to the first and the second paragraphs of this Article, the costs referred to in the point 3
of the first paragraph of this Article shall be recognised in case of use against payment, however only up to the
amount of such payment and/or reimbursement. The costs of the assets owned or leased by the taxpayer relating



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to private life and incurred during the use of such assets for private use shall not be recognised in proportion to
the extent of such use.

                                                            Article 31

                                               (Partially recognised expenses)

(1) The following shall be recognised, at the level of 50%, as expenditures:
1. Entertainment costs;
2. Supervisory board costs and/or costs of other body performing a supervisory function solely.

(2) Entertainment costs shall be deemed to be costs for hospitality, entertainment, or gifts (with or without a
logotype) to business contacts of the taxpayer with his/her business partners.

                                                            Article 32

                                                   (Interest on loan surplus)

(1) Except in the case of loan recipients that are banks and insurance undertakings, the interest paid on loans
received from a shareholder or partner who at any time in the tax period directly or indirectly owns at least 25% of
shares or holdings in the capital or voting rights of the taxpayer shall not be recognised as a deductable
expenses, provided that the loans exceed, at any time in the tax period, four times the amount of the
shareholder’s or partner’s holding in the taxpayer’s equity capital (hereinafter: loan surplus), established with
regard to the amount and duration of the loan surplus in the tax period, unless the taxpayer provides evidence
that he/she could have received the loan surplus from a lender who is a non-associated enterprise.

(2) Loans by third parties, including banks, for which a shareholder or partner gives a guarantee and loans if
made in connection with a deposit by a shareholder and/or partner in third party and/or in the bank shall also be
deemed loans by a shareholder and/or partner under the first paragraph of this Article.

(3) The amount of the shareholder’s or partner’s holding in the loan recipient’s equity capital shall be
determined for the tax period as an average on the basis of paid-in capital, retained earnings, and reserves as at
the last day of each month in the tax period.

                                                            Article 33

                                                         (Depreciation)

(1) Depreciation of tangible fixed assets, amortization of intangible assets or depreciation of investment
property (hereinafter: depreciation) shall be recognised as expenditure in the accounted amount, but not more
than the amount calculated using the straight-line depreciation method and the maximum depreciation rates
referred to in the fifth paragraph of this Article.

(2) When the accounted depreciation exceeds the amount calculated in accordance with the first paragraph
this Article, the surplus amount of depreciation shall be recognised in the following tax periods in such a manner
that for tax purposes the depreciation referred to in the previous paragraph shall be accounted until the final
depreciation and/or disposal and/or elimination of recording the tangible fixed asset, intangible asset or
investment in property. In case of disposal and/or elimination of recording the tangible fixed asset, intangible
asset or investment property, the revenue and expenses for tax purposes shall be calculated by taking into
account the tax values of the assets. The tax value of a certain asset shall be the amount attributed to that asset
when calculating the tax and/or the amount on the basis of which revenue, expenses, profits and losses are
calculated when calculating the tax.

(3) Depreciation shall be calculated individually.

(4) Assets which are being depreciated and the beginning of depreciation calculation shall be laid down by
regulations and accounting standards.

(5) The maximum annual depreciation rate subject to the provisions of the first paragraph of this Article shall,
amount to:
1. 3% for buildings, including investment property;
2. 6% for parts of buildings, including investment property;
3. 20% for equipment, vehicles and machinery:
4. 33.3% for parts of equipment and equipment for research activities;
5. 50% for computer equipment, hardware and software;
6. 10% for crops lasting several years;
7. 20% for breeding animals;
8. 10% for other investments.

(6) Without prejudice to the provisions of the first through fifth paragraphs of this Article, a write-off of the total
acquisition cost may be recognised as expense at the time of transfer into use in those tangible fixed assets



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whose useful life exceeds one year and whose acquisition cost does not exceed EUR 500.

(7) Depreciation of tangible fixed assets, including expenses of their disposal, calculated on a part of the
acquisition costs for the tangible fixed assets on the basis of the estimation of costs of decommissioning, removal
or reconstruction of the site for which provisions were created, and using or cancelling of provisions in such a
manner, shall be treated under the conditions of Article 20 of this Act.

                                                         Article 34

                     (Provisions for banks, brokerage companies and insurance undertakings)

(1) For banks, provisions which must be created with regard to special risks shall be recognised as expenses
in the accounted amounts, however not exceeding the level laid down by the Act regulating banking.

(2) Provisions which must be created by a brokerage company with regard to special risks shall be recognised
as expenses in the accounted amounts, however not exceeding the amount laid down by the Act regulating the
securities market.

(3) Technical provisions which an insurance undertaking is obliged to create in accordance with the Act
regulating insurance shall be recognised as expenses in the accounted amounts, however not exceeding the
amount or ceiling subject to the Act regulating insurance.

                                                         Article 35

                                (Salaries and other payments related to employment)

(1) Salaries, other payments related to employment and wage compensation for the time of absence from
work due to annual leave or due to other absences from work as regards employees shall be recognised as
expenses in the accounted amount.

(2) Salaries, other payments related to employment and wage compensation for the time of absence from
work due to annual leave or other absences from work as regards business executives, procurators and
employees with special powers and liabilities shall be recognised as expenses in the accounted amount, subject
to law and/or an employment contract.

(3) Payments of benefits taxable under the Act regulating personal income tax shall be considered as other
payments related to employment.

(4) Apprentices pay shall be recognised as expenses in the accounted amount, subject to law.

(5) Reimbursement for annual leave, jubilee benefits , termination benefits, solidarity aid, reimbursement of
work-related expenses , i.e. meal allowances, travel allowances, fieldwork allowances, separation expenses,
travel reimbursements, i.e.:
1. Daily allowance;
2. Travel cost reimbursement, including the reimbursement of costs incurred by using an employee's car for
work-related purposes (mileage); and
3. Reimbursement of the cost of lodging,
shall be recognised as expenses in the accounted amount.

                                                         4. Losses

                                                         Article 36

                                          (Tax losses and covering tax losses)

(1) Tax loss subject to this Act shall be the surplus of expenses over revenue laid down in this Act.

(2) Unless otherwise stipulated by the Act, a taxpayer can cover a tax loss in a tax period by reducing the tax
base in the subsequent tax periods.

(3) In reducing the tax base due to tax losses from preceding tax periods, the tax base shall first be reduced
by the tax loss of a prior date.

(4) A reduction of the tax base due to tax losses from preceding tax periods may only be allowed to maximum
amount of the tax base for the tax period.

(5) If during a tax period, the ownership of equity capital and/or equity holdings or voting rights of the taxpayer
changes directly or indirectly by over 50% compared to the state of ownership at the beginning of the tax period
and the taxpayer:
1. Did not perform the activity two years prior to the change in ownership; or
2. Considerably changed the activity two years prior to or after the change in ownership,



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the second paragraph of this Article shall not apply to the losses incurred in the year of the change in
ownership or in the preceding tax periods.

(6) When the activity of a taxpayer considerably changes within two years of the change in ownership, subject
to the fifth paragraph of this Article, the tax base shall increase by the already claimed tax losses incurred in the
year of the change in ownership or in the preceding tax periods.

(7) Item 2 of the fifth paragraph of this Article shall not apply to a taxpayer who considerably changes
his/her activity due to maintenance of employment or reorganisation of business.

                                                           Article 37

                                               (Tax loss – special provision)

A taxpayer who, in accordance with Article 28 of this Act, does not include in the tax base the revenue arising
from write-off of debts in the compulsory settlement procedure, in the part related to creation of reserves in
compliance with the Act regulating financial operation of enterprises, shall lose the right to cover tax losses
incurred in the previous years in the amount of the revenue that, due to the creation of reserves, shall not be
included in the tax base.

    VII. TAXATION APPLICABLE TO TRANSFERS OF ASSETS AND LIABILITIES, EXCHANGES OF SHARES,
                                    MERGERS AND DIVISIONS

                                                           Article 38

                                                      (Hidden reserves)

(1) In mergers or divisions carried out in accordance with this Chapter of the Act, the taxpayer shall in the tax
assessment disclose hidden reserves related to the remaining and/or transferred assets and shall include them in
the tax base, unless otherwise provided by law.

(2) The tax assessment referred to in the first paragraph of this Article shall be submitted within the time limit
and in a manner stipulated by the Act regulating tax procedure.

(3) The amount representing the hidden reserves referred to in the first paragraph of this Article shall be
calculated as the difference between the fair value and the tax value of the assets and liabilities as at the date of
tax assessment, as referred to in the first paragraph of this Article.

(4) Fair value is the amount for which an asset could be sold or otherwise exchanged or a liability settled or at
which an equity instrument granted could be exchanged between knowledgeable and willing parties in an arm’s
length transaction.

(5) Tax value of a certain asset or liability is the amount attributed to the asset or liability for the purpose of tax
and/or on the basis of which revenue, expenses, profits and losses have been calculated for the purpose of tax.

                                       1. Taxation applicable to transfers of assets

                                                           Article 39

                                                     (Transfer of assets)

The transfer of assets in accordance with this Article shall mean an operation whereby a company
(hereinafter: transferring company) transfers, without being dissolved, all or one or more branches of activity to
another existing company or to a new company that it establishes (hereinafter: receiving company) in exchange
for either the issuance or transfer of securities representing the capital of the acquiring company to the
transferring company. The branch of activity subject to this Article shall mean all the assets and liabilities of a
division of a company which from an organisational point of view constitute an independent business and is an
entity capable of functioning by its own means.

                                                           Article 40

                                                  (Rights and obligations)

(1) In the transfer of a branch of activity:
1. The transferring company shall be exempt from the tax relating to profits generated in transferring the
assets and liabilities belonging to the transferred branch or branches of activity;
2. The transferring company shall be exempt from the tax relating to losses incurred in transferring the
assets and liabilities belonging to the transferred branch or branches of activity;
3. The transferring company shall be obliged to value the granted securities of the receiving company at
their market value as at the day of transfer.




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