Slovenia - New SME VAT Scheme Simplifying Tax Compliance and Cross-Border Trade

The Slovenian government, more precisely the Ministry of Finance, proposed amending the Value Added Tax (VAT) Act following the EU-wide special arrangements for SMEs and administrative cooperation and information exchange to monitor the correct use of these special arrangements.

The proposed amendments mainly apply to domestic taxable persons but include some novelties concerning taxable persons from other EU Member States.

Understanding the Impact of the Proposed Amendments

Under the proposed amendment to the VAT Act, small businesses headquartered in another EU Member State will be exempt from VAT on supplies of goods and services carried out in Slovenia. Conversely, these amendments also establish conditions for VAT exemption on supplies made by Slovenian small businesses in another EU country if they fulfill specific requirements.

An essential change is increasing the VAT registration threshold from EUR 50,000 to EUR 60,000. However, an exemption is proposed for businesses exceeding the new threshold in this calendar year. Those businesses can use the transitional provision and continue to use the VAT exemption regime until the value of their annual turnover reaches EUR 66,000.

It is estimated that around 2,500 taxpayers, representing 2% of Slovenia's total VAT taxpayers, will no longer be subject to VAT obligations, as they will remain below the new VAT registration threshold. Consequently, the state budget revenue will decrease by around EUR 20 million due to less VAT being collected and remitted. 

Conclusion

Across the EU, Member States are changing their VAT registration thresholds to simplify the entry of small businesses into other EU countries' markets, reduce their administrative burdens on cross-border transactions and business operations, and equalize the competitive conditions of small businesses based in the EU.

Although these changes sometimes reduce the number of small businesses exceeding the threshold and registering for VAT purposes, these policies represent a substantial boost and support for SMEs.

Source: Act on Amendments to the Value Added Tax Act (ZDDV-1)