Slovenia

1) REFERENCES

Commission Opinion [COM(1997) 2010 final - Not published in the Official Journal]Commission Report [COM(1998) 709 final - Not published in the Official Journal]Commission Report [COM(1999) 512 final - Not published in the Official Journal]Commission Report [COM(2000) 712 final - Not published in the Official Journal]Commission Report [COM(2001) 700 final - SEC(2001) 1755 - Not published in the Official Journal]Commission Report [COM(2002) 700 final - SEC(2002) 1411 - Not published in the Official Journal]Commission Report [COM(2003) 675 final - SEC(2003) 1208 - Not published in the Official Journal]Treaty of Accession to the European Union [Official Journal L 236 of 23.09.2003]

2) SUMMARY

In its July 1997 Opinion, the Commission took the view that transposition of the Community acquis in the direct taxation field should not pose major difficulties for Slovenia. As regards indirect taxation, however, it was not convinced, in the absence of a VAT or excise system, whether Slovenia could comply with the acquis in the medium term. It also considered that Slovenia should be able to participate in the mutual assistance arrangements as its tax administration had developed its expertise in this respect.

The November 1998 Report noted that legislative activity in this area had slowed considerably, with no tangible progress having been achieved. Slovenia had once more postponed the introduction of VAT and of an excise duty system.

By October 1999 the Commission considered that significant progress had finally been made with the adoption of the VAT law and measures to restructure the tax administration.

In October 2000, the Commission considered that Slovenia had made a certain degree of progress and that only minor adjustments were necessary. The implementing regulations for the laws on VAT and excise duties had been adopted together with a decree relating to the excise duties on spirits produced by small distilleries and cigarettes. Slovenia had increased its administrative capacity in order to implement the new legislation and new administrative cooperation and mutual assistance. In addition, the tax administration departments had been reorganised (VAT). The customs administration had created a department for excise duties and in January 2000 it introduced a new system for the collection of data on taxpayers. No new elements were evident in the area of direct taxation.

In October 2001, Slovenia had made further progress, particularly in the field of excise duties (adoption of zero duty for fermented drinks in order to harmonise the rate with that of wine, rates of duty on methane aligned with that of liquefied petroleum gas, which is above the EC minimum, increase in duty on ethyl alcohol). However, there had been no progress on VAT, direct taxation, administrative cooperation and mutual assistance. Duty-free shops at border posts had been transformed into normal shops. With regard to administrative capacity, the code of ethics for the tax administration laying down the duties and rights of taxpayers had been put into practice.

The October 2002 Report stresses that Slovenia has continued to make progress in harmonising its tax legislation with the existing body of Community rules.

The Slovenian tax administration has also continued its reforms.

The 2003 Report finds that Slovenia is essentially meeting the commitments and requirements arising from the accession negotiations on VAT, excise duties and administrative cooperation and mutual assistance. By accession it should therefore be in a position to implement the acquis in these areas. Slovenia is only partially meeting its commitments regarding direct taxation and so needs to accelerate the process of transposition, as it still needs to transpose almost the whole acquis for this area.

Slovenia has obtained transitional periods for the reduced VAT rate on construction, renovation and maintenance work for residential housing not provided as part of a social policy (until 31 December 2007), the reduced VAT rate on the preparation of meals (until 31 December 2007), and has been granted derogations allowing it to apply a VAT exemption and registration threshold of EUR 25 000 for small and medium-sized businesses and VAT exemption on international passenger transport. Slovenia was also granted a transitional period allowing it to defer until 31 December 2007 implementation of the minimum excise duty rates of EUR 64 per 1000 cigarettes for the category most in demand.

The Treaty of Accession was signed on 16 April 2003 and accession took place on 1 May 2004.

COMMUNITY ACQUIS

The Community acquis in the area of direct taxation mainly concerns certain aspects of corporation taxes and capital duty. The four Treaty freedoms have a wider impact on national tax systems.

The legal framework for indirect taxation consists primarily of harmonised legislation in the field of value added tax (VAT) and excise duties. This includes the application of a non-cumulative general tax on consumption which is levied at all stages in the production and distribution of goods and services and requires equal tax treatment of all domestic and import transactions.

In the field of excise duties, the acquis comprises of harmonised tax structures and minimum rates of duty together with common rules on the holding and movement of excisable goods (in particular, the use of tax warehouses).

EVALUATION

Slovenia has reached a very advanced stage in this area and is well on the way to harmonisation with the introduction of significant legislation (VAT and excise duties). However, certain minor adjustments are necessary.

Indirect taxation

The VAT law was amended in July 2002. It specifies the public activities benefiting from a VAT exemption and the taxation on second-hand goods, antiques, collectors' items and travel. The law also lays down that the reduced VAT rate applicable to wine and audiovisual equipment will be aligned with the Community rate by accession. In the VAT field, the only transpositions still remaining relate to the provisions on intra-Community trade and certain other minor divergences.

At the end of 2003 Slovenia still needed to complete alignment of the scope of the reduced VAT rate in a few areas, exemptions from VAT for postal services, the definition of new means of transport and refunds of VAT to foreign taxable persons not established in the Community territory. Minor discrepancies also remain to be addressed in the areas of the definition of taxable persons and taxable transactions.

As regards excise duties, amendments to the excise duty law were adopted in November 2001. These amendments bring the excise duties on beer, fermented drinks and spirits to the minimum level applicable in the EC. With regard to cigarettes, the law provides for alignment by January 2004 with one of the requirements in force in the EC (total minimum excise duty of 57%). Slovenia already complies with the minimum rates of duty in force in the European Union for virtually all categories of harmonised products. The intra-Community provisions are still, however, to be transposed.

At the end of 2003 there were still some minor discrepancies in the definition of cigars and cigarillos, and exemptions for NATO armed forces still had to be introduced. Slovenia also needs to extend the national suspension scheme to intra-community movements of excisable goods. The gradual increase of excise duties on cigarettes is proceeding according to schedule.

Direct taxation

As regards direct taxation, amendments to the economic areas law were adopted in November 2001. These amendments alter the procedures applying in order to obtain tax advantages for activities carried out in the economic areas. Slovenia has stated that it is ready to recognise the code of conduct for business taxation.

At the end of 2003 Slovenia was behind with the alignment of legislation in this area. It needs to speed up transposition of the merger and parent/subsidiary Directives and the Directives on the taxation of savings income and on interest and royalties.

Administrative capacity

Substantial progress has been made in the area of administrative capacity. Both the tax administration and the customs administration, the latter being responsible for excise duties, are modern entities which operate effectively and have appropriately trained staff and adequate administrative structures. Both seem able to ensure the efficient collection, application and inspection of taxation. Both administrations have continued to ready themselves for tackling the problems with which they could be faced in the context of the internal market.

At the end of 2003 the capacity of the tax administration was sufficient to ensure the proper implementation of the acquis.

In the area of administrative cooperation and mutual assistance, the creation of an Excise Liaison Office in the General Directorate for customs was studied. The Central Liaison Office, responsible for the exchange of VAT and direct taxation data, was set up in 1999. In January 2002 a project for the introduction of a VAT information exchange system (VIES) was launched.

At the end of 2003 the implementing structures were largely in place. The Department for International Information Exchange (future Central Liaison Office) has been operational since 1999, whereas the Excise Liaison Office (ELO) in the General Customs Directorate was set up in June 2003. The system for the exchange of excise data (SEED) is also in place.

Last updated: 15.01.2004