How can companies in Slovenia that are tax residents of Slovenia reduce the advance tax on profits that you pay during the year to the Tax Office?

This year, companies pay a higher rate of corporate profit tax, find out below how you can reduce your advance payment of this tax.

You have recently had to file your tax returns, which means that your next instalment of corporate profit tax or business rates will be different from what it was before you filed your returns.

First, it will be calculated on the basis of last year’s business, and second, a new, higher tax rate applies. The current government has imposed an additional tax burden on businesses for the next five years: instead of the standard rate of 19%, the corporate profit tax rate will be 22% from 2024 to 2028 inclusive.

The tax rates for entrepreneurs, who pay tax according to the income tax scale, and for ratepayers remain unchanged.

Here’s when and how you can reduce – and ultimately increase if you expect to do better than last year – your advance on corporate profit tax.

How is the corporate profit tax advance calculated?

The tax surcharge is calculated automatically, on the basis of the company’s performance last year, i.e. after the 2023 return has been filed.

What if the company or entrepreneur foresees a reduced volume of business and wishes to pay a corresponding advance payment during the year, so as not to unnecessarily credit the government for the repayment of the overpaid advance payment, would it have to wait until the submission of the 2024 return, which is not until next year?

He can change the amount of the advance payment by submitting an application to change the amount of the advance payment during the year, if he reasonably expects his tax base to be lower or higher in the current tax period and justifies this with supporting documents or explanations.

This is done after the 2023 return (as the 2024 instalments have not been calculated before then).

From when is a different advance rate of tax automatically charged?

It varies depending on when company submits tax return. For example, if the company or taxpayer has already submitted the tax return in January 2024, the tax return will also calculate the new amount of the advance payment, taking into account the tax base for 2024 and the tax rate for 2024 (22%), in which case the advance payment for January 2024 will be paid by 20 February, explains the Tax Office.

Taxpayers who submitted their 2023 tax return in March, or by the legal deadline of 2 April this year, will pay the first instalment (i.e. the March 2024 instalment) in the new amount, taking into account the new tax rate, by 22 April. The January and February instalments will be affected by the change in the tax liability in the 2023 return compared to the 2022 return and the change in the tax rate from 19% to $22%, the Tax Office of the Republic of Slovenia points out.

How to apply for a lower or higher advance tax payment from the Tax Office?

The taxpayer can apply for a year-on-year change in the amount of the advance tax payment via the e-Taxes platform or, if instructed, by a certified accountant, who will assess the amount of income and expenditure in the current period and explain the change in the tax base. The taxpayer shall submit the request at least 30 days before the maturity of the advance payment instalment. The Tax Office will normally decide on the request within 15 days.

Statistics: more and more applications for a lower tax advance.

Statistics from the Tax Office show that more and more companies and entrepreneurs are applying for a lower corporation tax advance payment, or entrepreneurs for business income. Most applications are granted.

By comparison, last year the Tax Office received 849 applications for a reduction in the corporate tax advance and 2,226 applications for a reduction in the business income tax advance. 784 and 1,914 applications were approved respectively.

Which companies will apply for a lower advance and why is it worth it?

Entrepreneurs or companies that expect to underperform in 2024 compared to last year are likely to apply for a change in their tax advance. This way they improve their liquidity and do not finance the government in advance.

Is the overpayment of advance tax in the first months of the year refunded to the taxpayer or how is it settled?

Suppose that when you file your tax return for last year by the end of March or by 2 April this year, you realise that you will actually do worse this year than last year. You will claim a lower advance tax payment, but this will apply to future months.

Will you get back the tax you overpaid in the first few months of the year?

No. Any overpayment in the first few months of the year, which was calculated on the basis of tax returns filed in the past, is retained by the government until the following year. Based on the final performance in 2024, the tax return then calculates how much tax the company has overpaid, including any advance payments. The goverment will thus only reimburse the overpaid tax after the 2024 return is submitted in 2025, without interest. So until then, you have credited the government.

But let’s add a very bad “consolation” – because the tax rate will be higher this year, i.e. 22% instead of 19% corporate profit tax , your liability will still be higher than it would otherwise have been, even if you do less well than you would otherwise have done.

Of course, you could have done better, made more profit – in which case you will have to pay the extra tax when you file your return for this year, i.e. next year. Unless you are so afraid of a possible high surcharge that you apply for an increase in the advance payment – a voluntary increase in the advance payment, so to speak. The downside of this for you is a credit to the state, but the upside is that you won’t be hit too hard by the top-up tax liability when you return next year.

What are the most common reasons why Tax Office does not approve an application for an increase or reduction?

The most common reason is that the taxpayer withdraws the application or fails to provide documentation to prove the decrease in income or the reduction of the tax base in the current year compared to the previous year, the Tax office explained to us. However, at the beginning of the year, a number of taxable persons submit an application for a year-on-year change in the amount of the advance payment before submitting their return for the previous tax period.

How do you pay the advance payment?

The advance payment is paid in monthly or quarterly instalments. It is paid in monthly instalments if the amount of the annual advance exceeds €400, or in three-monthly instalments if the amount of the annual advance does not exceed €400.

Instalments of the advance shall fall due on the last day of the period to which they relate and shall be paid within 20 days of their maturity. For example: the instalment for April is due on the last day of April and must be paid by 20 May.