134th regular session of the Government of the Republic of Slovenia

SLOVENIA, December 23 - The Government approves the starting points for the residential property tax and tax relief on labour costs

The Government has approved the proposed starting points for the introduction of a residential property tax aimed at supporting housing policy, providing tax relief on labour costs and enhancing economic competitiveness. It was emphasised that the first residential property used by the owner as their primary residence would be fully exempt from the new tax.

Slovenia has long faced several challenges in the housing market. These include the grey rental market, insufficient oversight of tenancy relationships and a shortage of housing. At the same time, issues such as the accumulation of properties as investments, vacant housing and the use of properties for short-term rentals instead of long-term tenancies exacerbate the situation.

To improve this situation, the Government proposes the introduction of a residential property tax, aiming to encourage landlords to adopt more rational ownership and use of property, rent out properties based on formal tenancy agreements and declare the actual rental income received to the tax authorities.

The residential property tax framework provides for a tax burden on residential properties in Slovenia, including apartments, houses and building land. Both natural and legal persons owning residential property, including non-residents, would be subject to the tax.

The primary property where owners reside would be fully exempt. However, significant tax incentives would apply to other properties rented out under tenancy agreements.

The proposed tax rate is 1.45%, calculated based on the general market value of the property as reported by the Surveying and Mapping Authority of the Republic of Slovenia. Revenue from this tax would be allocated to the state budget.

A rental tax incentive is also proposed for natural persons, reducing the tax liability by 25% of the declared rental income. This incentive aims to encourage the accurate declaration and payment of rental income tax, as the benefit exceeds the tax typically paid on such income.

Based on current data and planned incentives, the total estimated residential property tax revenue could amount to nearly EUR 600 million.

The residential property tax would not affect the existing fee for the use of building land, which is a property tax and is due to municipalities for their investment activities. However, the Government proposes to abolish the existing property tax, which is a similar type of tax.

The funds raised from the residential property tax would be allocated to tax relief on labour costs, particularly benefiting the middle class, where the labour shortage is the most pronounced. This would improve economic competitiveness, boost employment and adequately address fiscal sustainability.

In this context, the proposal is to introduce a special personal allowance for employment income (an in-work allowance) in the form of a reduction of taxable income by EUR 2,000 per year. Adjustments to the personal income tax scale and rates are also proposed to ease the tax burden on the middle and upper classes.

These measures aim to make a significant step forward in restructuring taxes and social security contributions, which will positively impact Slovenia's competitiveness. Given that the economic structure of taxes and social security contributions is not optimal – due to Slovenia's above-average tax burden on labour costs and below-average tax burden on property – it is essential to address this aspect through a balanced approach across different areas.

The proposed starting points will undergo an extended period of public discussion, with thorough coordination within the coalition and the relevant ministries responsible for individual reforms.

Source: Ministry of Finance

The Government adopted amendments to the Social Assistance Act

The Government adopted a proposal for the Act Amending the Social Assistance Act. The proposed amendments aim to implement the Agreement on the salary system reform and the new classification of posts and titles into salary grades within the health, social assistance and compulsory social security sectors, as adopted through negotiations and coordination between the Government and the representative trade unions. The amendments also introduce urgent systemic corrections to address gaps in current regulation, positively impacting staff shortages and addressing the shortcomings of the current social assistance regulation.

During these negotiations, an agreement was reached on the systemic regulation of the intervention service at social work centres. These centres handle urgent and unavoidable cases outside office hours, following police notifications. Cases include situations where a child is at risk, domestic violence is reported, a person under guardianship or with mental health issues or with a disability is left without care and protection, or an older person is in distress. To comply with labour legislation, a new provision (Article 49.b of the Social Assistance Act - ZSV) is proposed to ensure adequate rest for professionals while maintaining the smooth operation and facilitating the organisation of the intervention service.

Another agreement reached during negotiations is an amendment to the Social Assistance Act (new Articles 69.a and 70.a) allows for the employment of candidates who are yet to obtain the required professional certification for professional staff or professional assistant staff but meet other requirements under Article 69 or 70 of the Social Assistance Act, provided that they obtain the necessary certification within one year of employment.

Furthermore, a proposed amendment to the Social Assistance Act introduces a new title for the promotion of professional staff and professional assistant staff to establish career development comparability between professionals working in social assistance and other salary groups.

Additionally, urgent systemic solutions are proposed to address the shortcomings in current social assistance regulations.

A new provision (54.b) is proposed, establishing the legal basis to provide crisis accommodation through providers of full-day institutional care for older persons, younger persons with disabilities, children, adolescents and adults with mental and physical disabilities, mental health issues or other disabilities, as well as for adults in urgent need of immediate assistance due to social, psychological, health or other crisis situations.

The amended Social Assistance Act (ZSV-H) reformed the organisational structure of social work centres by introducing assistant directors to manage individual units of social work centres. However, it included a provision which inadequately defined the conditions required for assistant director candidates compared to those of director candidates. The proposed new provision addresses the equalisation of the education condition and the required professional experience for directors and assistant directors of social work centres.

A proposed new provision of the Social Assistance Act (Article 68.č) seeks to integrate various public network providers into communities. This applies to the activities of special social care and employment centres, as well as special social care and education centres that serve persons with mental or physical developmental disorders or other disabilities. These will carry out certain tasks entrusted to them as public authorities.

Staff shortages in social assistance will also be addressed by the proposed regulation of relevant professional qualifications in this field (Article 70.b). This aims to harmonise the sectoral legislation with the Act Regulating the Procedure for Recognition of Professional Qualifications for Practising Regulated Professions, establishing the legal basis for the conduct of and decision-making in the procedure for recognising professional qualifications for practicing regulated social assistance professions for EU citizens and third-country nationals.

To ensure the appropriate standardisation of social assistance prizes and awards, which can be conferred by the minister, the types and number of awards in the field of social assistance are proposed (an amendment to Article 75).

A further new provision introduces supervision for professional staff and professional assistant staff at social work centres.

Source: Ministry of Labour, Family, Social Affairs and Equal Opportunities

Proposal for an Act on Services of General Economic Interest Relating to Drinking Water Supply and the Discharge and Treatment of Municipal Waste Water and Meteoric Water

The Government has drafted a proposal for an Act on Services of General Economic Interest Relating to Drinking Water Supply and the Discharge and Treatment of Municipal Waste Water and Meteoric Water, submitting it for discussion and adoption through an urgent legislative procedure by the National Assembly of the Republic of Slovenia.

The aim of the proposed Act is to provide a more detailed regulation of activities performed by the relevant public services in relation to drinking water supply and the discharge and treatment of municipal waste water and meteoric water. The new Act proposal is necessary as the systemic Services of General Economic Interest Act relating to environmental protection currently lays down only general provisions regarding the manner and forms in which services of general economic interest are performed.

The proposal seeks to implement Article 70.a of the Constitution of the Republic of Slovenia, ensuring the right to drinking water, while enhancing oversight of environmental protection services of general economic interest, which have until now been largely regulated through implementing regulations. To strengthen supervision, the Ministry has included inspection measures, typically regulated by Acts, in the proposed Act. Furthermore, the Constitutional Court will be able to assess the legality of municipal ordinances and their compliance with national legislation based on the proposed Act.

The state protects water sources (reservoirs) under the Waters Act, governing water protection areas and regulations pertaining to the drinking water supply for all residents under the same conditions. The distribution of drinking water to end users, including the discharge and treatment of municipal waste water, falls under the responsibility of municipalities.

Under the proposed act, the supply of drinking water for public and household use will no longer be conducted through profit-driven concessions. This will ensure the supply of drinking water and household water on a not-for-profit basis, as required by the Constitution of Slovenia.

The state's supervisory role is ensured through the pricing policy for public services, serving as a key instrument for regulating the public service system, and by strengthening existing supervision.

The proposal sets out the pricing of public services and the person liable for the payment of the public service charge. In this context, it sets out the pricing process and its composition, the elements of the price and the pricing baselines. It also sets out the eligible costs that can be included in the public service charge, and the Government will regulate these elements in more detail through an implementing regulation. Municipalities will set the price of the municipal public services through municipal council acts. The proposal also requires municipalities to adopt a pricing ordinance to regulate issues relating to price adoption, the eligible costs of the price and the criteria for determining the eligibility of each cost in the price, and the method and procedure for recovering excess revenue from municipal public service providers. The ordinance will form the basis for municipal council pricing decisions and price approvals.

The proposal also prohibits subcontracting essential parts of public services, as the proponent considers that the prohibition is reasonable and appropriate, to ensure greater transparency of service provision and greater accuracy in statutory reporting.

The proposal also upgrades the data collection system and improves the connectivity of existing databases. It lays down the rules for recording data on infrastructure networks and facilities, providing for the linking of the Cadastre of Public Infrastructure and the information system of services of general economic interest through a linking identifier, thus clearly and unambiguously defining the link between the different information systems. This is essential for effective and comprehensive oversight.

Source: Ministry of Natural Resources and Spatial Planning

The Government calls for the resignation of Energy Agency Council members and changes to the network charge methodology

The Government has called for the resignation of Energy Agency Council members as the current network charging methodology does not allow for an adequate transition period for businesses and fails to support household investments in green technologies.

The Government calls on the management of the Energy Agency to reinstate the previous method of calculating the network charge by 8 January 2025 and to amend the legal framework governing the methodology for determining network charges for electricity system operators.

Many individuals who have invested in new technological solutions such as solar power plants, heat pumps, electric vehicles or electricity storage systems are penalised by the new methodology with significantly higher network charges. This change was introduced without a proper transition period, creating an additional financial burden for households opting for sustainable energy solutions.

Business customers also faced insufficient time for an adequate transition period. The Government stresses that reverting to the previous calculation method would facilitate smoother transitions and mitigate the negative impact on businesses.

Source: Ministry of the Environment, Climate and Energy