The Slovenia Times

Parliament abolishes tax on holiday allowance


Broad, cross-partisan support was expressed for the government-sponsored changes in the debate preceding the votes. The only party to express reservations was the Left, the minority government's partner in the opposition, which abstained from voting.

The Left wanted to preserve the existing holiday allowance taxation for top earners. Under current legislation, personal income tax is deducted from holiday allowance, while social contributions are paid when the allowance exceeds 70% of average pay.

Under the changes, holiday allowance amounting up to average gross pay will be exempt of taxes and contributions. Average gross pay in Slovenia stood at EUR 1,715 in February.

The changes will be effective as of the start of 2019, which means that employees who already received their holiday allowances will get refunded for any surplus tax or contributions.

Addressing the National Assembly session today, Finance Minister Andrej Bertoncelj said that the changes would allow employers more room in deciding about rewards for their employees.

The minister noted that the annual holiday allowance, which must be paid out to all employees by 1 July, cannot be lower than average gross pay or EUR 887.

The Finance Ministry estimates that the tax cut would reduce annual budget revenue by EUR 90m in personal income tax and between EUR 1.2m and EUR 1.5m in social contributions.

To make up for the loss, the Finance Ministry has already drafted proposals to increase taxes on capital gains. Further cuts of labour taxation are also in the pipeline.


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