Taxing and Accounting

Accounting standards

International accounting standards often permit several solutions to be applied, but Slovenian Accounting Standards limit this possibility. Thus in certain cases it is possible to say that a company acted in accordance with international accounting standards even though the solution applied is in contravention of Slovenian Accounting Standards, the use of which is compulsory in the Republic of Slovenia. On the other hand, when a company follows Slovenian Accounting Standards which already incorporate the latest approaches used in international accounting standards it is possible to consider its financial statements as being in conformity with international accounting standards.

All legal entities independently performing a gainful activity in the market as their sole activity must be organised as commercial companies in one of the following forms:

  • Partnerships - d.n.o., k.d., t.d.
  • Corporate forms - d.o.o., d.d., k.d.d.

These companies are obliged to compile an annual report.

Companies compile an annual report for the financial year, which may differ from the calendar year. Under the Corporation Tax Act the tax year is the same as the calendar year. Therefore most companies have decided that their financial year will be the same as the tax year, i.e. the calendar year.

Classification of companies into micro-sized, small, medium-sized and large is important because of the differences in their obligations when compiling financial statements, their publication and their statutory auditing requirements.

A micro-sized company is a company meeting at least two of the following criteria:

  • The average number of employees in the financial year does not exceed 10.
  • The net sales income in the financial year is less than €2,000,000.
  • The value of assets at the end of the financial year does not exceed €2,000,000.

A small company is a company that cannot be classified as a micro-sized company and which meets at least two of the following criteria:

  • The average number of employees in the financial year does not exceed 50.
  • The net sales income in the financial year is less than €7,300,000.
  • The value of assets at the end of the financial year does not exceed €3,650,000.

A medium-sized company is a company that cannot be classified as a small company and which meets at least two of the following criteria:

  • The average number of employees in the financial year does not exceed 250.
  • The net sales income in the financial year is less than €29,200,000.
  • The value of assets at the end of the financial year does not exceed €14,600,000.

A large company is a company that cannot be classified as a micro-sized or small or a medium-sized company. In all cases the following are deemed to be large companies:

  • Banks.
  • Insurance companies.
  • Companies obliged to compile a consolidated annual report under Article 56 of the Companies Act.

Annual report

The management board of a company is responsible for the timeliness and accuracy of the statements and business reports and also for submitting them to its internal bodies within the time limits determined in its act.

The annual report of micro-sized and small companies whose securities are not traded on an organised market and which are not required by law to have their financial statements audited comprises:

  • A balance sheet.
  • An income statement.
  • Notes to the statements.

The annual report of medium-sized and large companies and small companies whose securities are traded on an organised market comprises:

  • A balance sheet.
  • An income statement.
  • Annexes containing notes to the statements.
  • A cash flow statement.
  • A statement of changes in equity.
  • A business report.

Balance sheet

The balance sheet is the basic financial statement in which the balance of assets and liabilities at the end of the financial year or at intervals during the year for which it is compiled is presented fairly. Under SRS 24 a balance sheet is drawn up in double entry form and for large and medium-sized companies broken down in line with the requirements in the Companies Act. The full balance sheet has 70 basic items (excluding sum totals), but for small companies the number is reduced to as few as 20 items.

Income statement

The income statement shows the incomes, expenses and operating result in the financial year. It may be compiled in one of two forms (versions I and II). Each company chooses the version that suits it best, which depends in part on its level of international activity.

Cash flow statement

The cash flow statement shows movements in receipts and outgoings or inflows and outflows in the financial year and explains changes in the balance of cash. SRS 25 gives priority to the direct method (version I).

Statement of changes in equity

The statement of changes in equity shows changes in the individual elements of the equity capital in the financial year, including the use of net profit and the covering of losses.

A supplement to the statement of changes in equity is a presentation of balance sheet profit as a category defined in the Companies Act. The general meeting distributes the balance sheet profit to shareholders or to other reserves, carries it forward to the following year or uses it for other purposes.

Business report

The business report must give at least a fair presentation of the development of the operations and position of the company. The business report must also present: 1. important business events occurring after the end of the financial year, 2. the anticipated development of the company, 3. the company's activities in the area of research and development, 4. subsidiaries of the company, 5. activities carried out by the company's subsidiaries abroad. The form for the business report is not prescribed.

Compiling of consolidated financial statements

Companies established in the Republic of Slovenia which control one or more companies established in Slovenia or elsewhere must also compile a consolidated annual report if either the controlling company or one or more of the controlled companies are companies with share capital, or if they have some other organisational form of the same type under the law of the country in which they are established.

Publication of annual reports

The annual reports of large and medium-sized companies and the annual reports of those small companies whose securities are traded on an organised market, and consolidated annual reports, are submitted to the Agency of the Republic of Slovenia for Public Law Records and Services (AJPES) together with the auditor's opinion within eight months of the end of the financial year for the purpose of publication.

The annual reports of small companies whose securities are not traded on an organised market and the annual reports of sole traders must be submitted for the purpose of publication to the same agency within three months of the end of the financial year.

Within three months of the end of the calendar year companies and sole traders must submit data from their annual reports on their assets and financial position and their operating result to the Agency for Public Law Records and Services (AJPES) for statistical reporting purposes (in accordance with the law regulating national statistics).

Auditing of financial statements

All large and medium-sized companies and those small companies whose securities are traded on an organised market are required to have their annual financial statements audited. The same applies to all consolidated financial statements.

The audit must be carried out within six months of the end of the financial year, and no later than eight days after receipt of the audit report. The audited financial statements and the audited annual report must be submitted to the body of the company responsible for adopting the audit report.

Taxable base

The taxable base is the profit established in the tax statement. For the purpose of establishing the profit, incomes and expenses are recognised in the amounts established in the income statement, taking account of the SRS, regulations and the Corporation Tax Act.

Not included as expenses under the Corporation Tax Act are: taxes paid by the owner of a company as a private individual, fines, penalty interest on taxes and contributions not paid on time, expenses for covering losses from previous years, provisions for covering potential losses, charges and write-offs of claims on employees, owners and associated persons.

Where the difference between incomes, including an increase in the taxable base, and expenses, including a reduction in the taxable base, (see tax reliefs in the Tax System section) is negative, the taxpayer discloses a loss in the tax statement. This loss can be set off against a reduction in the taxable base over the next seven years.

Depreciation

Depreciation of tangible fixed assets and intangible long-term assets is recognised as an expense in the accounted amount up to a maximum of the amount accounted using the straight line depreciation method and applying the maximum annual depreciation rates prescribed in the Corporation Tax Act.

Depreciation of fixed assets begins on the first day of the month following the month in which they were first put into use for carrying out the activity for which they are intended.

The maximum annual depreciation rates by depreciation groups are buildings 5%, machinery 25%, computers 50%

Stocks

Stocks are valued at the purchase prices. Business effects are usually valued using production costs (direct costs of material, direct costs of labour, other direct costs and indirect production costs), but may also be valued using a contracted full cost or variable production costs. Slovenian Accounting Standards recommend use of the FIFO method for reduction (use, sale) of stocks of goods and finished products.

If the taxpayer changes the method of accounting or selling stocks it must explain the reasons for the change in the tax statement and show the value effect of the change.