Text file: 8568.txt
author: "SAMO PER\u010CI\u010C"
downvotes: 6
end consideration date: 2017-09-29
id: '8568'
number comments: 6
number views: 3230
proposal type: Competent authority response
response: "Response from the Ministry of Finance\nThe VAT legislation is based on\
  \ and aligned with EU legislation, specifically Council Directive 2006/112/EC of\
  \ 28 November 2006 on the common system of value added tax (OJ L 347, 11.12.2006,\
  \ p. 1, as amended).\nArticle 94 of the Law on Value Added Tax (Official Journal\
  \ of the Republic of Slovenia No 13/11, 18/11, 78/11, 38/12, 83/12, 86/14 and 90/15;\
  \ hereinafter: ZDDV-1) provides for a special regime for small taxable persons,\
  \ allowing them to be exempted from VAT up to a taxable turnover threshold of EUR\
  \ 50 000. The purpose of this arrangement is to reduce the cost of implementing\
  \ VAT legislation for the taxable person as well as the administrative costs for\
  \ the tax authority by excluding certain taxable persons from the obligation to\
  \ account for and pay VAT.\nIn addition to the application of the special scheme\
  \ allowing transactions by small taxable persons to be exempt from VAT, Article\
  \ 44 of the VAT Act-1 provides for a number of \"other exempt activities\" on which\
  \ VAT is not charged. These are exemptions determined independently of the taxable\
  \ person threshold set out in Article 94 of the VAT Act. Given the nature of these\
  \ exemptions, they mean that taxable persons carrying out exempt activities do not\
  \ charge tax on their supplies and are not entitled to deduct the input tax charged\
  \ to them by their suppliers. Thus, Article 44(1) and (4)(1) of the VAT Act also\
  \ provide for VAT exemptions for insurance and financial transactions.\nAlthough\
  \ the VAT exemption does not entitle taxable persons supplying financial services\
  \ or insurance services to claim a VAT deduction in respect of the costs they incur\
  \ in supplying these services, it does mean that the value added generated by the\
  \ financial sector remains VAT-exempt.\nThe Financial Services Tax Act (Official\
  \ Journal of the Republic of Slovenia No 94/12, 90/14; hereinafter: FSTA) was thus\
  \ intended to tax financial services which are exempt from VAT under the VAT Act\
  \ and services of insurance intermediaries and agents which are also exempt from\
  \ VAT under the VAT Act, while at the same time being exempt from the tax on insurance\
  \ transactions.\nThe introduction of the financial services tax has thus brought\
  \ the regime for the taxation of financial services closer to that for the taxation\
  \ of insurance transactions, which are already subject to the 8.5% tax on the turnover\
  \ of insurance transactions. The FTTF therefore provides for a broad tax base in\
  \ order to cover a wide range of financial services and thus a wide range of taxable\
  \ persons, which ensures a more even and fair distribution of the tax burden among\
  \ all financial service providers operating on the market. The tax base for the\
  \ FTTF consists of the remuneration (commission) received by the taxable person\
  \ as a payment in respect of the financial service rendered.\nIn drafting the FTTF,\
  \ an attempt was made to find solutions that would be administratively as less burdensome\
  \ as possible for financial institutions and for the tax authority. The ZDFS therefore\
  \ already provides for an administrative simplification whereby tax is not levied\
  \ on each transaction separately, but can be levied in total on the total amount\
  \ of commissions received in a calendar month.\nVAT is payable on the supply of\
  \ any goods and services, other than those exempted from taxation, on the value\
  \ added by the individual operator in the sales chain, i.e. at each stage of the\
  \ production and sales chain, and is charged in the following way over a given period\
  \ of time, by deducting from the tax charged by the taxable person on sales of goods\
  \ and services the tax paid on purchases of goods and services, and passing the\
  \ liability on to the final consumer, who bears the full burden of the tax at the\
  \ last stage. The VAT is charged and shown on the invoice.\nThe VAT is paid and\
  \ levied on the financial services provided. The FATF does not contain provisions\
  \ on the invoicing of the FTT, as provided for in the VAT Act. Therefore, the FTT\
  \ does not have to be invoiced and accounted for, but is instead accounted for and\
  \ shown in the taxable person's books of account. As a general rule, the taxable\
  \ person accounts for the FTT on all commissions paid to him for financial services\
  \ rendered during the tax period and accounts for and pays the FTT.\nIf a special\
  \ regime were to be established for taxable persons supplying financial services,\
  \ namely by setting a threshold of \u20AC50,000 of annual turnover up to which no\
  \ GST would be chargeable, part of the value added generated by the financial sector\
  \ would again remain untaxed. Such a solution undermines the purpose and objective\
  \ of the FATF, i.e. to ensure that the financial sector is taxed more evenly than\
  \ other sectors of the economy, which are already subject to indirect taxes. The\
  \ introduction of the solution provided for by the VAT legislation in the ZDFS is\
  \ also inappropriate for the reason that it concerns taxable persons who are not\
  \ in the same position as taxable persons under the VAT legislation, both in terms\
  \ of determining the subject matter of taxation and in terms of the manner in which\
  \ the tax is levied and paid.\nFurthermore, the Ministry of Finance, when preparing\
  \ measures in the tax area, pursues the objective of strengthening the competitiveness\
  \ of the business environment through measures, thereby, on the one hand, influencing\
  \ sustainable economic growth and increasing Slovenia's global competitiveness,\
  \ and, on the other hand, ensuring fiscal consolidation so that the structural rebalancing\
  \ of public finances is gradually achieved. A measure providing for the exemption\
  \ from the payment of the FTT would not be consistent with ensuring an efficient\
  \ tax system with the most appropriate tax structure and limited use of tax reliefs\
  \ (expenditures), since, also according to the Organisation for Economic Co-operation\
  \ and Development (OECD), tax expenditures reduce the efficiency, effectiveness,\
  \ fairness and simplicity of the tax system.\nOn the basis of the above, we cannot\
  \ support the proposal.\n "
response date: 2017-11-20
response due date: null
sent date: 2017-09-08
title: DFS - Small taxpayer exemption
upvotes: 21
url: https://predlagam.vladi.si/predlog/8568
