Area: Kmetijstvo
Competent authority: MF, MKGP
EZU URL: .nan
Initiative ID: 564
Initiative accepted and completed: '2015-07-07'
Initiative classified in EZU: .nan
Initiative forwarded in response: '2015-05-20'
Initiative published: '2015-05-20'
Initiative submitted: '2015-05-12'
Response from the competent authority: "Reply from the Ministry of Finance:The Ministry\
  \ of Finance explains that all personal income is subject to income tax, except\
  \ for income that is exempt from income tax. Regardless of the nature and source\
  \ of the income, any payment or receipt of income, regardless of the form in which\
  \ it is made or received, is considered income under the law. Income is deemed to\
  \ have been received when it is paid to or otherwise made available to a natural\
  \ person. The basic starting point of the income tax system is the taxation of the\
  \ actual or real income of natural persons. The pursuit of this starting point ensures\
  \ compliance with basic tax principles, in particular the principle of taxation\
  \ on the basis of economic power, i.e. ability to pay tax, and the principle of\
  \ equal treatment of taxpayers, which requires comparable treatment of taxpayers\
  \ in the same income situation. It is therefore essential for income tax purposes\
  \ that income and, consequently, the tax base are established as realistically as\
  \ possible or in a way that allows for the differentiation of taxable persons in\
  \ substantially different income situations.In the case of the establishment of\
  \ income from the pursuit of an activity, including agricultural and forestry activities\
  \ or supplementary activities on a farm, the basic starting point is therefore the\
  \ establishment of actual income on the basis of accounting records showing actual\
  \ income and actual expenditure. In particular with a view to administrative and\
  \ cost simplification, which is important for taxable persons with a smaller scale\
  \ of activity, the income tax system introduces two simplifications. The first is\
  \ the possibility to determine income on the basis of actual, i.e. accounted, income\
  \ and normalised expenditure. This solution only requires the taxpayer to keep a\
  \ book record of income (i.e. simpler bookkeeping than in the VAT system), which\
  \ means that it is administratively very simple. However, the second option of a\
  \ full flat-rate determination of income on the basis of cadastral income and a\
  \ flat-rate assessment of income per beehive, which does not require any record-keeping\
  \ on the part of the taxable persons, can only be used by natural persons who are\
  \ considered to be engaged in basic agricultural and basic forestry activities,\
  \ i.e. agricultural and forestry activities for which the Law on the Determination\
  \ of Cadastral Income (Official Gazette of the Republic of Slovenia, No 9/11, 47/12,\
  \ 55/13 and 41/14) allows for a flat-rate assessment of income. As a rule, these\
  \ are only the basic types of production (production of crops, livestock farming\
  \ tied to own agricultural land, production of timber and forest products).In principle,\
  \ the simplified methods of determining income or tax base are intended to ease\
  \ the administrative burden, but simplifications, on the other hand, mask significant\
  \ differences in the extent of actual income between taxable persons and thus reduce\
  \ the fairness of taxation. In applying simplified methods of determining the tax\
  \ base, the disadvantages of the system are therefore always weighed against the\
  \ advantages (administrative simplification, reduction of record-keeping costs),\
  \ and simplifications are generally applied to taxable persons with a relatively\
  \ smaller scale of activity.The initiative proposes to include income from the carrying\
  \ out of complementary activities on the farm, up to a certain (we understand smaller)\
  \ scale, in the system of full flat-rate tax base determination, i.e. to include\
  \ it in the framework of the cadastral income scheme.The proposal is therefore in\
  \ line with the Commission's proposal to introduce a simplified tax base for taxable\
  \ persons with a relatively smaller scale of activity. In such a case, the calculation\
  \ of cadastral income, which today, through a system of calculations, very transparently\
  \ (albeit very understatedly) includes only income from primary agricultural and\
  \ forestry production in the calculation, would have to be upgraded by the calculation\
  \ of a flat-rate estimate of income from complementary activities. Given that these\
  \ can be very diverse, such an approach would require a number of additional calculations,\
  \ which would also represent a new administrative burden, this time on the part\
  \ of the State.The proposal can also be understood in the sense that income from\
  \ complementary activities up to a certain (small) extent would not be assessed\
  \ at all, but would be considered to be already included in the calculation of cadastral\
  \ income. Such a solution would in fact mean a complete exemption from income tax\
  \ for these incomes. Given that complementary activities are not always directly\
  \ linked to the agricultural or forestry activity of the farm (traditional skills,\
  \ energy production, etc.) and that they can often be in direct competition with\
  \ the pursuit of the same activity in another form of status (farm tourism, sale\
  \ of foreign products, processing of agricultural products, etc.), such an exemption\
  \ would constitute a direct additional unfair competitive advantage over the same\
  \ or similar activities not carried out on the farm, which would not be covered\
  \ by such an exemption. The question also arises as to the appropriateness of such\
  \ a tax advantage vis-\xE0-vis all other activities, which, regardless of the size\
  \ of the business (even if very small), have to establish their income on the basis\
  \ of the relevant records.Therefore, the view is supported that all activities should\
  \ be treated in the same way (the already established solution that larger farms\
  \ have to establish their income on the basis of bookkeeping is also supported for\
  \ agricultural and forestry activities) and the simplifications for small-scale\
  \ activities should be regulated in a uniform way. In the current income tax system,\
  \ the solution for all small-scale activities is to determine income on the basis\
  \ of actual income and normalised expenditure, which is administratively very simple\
  \ and with 80% of normalised expenditure recognised.Reply from the Ministry of Agriculture,\
  \ Forestry and Food:In order to process agricultural products, a farm must obtain\
  \ a licence to carry out a complementary activity, as the processing of agricultural\
  \ products is not included in the calculation of cadastral income. The inclusion\
  \ of processing in the basic farm taxation would clearly facilitate the carrying\
  \ out of processing. The Ministry of Agriculture, Forestry and Food (MAFF) is directing\
  \ activities towards this adjustment, which requires amendments to several regulations\
  \ in the field of farm taxation.Insurance for occupational injuries and diseases\
  \ is compulsory if the holder of a complementary activity on a farm is not compulsorily\
  \ insured as a farmer but under another title (e.g. employment, s.p.), In this case,\
  \ it is considered a secondary occupation under Article 17(10) of the Act on Health\
  \ Care and Health Insurance. The extent to which contributions are payable can be\
  \ adjusted by carrying out a seasonal activity for a maximum of six months continuously\
  \ and thus contributions are payable only for this period. The Ministry of Health\
  \ has brought this issue to the attention of the Ministry of Agriculture and Rural\
  \ Development. We understand the problems that arise, particularly in the case of\
  \ small-scale processing, which is more heavily burdened by contributions, and we\
  \ will try to reconcile these problems with the other ministries responsible for\
  \ these areas."
Text file: 564.txt
Title: Complementary activities on the farm - compulsory bookkeeping
URL: https://www.stopbirokraciji.gov.si/pobuda/?st=564
