Slovenia introduces a tax on financial services

The Slovenian Government approved the draft «Tax on Financial Services Act». In accordance with this Act financial services, released currently from the VAT, and also services of insurance brokers and agents will be taxed.

The subjects of this tax will be banks, other financial institutions and other persons providing financial services, including foreign legal entities and branches of foreign banks.

The tax basis shall be calculated on the base of remuneration received by the subject for the providing financial services. The tax rate is established in the amount of 6.5%. A calendar month will constitute a tax period.

The law also provides tax exemptions for some organizations, providing certain financial services: the Bank of Slovenia, the European Central Bank, the European Union, international financial institutions, founded by two or several EU member states, diplomatic and consular representations.

On the basis: http://www.vlada.si/en/media_room/government_press_releases/press_release/article/33rd_government_session_financial_services_taxation_act_35080/

Slovenia was one of the first member States of the European Union, supported the idea of imposing a tax on financial transactions. I shall remind, that introduction of this tax is stipulated by the Directive of the European Commission 2011/0261. This Directive contains a provision that the state parties should adopt and publish the laws, regulations and administrative provisions necessary to bring the legislation in accordance with this Directive not later than December 31, 2013.

It’s interesting that the Directive provides minimum tax rates equal to 0.1% for operations with bonds and excise duties, and 0.01% in the case of the transactions with derivative instruments.

But Slovenia decided to move away from the proposed minimum, and having taken into account that Directive does not provide the maximum possible rate, established in the draft law a tax rate of 6.5%.

It seems that the Government of Slovenia does not fear possible negative consequences of this law. The introduction of such a tax may lead to the fact that the financial sector will move their business in the country, in which this tax is not. Apparently Slovenia relies on the positive impact that may result from the act, namely, the solution of many economic problems, in particular the establishment and maintenance of financial stability in the country.