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Main employer – definition for tax purposes


The Financial Administration of the Republic of Slovenia (FURS) published an opinion in the beginning of November, significantly altering the position about the “main employer” for tax purposes.

When an employee receives employment income from two different entities, the Personal Income Tax Act (ZDoh-2) specifies that only the main employer may take into account the personal tax relief and personal income tax brackets when calculating the tax prepayment form such income, while the second employer must remit a fixed 25% income tax prepayment without accounting for any reliefs.

Up until now, the main employer was the one at which the employee earned the major part (by value) of his or her income from employment: Visit Link

Such definition was problematic primarily in cases where income from employment was paid in arrears (e.g. payment of wages based on a labour law dispute) because the amount of subsequently paid wages could exceed the amount of those paid in the current year. As a result, the "former" employer had become the main employer and the current employer became the "second" one.

Entities paying wages were usually not informed on the amount of employee's income with the other employer, which resulted in grave problems in practice for employers (they were unsure if they could apply tax reliefs in payment or not) and employees (a large personal income tax liability at the end of the year).

The calculation of the amount due to the employee and the amount that can be seized under a writ of execution resulted in problems in seizures of employee's income, as well.

To avoid such situations, the FURS co-operated with the Ministry of Finance in preparing an amended opinion which (in simple terms) lays down the following:

  • the qualitative criterion (substance of the relation) shall prevail over the quantitative criterion (amount of payment) in the determining the "main" employer for personal income tax purposes. If an entity pays income from employment based on a continuous and lasting relation, such employer shall be deemed the "main" employer, notwithstanding the income amount.
  • The amount of income would become decisive only if the employee were actually performing continuous work and earning income from employment by working for two or more "regular" employers.

A link to the new interpretation: Visit Link

The new opinion of the FURS will be useful primarily to persons enforcing writs of execution and to employers who have to pay income to employees for past periods (e.g. based on a court decision or settlement) because it makes their task much simpler.

It will also be useful to employees – income recipients – because they will be able to calculate the exact amount of income pertaining to them in a simple manner.