How can a foreigner buy property in Slovenia and avoid tax difficulties?

How to properly buy real estate in Slovenia for foreigners?
What are the tax and utility obligations for property owners in Slovenia?

Key aspects of purchasing real estate in Slovenia

This article discusses the key points related to the purchase of real estate by foreigners in Slovenia. We will cover the main tax aspects, including land tax and other taxes that property owners face. The article will also address the requirements for legal entities and the nuances related to financing when acquiring real estate.

Registration of a legal entity for foreigners

Foreigners planning to buy property in Slovenia should keep in mind that they need to register a legal entity. Setting up a company may seem like a complicated task, but in practice, this process is quite simple and can be completed quickly. Usually, just a week after submitting all the required documents and obtaining a tax number, the new legal entity can start its activities and enter the real estate market.

To open a company, you need a foreign passport and initial capital of7500 euros, which will be used to open a settlement account. This money can later be used for purchasing real estate. The company registration can be completed in just4 daysThe opening of a checking account usually takes abouttwo weeks.

Legal support

In this matter, a foreign investor will be assisted by a law firm in Slovenia, where experienced lawyers will provide support at all stages of the transaction. The most optimal solution would be to find such lawyers through real estate companies that have been working with attorneys for several years. The average cost of legal services is approximately2500 euros.

If the investor decides to turn to individual specialists, the cost of services for a translator, notary, and taxes may amount to about1000 eurosIn this case, the investor will need to independently search for the necessary specialists.

Real estate taxation

As for taxation, Slovenia has a land tax, but there is no tax on the property itself. The tax contributions for land depend on the purpose of the plots. For example, the tax related to the use of land for buildings is calculated individually and depends on many factors, such as:

location
square
local tax rates

For lands designated for agriculture, tax rates are extremely low and depend on the specific type of product, which requires an analysis of each case individually.

Payment of land tax

This tax must be paid once a year, with the option to split it into several installments. For example, for an apartment with an area of140 square metersA specific tax amount will also be established. All these aspects are of significant importance, as they can greatly affect the final cost of the property and the overall expenses involved in its purchase.

Conclusion

Thus, the process of purchasing real estate in Slovenia for foreigners involves many important steps and expenses. It is crucial to choose the right legal assistance and understand the tax legislation, as these aspects play a key role in the successful completion of a property acquisition deal. Ensuring competent legal support and understanding all the details of taxation will help avoid many problems and make the process of obtaining real estate in Slovenia more comfortable and clear.

General expenses for utilities

The cost of mandatory utility payments for a townhouse located 25 kilometers from the capital of Slovenia, Ljubljana, ranges from 76 to 100 euros per year.

Taxation of individuals when selling real estate

If an individual decides to sell their property in Slovenia, they will have to pay a tax of2%from the transaction cost, which is borne by the seller. It is also important to consider the income tax, the rate of which in this country is25%However, at the end of each five-year period, this rate decreases by5%The tax is collected once a year and applies to all income received by an individual, except for wages. Additionally, various deductions can be taken into account, which significantly reduces the taxable base. It is important to note that capital gains tax on the sale of property does not need to be paid if the property has been the owner's primary residence for a certain period.three years.

Sale of real estate by legal entities

When it comes to the sale of real estate by legal entities, including new construction projects, the legislation requires such sellers to pay value-added tax.VAT) from the transaction amount. The VAT rate is usually9.5%or22%Thus, legal entities that are registered as VAT payers must take these tax obligations into account when selling new buildings and other real estate. In this case, the buyer pays the price of the property, increased by the amount of VAT, which is then transferred to the state budget.

Exceptions for value-added tax

Nevertheless, the obligation to pay VAT for legal entities is not always valid; there are schemes under which a lower rate may be applied —2%Taxation in this situation has its own peculiarities, so it is advisable to consult specialists in tax legislation when concluding any deal, in order to accurately understand the applicable tax rate.

The tax system in Slovenia

The tax system in Slovenia encompasses various types of taxes that property owners may encounter. Among them, the following can be highlighted:

Corporate income tax.
Dividend tax - if their payment is anticipated.
Income tax on wages - with a temporary or permanent residence permit.

Requirements for legal entities

Certain requirements are imposed on legal entities in Slovenia, including:

The obligation to comply with the minimum wage level, which must exceed800 euros(net)
Payment of the net profit tax, which amounts to19%.
Annual provision of financial reports.
Payment of income tax in advance.
Once a year, the payment of corporate income tax and land tax is made.

These tax obligations are fulfilled regularly, and the amounts of payments depend on the chosen tax system.

Conclusion

In conclusion, I want to emphasize that the process of purchasing real estate in Slovenia for foreigners may seem quite complicated at first glance. However, as I described in this article, all aspects can be simplified with a smart approach and the help of professionals. When registering property under a legal entity, the procedure becomes much more accessible and quicker, allowing foreign investors to acquire the desired property in just a few days.

It's important to remember that the tax system in Slovenia has its own peculiarities that need to be taken into account when planning a purchase. The presence of land tax and other tax obligations can affect the overall cost of property ownership, so it's advisable to consult with experienced lawyers and tax advisors in advance to avoid unpleasant surprises in the future.

It is also worth noting that despite potential financial obligations, investing in Slovenian real estate can be quite profitable. Slovenia, with its favorable geographical location and attractive climate, continues to attract the attention of foreign buyers and investors.

Recommendations

Study the tax obligations:Consider the features of Slovenia's tax system.
Consult with professionals:Experienced lawyers and tax consultants will help avoid mistakes.
Please pay attention to legal entities:Registering real estate under a company can simplify the process and speed up the acquisition.

In conclusion, I would like to recommend that everyone interested in purchasing real estate in Slovenia carefully examine all aspects, including taxation and requirements for legal entities. We were able to discuss the main nuances in detail, and I hope this information proves useful. Good luck with your investment endeavors!