PRESS RELEASE
The proposal to introduce a development cap is a step in the right direction, but it should not be the only measure taken when it comes to reducing the tax burden on wages. Over the last 30 years, we have merely patched and repaired the tax system rather than truly transforming it into a key development policy for Slovenia's greater competitiveness. Too often, this has been done with insufficient strategic foresight and too many ad-hoc solutions, such as the repeated changes to the taxation system for sole proprietors.
Ljubljana, April 16, 2026 – At the Slovenian Technology Forum (GIZ), we support changes that will make Slovenia's tax system more competitive for both employees and businesses. We have always emphasized that any changes must be approached comprehensively and with strategic consideration. This applies both to changes in tax rates and to the current tax system, which is overly complex, administratively demanding, and expensive.
Barbara Krajnc, Director of the STF, highlighted the following:
“During the pre-election period, most political parties agreed that urgent measures were needed to reduce the tax burden on middle-class wages. Therefore, the proposal to introduce a cap on social security contributions for all taxpayers—often referred to as a development cap—is a step in the right direction. However, we must not stop there when discussing wage relief.
A set of measures is needed to simplify the tax system, including reducing or completely eliminating various exemptions and deductions. Furthermore, we continue to advocate for adjusting the existing income tax brackets (abolishing the 5th bracket), regular indexation of amounts, and regularly adjusting the general tax allowance to a level that covers the minimum cost of living.
We would especially like to highlight the tax treatment of taxpayers who operate on the basis of standardized expenses. Whether we admit it or not, the current system has devolved into a form of disguised employment. We must rethink and restructure it so that, on one hand, it supports the principle that all work counts, while on the other, it ensures that this way of doing business carries certain risks for the taxpayer. Otherwise, we all lose.”
Development Cap
A development cap is not a whim; it is one of the key factors for maintaining existing jobs and creating new ones, which are the drivers of development, innovation, knowledge, and higher productivity. This is exactly what we urgently need in Slovenia if we want to improve our appeal to experts and talent, keep young people at home, and attract them from abroad.
However, we estimate that the proposed development cap at a gross salary of 7,500 euros primarily benefits the management level, while the vast majority of engineers, developers, and similar professionals will not feel the impact. Yet, these are the very professionals we need most in Slovenia.
Ultimately, we should make achieving higher wages an imperative in Slovenia and view them as a lever for the country's development and progress, as well as for achieving higher added value and greater productivity. In the long run, this will solidify our position on the map as an attractive destination for the professions and industries of the future, such as new technologies, biotechnology, pharmaceuticals, robotics, engineering, and the space industry, and for establishing global development centers in Slovenia.
Developmental Income Tax
The current income tax system in Slovenia progressively taxes labor more than other sources (capital, assets). The data speaks for itself. Lower wages simply do not contribute enough to creating a higher GDP, higher added value, greater tax revenues, and increased prosperity in the country.
We have almost no middle class left, and today, even pensioners are among those liable for income tax (if their pension exceeds a certain amount). This is why we also advocate for a "developmental income tax," which involves updating the current income tax brackets (abolishing the highest one, lowering the other rates, regularly adjusting/indexing amounts, and regularly adjusting the general tax allowance to cover the minimum cost of living).
Changes for flat-rate taxpayers
In recent years, we have witnessed several changes to the flat-rate tax system, yet these have failed to comprehensively address all the weaknesses and anomalies that have emerged over time.
One such issue is the clear need for comparable and fairer tax and contribution treatment across all forms of work ("every job counts"). While moves toward progressive taxation for flat-rate taxpayers are a step in the right direction, we continue to advocate for a deeper reflection and a comprehensive overhaul of this system.
Many people rely on this system for their livelihood, while others exploit it for disguised employment. It is precisely because of the latter that changes are necessary—or rather, a system that the state can effectively monitor, rather than one that becomes even more opaque and, in a way, signals that the state is incapable of enforcing its own regulations.
Mandatory publication of annual reports for flat-rate taxpayers in AJPES
In this context, we reiterate our demand for the mandatory public disclosure of annual reports (financial statements) in the AJPES register for sole traders who opt into the flat-rate expense system, just as is required for other legal entities.
Tax competitiveness – a transparent and understandable tax system
We once again point out that Slovenia is lagging significantly in terms of tax competitiveness. Beyond the aforementioned burden on higher and high salaries—where the issue lies in social security contributions—there is the corporate income tax rate (22% by 2028) alongside numerous exceptions and tax breaks that often lead to much lower effective tax rates, a fact that is frequently overlooked.
We should also mention the inefficient VAT collection system and the excessively low taxation of real estate (the lowest in the EU).
Ultimately, a transparent and understandable tax system that is not subject to constant change, and which is simple and cost-effective to manage and monitor, must be the primary goal of any reform.
"At the Slovenian Technology Forum, GIZ, as a key partner to the state in shaping a more competitive business environment for high-tech, export-oriented development companies and startups, we will always support changes based on careful, strategic reflection rather than short-term, populist politics. We are proactively developing proposals to reduce the tax burden on middle-class salaries and emphasize the need to simplify the tax system, including reducing exceptions and tax breaks. At the same time, we recognize that lower tax revenues on one side must be offset by additional income on the other," concludes Barbara Krajnc, Director of the STF.
