VZMD sent a letter to the Director General of the Financial Administration of the Republic of Slovenia (FURS), Mr. Peter Grum; the letter was a "Call for the correction of the unlawful new explanations published on the FURS websites". The VZMD experts were shocked and distraught when they read the 5th edition of the document "Other income under the Personal Income Tax Act (detailed description)" which contains an ADDITIONAL SECTION regarding the "additional remuneration" which is ENTIRELY WRONG, because it also considers remuneration payments for the squeeze-out or expropriation of minority shareholders as other income under the Personal Income Tax Act.
VZMD pointed out that this newfound position of FURS could have devastating consequences for tens of thousands of minority shareholderswho were, against their will, deprived of their own stocks, i.e. their capital, when they were squeezed out of public limited companies by the majority (main) shareholders. The mere circumstance where the minority shareholders' capital holding period was cut short against their can have a negative impact on their tax situation, as the taxation of capital gains is reduced relative to the capital holding period. Additionally, the shareholders are even more affected by the wrong definition of the capital gains as other income which falls under synthetic taxation. The latter has an unlawful explanation in the document released by FURS: adequate remuneration which the squeezed-out minority shareholders are entitled to is considered as capital gains only in the part which the main shareholder pays at squeeze-out (according to their own assessment and discretion), but not in the part which the COURT DEEMS APPROPRIATE.
"Adequate remuneration for the expropriated shares of the minority shareholders – the income of the exact same type is considered entirely differently under this newfound interpretation by FURS, i.e. exclusively dependent on the will of the majority (main) shareholder who wants to use the squeeze-out and expropriation to pay out the minority shareholders at a (too) low price. According to the newfound position of FURS, the following applies: The more the minority shareholders are deprived by the main shareholder and the lower the remuneration paid out to the minority shareholders, the higher the taxes for the minority shareholders levied by the state, i.e. when they will have demonstrated the adequate or rather fair remuneration after years of arduous court battles," the VZMD President, Mr. Kristjan Verbič, commented on the contradictory newly published explanations by FURS, and added that, given the urgency, they also addressed the letters to Mr. Robert Golob, the Prime Minister of the Republic of Slovenia, Mr. Klemen Boštjančič, the Minister of Finance, Mr. Matjaž Han, the Minister of Economy, Tourism and Sport, Mr. Luka Mesec, the Minister of Labour, Family, Social Affairs and Equal Opportunities, Ms. Dominika Švarc Pipan, the Minister of Justice, and several other competent authorities.
Furthermore, the VZMD experts concluded that the incorrectness of the newly published position of FURS is evident from the incorrectly named allowance itself which FURS refers to as "additional remuneration" although there is nothing "additional" about it. They pointed out that this is merely the payment of the suitable severance pay margin that the minority shareholders should have received the moment they were squeezed out but did not (unlawfully so), which initiated litigation proceedings. Unfortunately, due to the fact that the judicial proceedings for determining the adequate remuneration last several years, the legal nature or rather the method of income taxation cannot be changed, although the minority shareholders and VZMD would certainly wish that the proceedings would take significantly less time (!), in relation to which they had made numerous legislative initiatives.
VZMD expects that FURS will WITHDRAW, annul, or amend their unlawful position AS SOON AS POSSIBLE, otherwise this will cause serious damage that will be difficult to repair and will affect tens of thousands of both former, current, and possibly future shareholders. At the same time, VZMD noted with regret that the "expert" financial intermediaries (i.e. banks and brokerage companies) have begun offering payment arrangements to the shareholders while, with regard to the controversial newfound position by FURS, they have done absolutely nothing, meaning they are offering merely the payments under the terms of the least favorable taxation of "additional remuneration" (i.e. under the terms of the marginal tax rate for personal income which falls under synthetic taxation).
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