Slovenia has increased the standard VAT rate from 22% to 24% with effect from 1 May 2014 until 31 December 2014. This is intended to contribute to dealing with the 14.7% budget deficit to GDP that has arisen due to a bailout of banks in 2013. Under the rules of the Euro currency union countries should keep their deficit below 3% to avoid any punitive action by the EU.
This VAT increase is important for Slovenia because the Constitutional Court has recently rejected a proposal for a new tax on real estate. The VAT rise is therefore important to supplement the shortfall in funding.
