Advantages and Disadvantages of Registering a Slovenian Sole Trader X in Austria from the Perspective of Taxation in the Country of Tax Residency

Slovenian companies and entrepreneurs are relocating their operations abroad due to the tax-unfriendly environment at home. Service activities are moving primarily to Austria due to the perception that Austria has simpler bureaucracy, a more favourable tax system, a more flexible business environment, and better payment discipline. Through the diploma thesis, she prepared calculations of business results, tax results, contributions, and tax based on a comparison of Slovenian and Austrian legislation. The entire comparison was based on data from sole trader X.

Problem

Slovenian companies and entrepreneurs are relocating their operations abroad due to the tax-unfriendly environment at home. Service activities are moving primarily to Austria due to the perception that Austria has simpler bureaucracy, a more favourable tax system, a more flexible business environment, and better payment discipline. But is this really the case?

The goal of every company is to achieve profit, and the level of taxation is the main reason why smaller companies do not strive to achieve the highest possible profit, but rather the lowest possible taxation. For these reasons, they are always searching for more favourable tax environments, even if this means relocating their activities abroad. The diploma thesis began with the presentation and definition of a sole trader.

In this chapter, she presented the process of registering a sole trader in Slovenia and in Austria. A shorter chapter was dedicated to explaining what it means to be a tax resident of a particular country, what the rules are for determining tax residency, and what obligations arise from this status.

Results

Through the diploma thesis, she prepared calculations of business results, tax results, contributions, and tax based on a study of domestic and foreign legislation, comparing Slovenian and Austrian legislation. The entire comparison was based on data from sole trader X. The calculation is based on the example of a sole trader who determines their tax base by taking into account actual revenues and expenses.

Based on the calculations, the diploma thesis presented differences in business results and differences in the calculation and payment of social security contributions for a sole trader. The main chapter was dedicated to presenting the calculation of taxation and the tax assessment. Through the diploma thesis, she assessed and determined which country is more tax-favourable for a sole trader, assuming that the business operator maintains tax residency status in Slovenia.

The main hypothesis of the diploma thesis was that Slovenia is less tax-favourable for a sole trader who determines their tax base by taking into account actual revenues and expenses compared to Austria.