Businesses are preparing year-end employee rewards
The final months of the year are traditionally a period when many businesses plan employee bonuses and additional payments.
Terms such as Christmas bonus, thirteenth salary and performance bonus are frequently used.
However, the name given to a payment does not automatically determine its tax treatment.
To qualify for favourable tax treatment, a performance-related payment must meet the conditions established by Slovenian legislation.
When planning payments for 2026, employers should also distinguish between performance bonuses and the statutory winter allowance.
What is a performance bonus?
A performance bonus is a form of employee remuneration linked to the company’s business performance.
The employer may establish entitlement to such payments through an internal general act or a collective agreement, subject to the applicable legal requirements.
For favourable tax treatment, the relevant statutory conditions must be satisfied.
It is important that the eligibility criteria are properly defined and that payments are made consistently with the applicable rules.
How are performance bonuses taxed?
Under the Slovenian Personal Income Tax Act, qualifying performance-related payments may be excluded from the personal income tax base up to the prescribed limit.
The relevant restrictions concerning the amount and frequency of qualifying payments must also be considered.
Favourable personal income tax treatment does not automatically mean exemption from social security contributions.
Contributions must be calculated according to the rules applicable to the particular payment.
Why are payment criteria important?
Before paying bonuses, employers should verify that the relevant conditions and criteria have been properly established.
The criteria should be transparent and comply with applicable legislation.
If a company calls a payment a Christmas bonus but does not meet the requirements for favourable tax treatment of performance-related remuneration, a different tax treatment may apply.
Reviewing the supporting documentation before processing payroll can help prevent errors.
Performance bonuses and the winter allowance are not the same
When planning year-end payments, employers must distinguish between performance bonuses and the statutory winter allowance.
These payments have different legal bases and may therefore be subject to different conditions, limits and tax rules.
Employers should not combine or substitute one payment for the other without first reviewing the applicable legislation.
Particular attention should be paid to correct payroll calculations, documentation and tax reporting.
When should employers start preparing?
Businesses planning employee bonuses in November or December should review the following in advance:
- The legal basis for the payment.
- Eligibility criteria and internal rules.
- The proposed bonus amounts.
- Personal income tax and social security treatment.
- Available funds and the expected total employment cost.
Early preparation reduces the risk of payroll errors and supports more accurate financial planning.
K2A advises
👉 Before paying performance bonuses, verify the legal basis, eligibility criteria and applicable tax treatment. It is particularly important not to confuse performance-related remuneration with the statutory winter allowance.
At K2A Accounting, we help businesses prepare payroll calculations, employee bonuses and other employment-related payments.