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HMRC internal manual

Double Taxation Relief Manual

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HM Revenue & Customs
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Slovenia: Dividends

The Slovenian tax deducted from dividends at the agreement rate of 15 per cent in respect of portfolio holdings qualifies for credit as a direct tax (see INTM164010(c)).

If the beneficial owner is a United Kingdom company which holds directly at least 20% of the capital of the company paying the dividends, the dividends will be exempt from tax in Slovenia.

The exemption does not apply if the dividends are effectively connected (see INTM153110 fifth sub-paragraph) with a business carried on through a permanent establishment which the recipient has in Slovenia.

However, the EC Parent-Subsidiary Directive applies to Slovenia from 1 January 2005. This bars the imposition of withholding taxes on dividends paid by a company resident in one Member State of the Community to a company resident in another Member State, where the company receiving the dividends holds a minimum of 20 per cent (from 1 January 2005)of the capital of the company paying the dividend. The level of control required to gain exemption is 15% from 1 January 2007(when the United Kingdom/Yugoslavia agreement applies) and 10% from 1 January 2009. (when the United Kingdom/Slovenia agreement applies).

The United Kingdom/Yugoslavia agreement is unusual in that it does not provide for relief for underlying tax (see INTM164010(d)). Any claim for credit in respect of underlying tax for periods when the United Kingdom/Yugoslavia agreement applies must therefore be dealt with under the unilateral relief provisions at ICTA88/S790 (see INTM164360).