Slovenia - Dividend

Article 10. Dividends

1.  Dividends paid by a company which is a resident of a Contracting State to a resident of the other Contracting State may be taxed in that other State.

2.  However, such dividends may also be taxed in the Contracting State of which the company paying the dividends is a resident and according to the laws of that State, but if the beneficial owner of the dividends is a resident of the other Contracting State, the tax so charged shall not exceed:

a.  5 per cent of the gross amount of the dividends if the beneficial owner is a company (other than a partnership) which holds at least 10 percent of the capital of the company paying the dividends;

b.  15 per cent of the gross amount of the dividends in all other cases.

3.  The competent authorities of the Contracting States shall by mutual agreement settle the mode of application of the limitations of paragraph 2.

4.  The provisions of paragraphs 2 shall not affect the taxation of the company in respect of the profits out of which the dividends are paid.

5.  The term "dividends" as used in this Article means income from shares, "jouissance" shares or "jouissance" rights, mining shares, founders' shares or other rights, not being debt-claims, participating in profits, as well as income from other corporate rights which is subjected to the same taxation treatment as income from shares by the laws of the State of which the company making the distribution is a resident.

6.  The provisions of paragraphs 1, 2 and 8 shall not apply if the beneficial owner of the dividends, being a resident of a Contracting State, carries on business in the other Contracting State, of which the company paying the dividends is a resident, through a permanent establishment situated therein and the holding in respect of which the dividends are paid is effectively connected with such permanent establishment. In such case the provisions of Article 7 shall apply.

7.  Where a company which is a resident of a Contracting State derives profits or income from the other Contracting State, that other State may not impose any tax on the dividends paid by the company, except insofar as such dividends are paid to a resident of that other State or insofar as the holding in respect of which the dividends are paid is effectively connected with a permanent establishment situated in that other State, nor subject the company's undistributed profits to a tax on the company's undistributed profits, even if the dividends paid or the undistributed profits consist wholly or partly of profits or income arising in such other State.

8.  Notwithstanding the provisions of paragraphs 1, 2 and 7, dividends paid by a company whose capital is divided into shares and which under the laws of a State is a resident of that State, to an individual who is a resident of the other State may be taxed in the first-mentioned State in accordance with the laws of that State if that individual - either alone or with his or her spouse - or one of their relations by blood or marriage in the direct line directly or indirectly holds at least 5 per cent of the issued capital of a particular class of shares in that company. This provision shall apply only if the individual to whom the dividend is paid has been a resident of the first-mentioned State in the course of the last ten years preceding the year in which the dividend is paid and provided that, at the time he became a resident of the other State, the above-mentioned conditions regarding share ownership in the said company were satisfied. In cases where, under the domestic laws of the first-mentioned State, an assessment has been issued to the individual to whom the dividend is paid in respect of the alienation of the aforesaid shares deemed to have taken place at the time of his emigration from the first-mentioned State, the above shall apply only as long as part of the assessment is still outstanding.

Protocol:

VIII. Ad Article 10

1.  Notwithstanding the provisions of paragraph 2, subparagraph a, of Article 10, as of the day that Slovenia becomes a member of the European Union, the Contracting States shall not levy a tax on the distribution of dividends if the conditions set forth in the Directive of 23 July 1990 on the common system of taxation applicable in the case of parent companies and subsidiaries of different Member States (90/435/EEC) are met.

2.  Notwithstanding the provisions of paragraph 2 of Article 10 the Contracting State of which the company is a resident shall not levy a tax on dividends paid by that company, if the beneficial owner of the dividends is a pension fund referred to in paragraph III of this Protocol.


IX. Ad Article 10, paragraph 5 and Article 11, paragraph 5

Notwithstanding paragraph 5 of Article 10, it is understood that the term dividends also means income from debt-claims provided that the law of a Contracting State subjects this income from debt-claims to the same taxation treatment as income from shares according to a combination of the following criteria: - the redemption date of a loan; - the size of the remuneration or indebtedness of the remuneration is depending on the profit or the distributions of profits; and - the subordination of a loan.


X. Ad Articles 10, 11 and 12

Where tax has been levied at source in excess of the amount of tax chargeable under the provisions of Articles 10, 11 or 12, applications for the refund of the excess amount of tax have to be lodged with the competent authority of the State having levied the tax, within a period of five years after the expiration of the calendar year in which the tax has been levied.


XI. Ad Articles 10 and 13

It is understood that income received in connection with the (partial) liquidation of a company or a purchase of own shares by a company is treated as dividends and not as capital gains.