New DTT with Switzerland

According to the Official Gazette of Republic of Slovenia, a new Double Tax Treaty (DTT) with Switzerland came into force on 14 October 2013. The new Treaty will apply to all income received as of 1 January 2014. It provides for the following benefitial treaty tax rates:

Article 10. Dividends

• 15%, if the recipient is the beneficial owner of the dividend income
• 0%, if the beneficial owner is:
• a company (other than a partnership) which is a resident of the other contracting state and holds directly at least 25% of the capital in the company paying the income
• a pension scheme

Article 11. Interest

• 5%, if the recipient is the beneficial owner of the interest income
• 0%, if the interest is paid:
• by the Government of a contracting state, its political subdivision, local authority or Central Bank
• to the Government of a contracting state, its political subdivision, local authority or Central Bank
• in respect of a loan made, approved, guaranteed or insured by an institution which is authorised in accordance with internatinal law on insurance and financing of international business transactions
• in respect of indebtedness arising as a consequence of the sale on credit of any equipment, merchandise or ser­vices
• by a bank in one contracting state to a bank in the other contracting state
• by a company in one contracting state to a company in the other contracting state where such company is affiliated with the company pay­ing the interest income by a direct holding of at least 25% in its capital or where both companies are held by a third company (being a resident of any Member State of the European Union or Switzerland) which has a direct holding of at least 25% both in the capital of the first company and in the capital of the second company.

Impact on investors: The new DTT between Slovenia and Switzerland will enable eligible tax residents of both countries to enjoy lower tax rates on dividend and interest income.