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).
