Slovenia - Foreign Relations
Paragraph 2 states the generally accepted relationship both between the If, however, the resident of Slovenia is also a citizen of the United States, the saving . The mission of the United States Embassy is to advance the interests of the United States, and to serve and protect U.S. citizens in Slovenia. Information on Slovenia — geography, history, politics, government, economy, population statistics, culture, religion, languages, largest cities, as well as a map .
For example, if a deduction would be allowed under the U. Internal Revenue Code the "Code" in computing the U. Paragraph 2 also means that the Convention may not increase the tax burden on a resident of a Contracting State beyond the burden determined under domestic law. Thus, a right to tax given by the Convention cannot be exercised unless that right also exists under internal law.
The relationship between the non-discrimination provisions of the Convention and other agreements is not addressed in paragraph 2 but in paragraph 3. It follows that under the principle of paragraph 2 a taxpayer's liability to U.
A taxpayer may not, however, choose among the provisions of the Code and the Convention in an inconsistent manner in order to minimize tax. For example, assume that a resident of Slovenia has three separate businesses in the United States.
One is a profitable permanent establishment and the other two are trades or businesses that would earn taxable income under the Code but that do not meet the permanent establishment threshold tests of the Convention. One is profitable and the other incurs a loss. Under the Convention, the income of the permanent establishment is taxable, and both the profit and loss of the other two businesses are ignored.
Under the Code, all three would be subject to tax, but the loss would be offset against the profits of the two profitable ventures. The taxpayer may not invoke the Convention to exclude the profits of the profitable trade or business and invoke the Code to claim the loss of the loss trade or business against the profit of the permanent establishment.
If, however, the taxpayer invokes the Code for the taxation of all three ventures, he would not be precluded from invoking the Convention with respect, for example, to any dividend income he may receive from the United States that is not effectively connected with any of his business activities in the United States.
Similarly, nothing in the Convention can be used to deny any benefit granted by any other agreement between the United States and Slovenia. For example, if certain benefits are provided for diplomats under a consular convention between the United States and Slovenia, those benefits or protections will be available to residents of the Contracting State, regardless of any provisions to the contrary or silence in the Convention.
Paragraph 3 Paragraph 3 specifically relates to non-discrimination obligations of the Contracting States under other agreements. The provisions of paragraph 3 are an exception to the rule provided in paragraph 2 of this Article under which the Convention shall not restrict in any manner any benefit now or hereafter accorded by any other agreement between the Contracting States.
Subparagraph a of paragraph 3 provides that, notwithstanding any other agreement to which the Contracting States may be parties, a dispute concerning whether a measure is within the scope of this Convention shall be considered only by the competent authorities of the Contracting States, and the procedures under this Convention exclusively shall apply to the dispute.
Thus, procedures for dealing with disputes that may be incorporated into trade, investment, or other agreements between the Contracting States shall not apply for the purpose of determining the scope of the Convention. Subparagraph b of paragraph 3 provides that, unless the competent authorities determine that a taxation measure is not within the scope of this Convention, the non-discrimination obligations of this Convention exclusively shall apply with respect to that measure, except for such national treatment or most-favored-nation "MFN" obligations as may apply to trade in goods under the General Agreement on Tariffs and Trade "GATT".
No national treatment or MFN obligation under any other agreement shall apply with respect to that measure. Thus, unless the competent authorities agree otherwise, any national treatment and MFN obligations undertaken by the Contracting States under agreements other than the Convention shall not apply to a taxation measure, with the exception of GATT as applicable to trade in goods. Subparagraph c of paragraph 3 defines a "measure" broadly.
Slovenia–United States relations
It would include, for example, a law, regulation, rule, procedure, decision, administrative action or guidance, or any other form of governmental action or guidance.
Paragraph 4 Paragraph 4 contains the traditional saving clause found in U. The Contracting States reserve their rights, except as provided in paragraph 5, to tax their residents and citizens as provided in their internal laws, notwithstanding any provisions of the Convention to the contrary.
For example, if a resident of Slovenia performs independent personal services in the United States and the income from the services is not attributable to a fixed base in the United States, Article 14 Independent Personal Services would by its terms prevent the United States from taxing the income.
If, however, the resident of Slovenia is also a citizen of the United States, the saving clause permits the United States to include the remuneration in the worldwide income of the citizen and subject it to tax under the normal Code rules i. However, paragraph 5 a of this Article preserves the benefits of special foreign tax credit rules applicable to the U.
See paragraph 3 of Article 23 Relief from Double Taxation. For purposes of the saving clause, "residence" is determined under Article 4 Residence.
Thus, if an individual who is not a U. The United States would not be permitted to apply its statutory rules to that person if they are inconsistent with the treaty. Thus, an individual who is a U.
However, the person would be treated as a U. For example, in determining under Code section whether a foreign corporation is a controlled foreign corporation, shares in that corporation held by the individual would be considered to be held by a U. As a result, other U. Under paragraph 4 each Contracting State also reserves its right to tax former citizens and long-term residents whose loss of citizenship or long-term residence had as one of its principal purposes the avoidance of tax.
An individual shall not be treated as a lawful permanent resident for any taxable year if such individual is treated as a resident of a foreign country under the provisions of a tax treaty between the United States and the foreign country and the individual does not waive the benefits of such treaty applicable to residents of the foreign country. In the United States, such a former citizen or long-term resident is taxable in accordance with the provisions of section of the Code.
Paragraph 5 Some provisions are intended to provide benefits to citizens and residents even if such benefits do not exist under internal law.
Paragraph 5 sets forth certain exceptions to the saving clause that preserve these benefits for citizens and residents of the Contracting States. Subparagraph a lists certain provisions of the Convention that are applicable to all citizens and residents of a Contracting State, despite the general saving clause rule of paragraph 4: The inclusion of paragraph 2 in the exceptions to the saving clause means that the grant of exclusive taxing right of social security benefits to the paying country applies to deny, for example, to the United States the right to tax its citizens and residents on social security benefits paid by the Republic of Slovenia.
The inclusion of paragraph 5, which exempts child support payments from taxation by the State of residence of the recipient, means that if a resident of Slovenia pays child support to a citizen or resident of the United States, the United States may not tax the recipient.
Excepting this Article from the saving clause requires, for example, that the United States give such benefits to a resident or citizen of Slovenia even if that person is a citizen of the United States.
For example, the statute of limitations may be waived for refunds and the competent authorities are permitted to use a definition of a term that differs from the internal law definition.
Timeline of 25 years of U.S.-Slovenian relations | U.S. Embassy in Slovenia
As with the foreign tax credit, these benefits are intended to be granted by a Contracting State to its citizens and residents. Subparagraph b of paragraph 5 provides a different set of exceptions to the saving clause. The benefits referred to are all intended to be granted to temporary residents of a Contracting State for example, in the case of the United States, holders of non-immigrant visasbut not to citizens or to persons who have acquired permanent residence in that State.
If beneficiaries of these provisions travel from one of the Contracting States to the other, and remain in the other long enough to become residents under its internal law, but do not acquire permanent residence status i.
The benefits preserved by this paragraph are the host country exemptions for the following items: With two exceptions, the taxes specified in Article 2 are the covered taxes for all purposes of the Convention.
A broader coverage applies, however, for purposes of Articles 2 Non-discrimination and 26 Exchange of Information and Administrative Assistance. Article 24 applies with respect to all taxes, including those imposed by state and local governments.
Article 26 applies with respect to all taxes imposed at the national level. Paragraph 1 Subparagraph 1 a provides that the United States covered taxes are the Federal income taxes imposed by the Code, together with the excise taxes imposed with respect to private foundations Code sections through Although they may be regarded as income taxes, social security taxes Code sections, and are specifically excluded from coverage.
It is expected that social security taxes will be dealt with in bilateral Social Security Totalization Agreements, which are negotiated and administered by the Social Security Administration. Except with respect to Article 24 Non-Discriminationstate and local taxes in the United States are not covered by the Convention.
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Under the Code, these taxes will not apply to most foreign corporations because of a statutory exclusion or the corporation's failure to meet a statutory requirement. Subparagraph 1 b specifies the existing taxes of Slovenia that are covered by the Convention. They are the tax on profits of legal persons, the tax on income of individuals, and the assets tax on banks and savings institutions. Paragraph 2 Under paragraph 2, the Convention will apply to any taxes that are identical, or substantially similar, to those enumerated in paragraph 1, and which are imposed in addition to, or in place of, the existing taxes after the date of signature of the Convention.
The paragraph also provides that the competent authorities of the Contracting States will notify each other of significant changes in their taxation laws or of other laws that affect their obligations under the Convention. The use of the term "significant" means that changes must be reported that are of significance to the operation of the Convention. Other laws that may affect a Contracting State's obligations under the Convention may include, for example, laws affecting bank secrecy.
The competent authorities are also obligated to notify each other of official published materials concerning the application of the Convention. This requirement encompasses materials such as technical explanations, regulations, rulings and judicial decisions relating to the Convention. Certain others are defined in other articles of the Convention. For example, the term "resident of a Contracting State" is defined in Article 4 Residence.
The term "permanent establishment" is defined in Article 5 Permanent Establishment.
The terms "dividends," "interest" and "royalties" are defined in Articles 10, 11 and 12, respectively. The introduction to paragraph 1 makes clear that these definitions apply for all purposes of the Convention, unless the context requires otherwise. This latter condition allows flexibility in the interpretation of the treaty in order to avoid unintended results.
Terms that are not defined in the Convention are dealt with in paragraph 2. Subparagraph 1 a defines the term "person" to include an individual, an estate, a trust, a partnership, a company and any other body of persons. The definition is significant for a variety of reasons.
For example, under Article 4, only a "person" can be a "resident" and therefore eligible for most benefits under the treaty. Also, all "persons" are eligible to claim relief under Article 25 Mutual Agreement Procedure. The term "company" is defined in subparagraph 1 b as a body corporate or an entity treated as a body corporate for tax purposes in the state where it is organized. The terms "enterprise of a Contracting State" and "enterprise of the other Contracting State" are defined in subparagraph 1 c as an enterprise carried on by a resident of a Contracting State and an enterprise carried on by a resident of the other Contracting State.
Despite the absence of a clear, generally accepted meaning for the term "enterprise," the term is understood to refer to any activity or set of activities that constitute a trade or business. An enterprise of a Contracting State need not be carried on in that State. It may be carried on in the other Contracting State or a third state e. Subparagraph 1 d defines the term "international traffic.
This definition is applicable principally in the context of Article 8 Shipping and Air Transport.
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The definition combines with paragraphs 2 and 3 of Article 8 to exempt from tax by the source State income from the rental of ships, aircraft or containers that is earned both by lessors that are operators of ships and aircraft and by those lessors that are not e.
The exclusion from international traffic of transport solely between places within a Contracting State means, for example, that carriage of goods or passengers solely between New York and Chicago would not be treated as international traffic, whether carried by a U. The substantive taxing rules of the Convention relating to the taxation of income from transport, principally Article 8 Shipping and Air Transporttherefore, would not apply to income from such carriage.
Thus, if the carrier engaged in internal U. The income would, however, be treated as business profits under Article 7 Business Profitsand therefore would be taxable in the United States only if attributable to a U.
The gross basis U. If, however, goods or passengers are carried by a carrier resident in Slovenia from a non-U. This would be true if the international carrier transferred the goods at the U. For this reason, the Convention refers, in the definition of "international traffic," to "such transport" being solely between places in a Contracting State, while the OECD Model refers to the ship or aircraft being operated solely between such places.
The definition is intended to make clear that, as in the above example, even if the goods are carried on a different aircraft for the internal portion of the international voyage than is used for the overseas portion of the trip, the definition applies to that internal portion as well as the external portion.
Resources Slovenia - Foreign Relations In regular public statements, Slovenia's highest politicians underscore their government's commitment to expanding cooperative arrangements with neighbors and active contributions to international efforts aimed at bringing stability to southeast Europe.
Resource limitations are a concern for the government, which does not wish to see itself spread too thin. Nonetheless, the Slovenes are taking concrete steps toward a more outward looking and constructive role in regional and international security arrangements, as resources allow.
Slovenia Treasury Explanation
One of Slovenia's primary foreign policy goals is the stabilization and economic and political development of the southeastern Europe SEE region. Through the "Together" Regional Center for Psychosocial Well-being of Children, Slovenia supports rehabilitation of victims of violence in the region. Slovenia has also taken a leading role in demining projects, creating the International Trust Fund for Demining and Mine Victims Assistance ITFwhich has achieved considerable success.
The ITF has established partnership relations with competent bodies in SEE countries as well as with other international structures involved in demining, particularly UN structures. From toSlovenia occupied a non-permanent seat on the United Nations UN Security Council and in that capacity distinguished itself with a constructive, creative, and consensus-oriented activism; the country is lobbying for a seat on the UN Security Council in It signed an association agreement with the EU in and became a full EU member state on May 1, It is a member of all major international financial institutions--the International Monetary Fund, the World Bank Group, and the European Bank for Reconstruction and Development--as well as 40 other international organizations, including the WTO.
Slovenia is engaged with 29 countries in bilateral military exchange--most actively with the U.