Slovenia published a notice in the Official Gazette on 25 August 2022 announcing that the income tax treaty with Morocco entered into force on 14 April 2022. The treaty, signed 5 April 2016, is the first of its kind between the two countries.

Taxes Covered

The treaty covers Moroccan income tax and corporation tax and covers Slovenian tax on income of legal persons and tax on income of individuals.

Service PE

The treaty includes the provision that a permanent establishment will be deemed constituted when an enterprise furnishes services in a Contracting State through employees or other engaged personnel for the same or connected project for a period or periods aggregating more than 3 months within any 12-month period.

Withholding Tax Rates

• Dividends - 7% if the beneficial owner is a company directly holding at least 25% of the paying company's capital; otherwise, 10%
• Interest - 10%, with an exemption for interest arising in a Contracting State and paid to the government or to the Central Bank of the other Contracting State
• Royalties, including technical assistance - 10%

Article 10 (Dividends) also provides that the withholding tax on repatriated profits of a permanent establishment is limited to 7% after deducting the corporation tax payable.

Capital Gains

The following capital gains derived by a resident of one Contracting State may be taxed by the other State:

• Gains from the alienation of immovable property situated in the other State;
• Gains from the alienation of the capital stock of a company, the property of which consists directly or indirectly principally of immovable property situated in the other State; and
• Gains from the alienation of movable property forming part of the business property of a permanent establishment in the other State.

Gains from the alienation of other property by a resident of a Contracting State may only be taxed by that State.

Double Taxation Relief

Both countries apply the credit method for the elimination of double taxation. A provision is also included for a tax sparing credit for tax that would otherwise be payable but has been reduced or exempted in accordance with incentives laws in a Contracting State that were in effect on the date the treaty was signed (5 April 2016). The tax sparing credit applies for five years beginning 1 January of the year following the treaty's entry into force.

Effective Date

The treaty applies from 1 January 2023.