UK Signs Tax Agreements With Slovenia And Moldova

by Robert Lee, Tax-News.com, London

15 November 2007

Kitty Ussher, the UK Economic Secretary to the Treasury has signed first-time comprehensive double taxation conventions with the Republics of Slovenia and Moldova on behalf of the UK government, it emerged this week.

The new Convention with Slovenia will replace the 1981 Convention between the United Kingdom and the Socialist Federal Republic of Yugoslavia. The updated agreement was signed on November 13 by Ussher and the Ambassador of Slovenia, Iztok Mirosic.

The Convention generally follows the OECD Model Double Taxation Convention. Among the features agreed are an exemption from dividend withholding for direct company investors and pension funds, with a 15% rate for other investors. Interest and royalties attract a 5% withholding rate, although some categories of interest are exempt.

The Convention will enter into force once both countries have completed their legislative procedures. In the United Kingdom, the provisions of the Convention will take effect from 1 April (for corporation tax purposes), and from 6 April (for income tax and capital gains tax purposes) in the calendar year following the date of entry into force. In Slovenia, the provisions will take effect from 1 January in the calendar year following the date of entry into force.

The new double taxation convention between the United Kingdom and the Republic of Moldova also generally follows the OECD model and was signed on November 8 by Meg Munn, UK Parliamentary Under-Secretary of State, and the Moldovan Deputy Minister for Foreign Affairs, Valeriu Ostalep. Among the features agreed are an exemption from dividend withholding for direct company investors, subject to a minimum holding of 50% of the capital of the company paying the dividends, and a minimum investment of GBP1 million. Pension funds are also exempt from withholding on dividends received. A maximum 15% withholding rate applies to other investors. Interest and royalties attract a 5% headline withholding rate, although many categories of interest are exempt.

In the UK, the DTA with Moldova will also take effect from 1 April for corporation tax purposes, and from 6 April for income tax and capital gains tax purposes in the calendar year following the date of entry into force.

The UK now has Double Taxation Conventions in place with more than 100 countries.

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