Slovenia – Tax Treaty with New Zealand Is Ratified

WHY THIS MATTERS

Double taxation treaties are generally expected to facilitate cross-border commerce and investments, including the movement of globally mobile employees between one country and another – in this case Slovenia and New Zealand – by reducing or eliminating double taxation on the same income.

As such, a double taxation treaty, like this one between Slovenia and New Zealand, can have a substantial impact on international work assignments, as they clarify taxing rights and create rules that help prevent tax evasion and tax abuse with respect to many different sources of income, and thereby help multinational companies – and their tax service providers – manage the tax liabilities of employees working across borders.  Consequently, companies doing business between Slovenia and New Zealand can more effectively plan for the costs of sending employees into each other’s country and foster compliance with the other country’s tax laws while availing of the treaty’s provisions and enhancing opportunities for planning and savings.

KPMG INSIGHTS

Steps to Consider

In light of the upcoming changes, organisations and individuals within the scope of the Treaty should consider the following:

• Businesses may wish to review existing and planned cross-border structures, especially regarding holding companies, financing arrangements, and intellectual property, to adapt their withholding tax positions and help ensure PE rules are met.
• Individuals may wish to assess residency status, pension arrangements, and employment contracts to mitigate double taxation risks and avail of treaty reliefs.
• Tax departments and professional tax advisers may wish to update compliance processes, train staff on new treaty provisions, and monitor further guidance or administrative updates from both tax authorities.
• Global mobility programme managers – where applicable, working with their global mobility tax services providers – may wish to update their policies and develop and issue communications to relevant stakeholders and impacted employees.

What’s Next?

The Treaty will become effective following completion of ratification procedures in both countries.  Multinational organisations, tax advisers, and mobile employees may wish to review their structures and cross-border arrangements in anticipation of the Treaty’s entry into force, to benefit from its provisions and foster compliance.

The Treaty’s entry into force is expected to stimulate greater economic cooperation and cross-border movement between Slovenia and New Zealand.  Both countries may issue further interpretive guidance or administrative instructions, and future amendments.  

If assignees and/or their programme managers have any questions or concerns about the scope of the Treaty, its application and potential impacts, and appropriate next steps, they should consult with their qualified tax professional or a member of the GMS tax team with KPMG in Slovenia (see the Contacts section).