New White list from 01.01.2021
According to the Income Tax Act, the Ministry of Finance of the Slovak Republic has issued a new list of states with which the Slovak Republic has concluded an international double tax treaty or an international treaty on the exchange of tax information, or states that are parties to an international treaty containing exchange provisions information for tax purposes to a similar extent to which this state and the Slovak Republic are bound. The following countries are excluded from this new list:
• countries that appear on the European Union list of non-cooperating States for tax purposes, published in the Official Journal of the European Union as at 1 January of the calendar year, or
• countries that do not apply corporate income tax, or
• apply a zero corporate tax rate.
The EU List of jurisdictions that do not cooperate for tax purposes was used as basis for compiling the list of cooperating states for 2021.
When assessing the non-application of corporate tax or the application of a zero corporate tax rate, the relevant statistics of the Organization for Economic Co-operation and Development (OECD) and the analogy with corporate tax applied in the Slovak Republic are taken into account.
The list of excluded countries compared to 2020 is as follows:
• British Virgin Islands
• Cayman Islands
• Isle of Man
• United Arab Emirates
• Turks and Caicos Islands.
On the contrary, compared to 2020, the following countries have been added to the List:
• Cape Verde Islands
Although countries are excluded from the list of cooperating countries (the so-called White List), double tax treaties concluded between these countries and the Slovak Republic continue to apply. These treaties take precedence over national rules.
In the case of the above-excluded countries, no double tax treaties have been concluded except for the United Arab Emirates.
Although a double taxation treaty (further "the treaty") has been concluded with the United Arab Emirates, the country has been removed from the list of cooperating states because of new criteria in the amended Income Tax Act. We also state what impact these facts will have on the taxation of selected income generated by taxpayers from the United Arab Emirates.
The Article 11 of the treaty providing for taxation of dividends, does not include any restriction of taxation and thus the income is subject to corporate tax in the Slovak Republic. In this case, a 35% tax deduction will be applied according to the Slovak Income Tax Act. For other non-cooperating countries, a withholding tax of 35% will also apply.
The taxation of interest from the United Arab Emirates will be governed by Article 12 of the treaty at the rate of 10% of the gross amount of interest. For other non-cooperating countries, a withholding tax of 35% will apply.
Taxation of royalties from the United Arab Emirates will be governed by Article 13 of the Treaty at a rate of 10% of the gross amount of royalties.
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