NON-RESIDENT’S PERMANENT ESTABLISHMENT – What changed in Slovenian legislation in 2024

The concept of permanent establishment enables the Contracting State to tax the profit of an enterprise of another Contracting State. When the enterprise carries out the business in another Contracting State through a permanent establishment, the profit of enterprise attributed to such business unit may be taxed in the state where the permanent establishment is located, but only such amount of profit, which is attributed to that permanent establishment.

Third paragraph of OECD Model Convention states that:
» A building site or construction or installation project constitutes a permanent establishment only if it lasts more than twelve months.«
Twelve months period is also the period agreed in most Double Tax Treaties that Slovenia signed.
In 2024 Slovenia changed its Corporate Income Tax Act in a way that a building site or construction or installation project constitutes a permanent establishment if it lasts more than six months.

Implemented changes may result in an additional administration for foreigner companies who carry out above mentioned business in Slovenia for more that six months.

The tax payer will therefore have to claim more favorable treatment in accordance with the Double Tax treaties before the competent financial authority in Slovenia, otherwise, the foreigner may become liable to pay tax in Slovenia if there is existence of a construction site or whether the business relates to construction or installation in the territory of the RS for more than 6 months.

If you believe this information may apply to your situation or if you have any questions about how Slovenian law might impact you, please don’t hesitate to reach out. Our team is here to provide guidance and support, ensuring you have all the information and assistance you need to stay compliant and make informed decisions.