Unofficial and unauthorized translation

Unofficial and unauthorized translation

Unofficial and unauthorized translation 1 Pursuant to the first paragraph of Article 153 of the Rules of Procedure of the National Assembly of the Republic of Slovenia, the Legislative and Legal Service has drawn up an unofficial consolidated version of the Corporate Income Tax Act comprising: – the Corporate Income Tax Act – ZDDPO-2 (Uradni list RS [Official Gazette of the Republic of Slovenia], No. 117/06 of 16 November 2006), – the Act Amending the Corporate Income Tax Act – ZDDPO-2A (Uradni list RS, No. 65/08 of 6 June 2008), – the Act Amending the Corporate Income Tax Act – ZDDPO-2B (Uradni list RS, No.

76/08 of 25 July 2008), – the Act Amending the Corporate Income Tax Act – ZDDPO-2C (Uradni list RS, No. 5/09 of 23 January 2009), – Act Amending the Corporate Income Tax Act –ZDDPO-2D (Uradni list RS, No. 96/09 of 27 November 2009), – Act amending the Tax Procedure Act – ZDavP-2B (Uradni list RS, No. 110/09 of 29 December 2009 and 1/10 of 8 January 2010 – correction) and – Act Amending the Corporate Income Tax Act –ZDDPO-2E (Uradni list RS, No. 43/10 of 31 May 2010). Ref. No.: 435-02/10-15/1 Date: 03 June 2010 EPA 1088-V Božo Strle Head of the Legislative and Legal Service CORPORATE INCOME TAX ACT UNOFFICIAL CONSOLIDATED TEXT (ZDDPO-2-NPB6) I.

GENERAL PROVISIONS Article 1 (Contents of the Act) (1) This Act regulates the system and introduces the liability to pay corporate income tax. (2) This Act shall transpose the following Directives of the European Community into the legislation of the Republic of Slovenia: – Council Directive 90/434/EEC of 23 July 1990 on the common system of taxation applicable to mergers, divisions, transfers of assets and exchanges of shares concerning companies of different Member States (OJ L 225 of 20 August1990, p. 142), as last amended by Council Directive 2005/19/EC amending Directive 90/434/EEC 1990 on the common system of taxation applicable to mergers, divisions, transfers of assets and exchanges of shares concerning companies of different Member States (OJ L 58 of 4 March 2005, p.19); – Council Directive 90/435/EEC of 23 July 1990 on the common system of taxation applicable in the case of parent companies and subsidiaries of different Member States (OJ L 225, 20 August 1990, p.

6), as last amended by Council Directive 2003/123/EC amending Council Directive 90/435/EEC on the common system of taxation applicable in the case of parent companies and subsidiaries of different Member States (OJ L 7 of 13 January 2004, p.41); – Council Directive 2003/49/EC of 3 June 2003 on a common system of taxation applicable to interest and royalty payments made between associated companies of different Member States (OJ L 157 of 26 June 2003, p.49).

Article 2 (Entitlement to tax proceeds) Corporate income tax (hereinafter: tax) under this Act shall be revenue for the state budget. II. TAXPAYER AND TAX LIABILITY Article 3 (Taxpayer)

Unofficial and unauthorized translation 2 (1) Taxpayers shall be legal entities of domestic and foreign law (hereinafter: taxpayer). (2) Without prejudice of the first paragraph of this Article, a taxpayer shall also be a company and/or any association of persons, including a civil law company subject to foreign law, which does not have legal personality and is not considered a taxpayer subject to the Act regulating personal income tax.

(3) Unless otherwise stipulated by this Act, the Republic of Slovenia and local authorities shall not be considered taxpayers.

Article 4 (Scope of tax liability) (1) Residents of the Republic of Slovenia (hereinafter: residents) shall be liable to pay tax on all income originating in the Republic of Slovenia (hereinafter: Slovenia) and on all income originating outside Slovenia. (2) Non-residents of Slovenia (hereinafter: non-residents) shall be liable to pay tax on income originating in Slovenia. (3) The income of residents or non-residents, stipulated by this Act, shall be taxable within the scope and in the manner stipulated by this Act.

Article 5 (Resident and non-resident) (1) A resident shall be a taxpayer as referred to in Article 3 of this Act who meets one of the following conditions: 1.

The resident's registered office is located in Slovenia. 2. The resident's place of effective management is located in Slovenia. (2) A non-resident shall be a taxpayer as referred to in Article 3 of this Act who meets neither of the conditions referred to in the first paragraph of this Article. (3) The minister competent for finance shall define the method of establishing the place of effective management, while taking into account that the place of effective management is the place where key administrative and business decisions needed for the management of business operations are taken and which is usually the place where persons or a group of persons holding leading positions, for example management, take decisions, or the place where the activities to be performed by a person as a whole are planned and that in the procedure of establishing all the important facts and circumstances of a certain case are taken into account.

Article 6 (Non-resident’s business unit) (1) A non-resident’s business unit (business establishment) subject to this Act shall be the place of business, i.e. the place in or through which the non-resident’s activities and/or business in Slovenia are conducted in whole or in part.

(2) The following, in particular, shall be deemed the non-resident’s business unit: 1. Office, branch, factory, workshop, mine, quarry or other place where natural resources are obtained or exploited; 2. A construction site, a project involving construction, assembly or mounting, or the related supervision, if the duration of the activities and/or business concerned exceeds 12 months. (3) An agent that acts on behalf of a non-resident in all the activities and/or business for the non-resident shall also be considered the non-resident's business unit, if the agent holds and normally applies a power of attorney to conclude contracts on behalf of the non-resident, unless the agent’s activities are limited to those referred to in Article 7 of this Act, due to which the place of business in question would not be deemed the non-resident's business unit.

(4) A non-resident's business unit shall be an agent that, on his/her own behalf, acts for the non-resident as a stockbroker within the framework of his/her regular activities, an agent holding a general power of attorney or any other independent agent where the agent in whole or in part acts on behalf of the non-resident and where the conditions and circumstances pertaining to commercial and financial relations between the non-resident and agent in question differ from those prevailing in relations between non-associated enterprises. (5) A construction site, a project involving construction, assembly or mounting, or the related supervision, if the duration of the activities concerned exceeds twelve months, shall be deemed the non-resident’s business unit from the day of commencement of activities and/or business, including preparatory works.

Unofficial and unauthorized translation 3 Article 7 (Place of business that is not a business unit) Without prejudice to Article 6 of this Act, a place of business shall not be deemed a non-resident’s business unit if the non-resident: 1. Only uses the premises in question for warehousing, exhibiting or supply of goods belonging to him; 2. Only maintains inventories of goods belonging to him for the purpose of warehousing, exhibiting or supply; 3. Only maintains inventories of goods belonging to him for the purpose of processing by third parties; 4. Only maintains the place of business in question for the purpose of purchasing goods, or collecting information for himself; 5.

Only maintains the place of business for the purpose of engaging in any other preparatory or auxiliary activity and/or business for himself; 6. Only maintains the place of business in question for the purpose of any combination of activities and/or business referred to in points 1 through 5 of this Article, provided that the general activity and/or business of the place of business which is a consequence of that combination is of a preparatory or auxiliary type. III. SOURCE OF INCOME Article 8 (Source of income) (1) Income shall be considered to have its source in Slovenia when it is possible to determine the source of income in Slovenia according to any stipulation of the second through fourteenth paragraph of this Article.

(2) Income of a resident, excluding income earned in a business unit or through a business unit of that resident located outside Slovenia, and/or excluding income which is, in accordance with the stipulations of the fourth through fourteenth paragraphs of this Article, income with a source outside of Slovenia, shall be considered to have a source in Slovenia.

(3) A non-resident’s income earned either in a business unit of that non-resident or through a business unit of that non-resident, shall be considered to have its source in Slovenia if the business unit is located in Slovenia; (4) Income from immovable property and from the rights pertaining to immovable property shall be considered to have its source in Slovenia if the immovable property concerned is situated in Slovenia, and income from agricultural and forestry activities shall be considered to have its source in Slovenia if the activity is performed on land situated in Slovenia; (5) Income from exploitation or the right to exploitation of deposits of ores, sources or other natural resources shall be considered to have its source in Slovenia, if the deposits of ores, sources or other natural resources are located in Slovenia.

(6) Dividends, including income similar to dividends and income from holdings sourced in financial instruments and/or of all types financial investments such as securities and ownership shares, shall be considered to have their source in Slovenia if issued by companies, cooperative societies or other types of organisations set up in accordance with the regulations of Slovenia, Slovenia, local authorities or the Bank of Slovenia, and/or from holdings in companies, cooperative societies and other types of organisations set up in accordance with the regulations of Slovenia.

(7) Interest shall be considered to have its source in Slovenia if borne by a resident or non-resident through his/her business unit in Slovenia.

(8) Income from the use or the right to use copyrights, patents, brand names and other property rights, and income from other similar rights shall be considered to have its source in Slovenia if borne by a resident or a nonresident through his/her business unit in Slovenia. (9) Profit from disposal of a resident’s or non-resident’s business unit in Slovenia shall be considered to have its source in Slovenia.

(10) Profit from disposal of the immovable property referred to in the fifth paragraph of this Article shall be considered to have its source in Slovenia. (11) Profit from disposal of the financial instruments and/or investments referred to in the sixth paragraph of this Article shall be considered to have its source in Slovenia. (12) Income from services provided by performing artists or sportsmen, belonging to another person, shall be considered to have its source in Slovenia if such services are provided in Slovenia. (13) Income from all types of services paid to persons who have the seat or place of effective management in

Unofficial and unauthorized translation 4 countries where the general and/or average nominal corporate profit tax rate is lower than 12.5% and these countries are not EU Member States shall be considered to have its source in Slovenia if borne by a resident or non-resident through his/business unit in Slovenia or was paid out by the resident or non-resident through his/her business unit in Slovenia. (14) The profit referred to in paragraph ten of this Article shall also constitute the profit from disposal of equity holdings and the rights arising from equity holdings in a company, cooperative society or other type of organisation if over one half of the value thereof arises directly or indirectly from immovable property and the rights pertaining to immovable property located in Slovenia.

(15) The Ministry of Finance and the Tax Administration of the RS publish on their website a list of countries where the general and/or average nominal corporate profit tax rate is lower than 12.5% and where these countries are not the EU Member States referred to in the thirteenth paragraph of this Article. (16) Stipulations of this Act conditioning the rights and liabilities of taxpayers in relation to the seat and place of effective management in the countries referred to in the thirteenth paragraph of this Article shall enter into force on the day following the publication of the country’s name in the list referred to in the fifteenth paragraph of this Article.

(17) Income subject to this Act not originating in Slovenia shall be considered income originating outside Slovenia. IV. EXEMPTIONS Article 9 (Tax exemption applicable to taxpayer established for performing non-profit activities) (1) Taxpayer such as institutions, associations, institutes, religious communities, political parties, chambers, representative trade unions shall not pay tax subject to this Act, provided that: 1. They are, pursuant to a special act, established for performing non-profit activities; and 2. Actually perform their operations according to the purpose of their establishment and operation.

(2) Without prejudice to the first paragraph of this Article, the taypayer referred to in the first paragraph of this Article shall pay tax subject to this Act on income from profit activity.

(3) Without prejudice to the first paragraph of this Article, a legal entity, as a public institution established to provide mandatory stock of oil and petroleum products according to the Act regulating commodity reserves shall not pay tax under the second paragraph of this Article for the activity of provision of the mandatory stock of oil and petroleum products. (4) The Minister responsible for finance shall define profit and/or non-profit activity in detail for the purpose of this Article, taking into account that profit activity is performed in the market to gain profit and that through performing profit activity the taxpayer under this Article compete in the market with other persons under this Act and the Minister responsible for finance shall define in detail the type of the legal entity of taxpayer under this Article.

V. TAX PERIOD AND INCOME SUBJECT TO TAXATION Article 10 (Tax Period) (1) Tax shall be imposed on a taxpayer’s income as laid down in this Act during the tax period, which shall be the same as the calendar year. (2) Notwithstanding the first paragraph of this Article, a taxpayer may choose to have the tax period be the same as the financial year, which differs from the calendar year, where the tax period shall not exceed a period of 12 months. (3) The taxpayer referred to in the second paragraph of this Article shall be obliged to notify the Tax Authority of his/her choice. The tax period thus chosen shall not be changed for at least three years.

Article 11 (Income subject to taxation) (1) According to this Act, the following income shall be subject to taxation: 1. A resident’s or a non-resident’s profit, earned by the activity and/or business performed by him/her either in or through a business unit in Slovenia; 2. A resident’s or a non-resident’s profit, subject to withholding tax under Article 70 of this Act.

Unofficial and unauthorized translation 5 VI. TAX BASE 1. General provisions Article 12 (Tax base) (1) The tax base of a resident and non-resident in respect of activities and/or business performed either in or through a business unit in Slovenia shall be the profit established in accordance with the provisions of this Act. (2) Profit shall be the surplus of revenue over expenses as laid down in this Act. (3) In establishing the profit, the revenue and expenses determined in the profit and loss statement or the annual report corresponding to the profit and loss statement, and declaring revenue, expenses and profit or loss shall, subject to the law and the accounting standards established on the basis thereof, be taken into account., unless otherwise provided in this Act (4) The profit of a non-resident's business unit in Slovenia shall be profit that can be attributed to that business unit.

The profit which can be attributed to the place of establishment shall be the profit that can be expected to be earned by that place of establishment as if it were a taxpayer performing the same or similar activity and/or business. Income earned by performing an activity and/or business in a non-resident’s place of establishment or through a non-resident’s place of establishment in Slovenia, and the actual expenses which are incurred for the purposes of that place of establishment, including executive and general administrative expenses, shall be attributed to that place of establishment whether incurred in Slovenia or elsewhere.

(5) The tax base for withholding tax on the income listed in Article 70 of this Act shall be each individual income.

Article 13 (Elimination of double taxation and elimination of less than single taxation) (1) Resident’s revenue and non-resident’s revenue in respect of activities and/or business performed in a business unit or through a business unit in Slovenia which is included in the tax base of the current tax period or was included in the tax base of past tax periods shall not be included again in the tax base of the current or future tax periods. (2) Resident’s expenses and non-resident’s expenses in respect of activities and/or business performed in a business unit or through a business unit in Slovenia which are included in the tax base of the current tax period or were included in the tax base of past tax periods shall not be included again in the tax base of the current or future tax periods.

(3) Resident’s revenue and non-resident’s revenue in respect of activities and/or business performed in a business unit or through a business unit in Slovenia which originates from expenses not recognised for tax purposes in the past tax periods shall be exempt from the tax base, however only up to an amount not exceeding the amount of expenses not recognised for tax purposes in the past tax periods. (4) The taxpayer shall provide and store data on revenue and expenses under the first through third paragraphs of this Article which were included in the tax base and/or which reduced the tax base.

Article 14 (Tax base in case of changes in accounting policy and in case of rectification of errors) In establishing the tax base and/or in the recognizing the revenues and expenses of a taxpayer, amounts representing differences arising from changes in accounting policy and rectification of errors in taxable revenue and expenses recognised for tax purposes under this Act, for which the retained earnings or other capital components are calculated shall , be included in the tax base in the period of change in accounting policy and rectification of errors in such a way that they increase or reduce the tax base.

Article 15 (Tax base in revaluation to higher values) When establishing the tax base and/or recognizing the revenue and expenses of a taxpayer, the amount of revaluation surplus, resulting from revaluation of economic categories to higher fair values, and which is transferred to the retained earnings or other equity items by taxpayer, shall be included in the tax base in the year of such transfer. For assets which are being depreciated the revaluation surplus shall be transferred to the retained earnings and to the tax base in proportion to the accounted depreciation according to Article 33 of this

Unofficial and unauthorized translation 6 Act from the revaluated part of these assets. Article 16 (Transfer prices) (1) An associated enterprise shall be a taxpayer – resident or non-resident and a foreign legal entity or a foreign person without legal personality who is not a taxpayer (hereinafter: foreign person), when: 1. The taxpayer directly or indirectly holds at least 25% of the value or number of shares or equity holdings, shares in managing or control and/or voting rights of a foreign person, or controls the foreign person on the basis of a contract or the transaction conditions differ from the conditions that have been or would be reached between non-associated enterprises in equal or comparable circumstances; or 2.

The foreign person directly or indirectly holds at least 25% of the value or number of shares or equity holdings, shares in managing or control and/or voting rights of the taxpayer, or controls the taxpayer on the basis of a contract or the transaction conditions differ from the conditions that have been or would be reached between non-associated enterprises in equal or comparable circumstances; or 3. The same person at the same time directly or indirectly holds at least 25% of the value or number of shares or equity holdings, shares in managing or control and/or voting rights of the taxpayer and the foreign person or of two taxpayers, or controls the them on the basis of a contract or the transaction conditions differ from the conditions that have been or would be reached between non-associated enterprises in equal or comparable circumstances; or 4.

The same individuals or their family members directly or indirectly hold at least 25% of the value or number of shares or equity holdings, shares in managing or control and/or voting rights of the taxpayer and foreign person or of two residents or control them on the basis of a contract, or the transaction conditions differ from the conditions that have been or would be reached between non-associated enterprises in equal or comparable circumstances.

(2) A family member shall be considered: a person’s spouse or person with whom the individual lives in a longterm relationship that, under the Act governing marriage and family relations, has the same legal consequences as marriage; a partner with whom the individual lives in a registered same-sex partnership under the Act governing same-sex partnership registration; children, adopted children, step-children or children of the person with whom the individual lives in a long-term relationship that, under the Act governing marriage and family relations, has the same legal consequences as marriage; children of a partner with whom the individual lives in a registered same-sex partnership under the Act governing same-sex partnership registration; or parents or adoptive parents of a individual.

(3) In establishing a taxpayer’s revenue, it shall be taken into account transfer prices with associated enterprises as regards assets, including intangible assets and services, however at least the amount established by taking into account the prices of such or comparable assets and services which, in equal or comparable circumstances, have been reached or would be reached on the market among non-associated enterprises (hereinafter: comparable market prices). (4) In establishing a taxpayer’s expenses, it shall be taken into account transfer prices with associated enterprises as regards assets, including intangible assets and services, however up to the amount established by taking into account comparable market prices.

(5) The comparable market prices referred to in the third and fourth paragraphs of this Article shall be fixed by using one of the following methods or any combination of the following methods: 1. Comparable uncontrolled price method 2. Resale price method 3. Cost plus method 4. Profit split method and/or 5. Transactional net margin method (6) The Minister responsible for finance shall regulate the implementation of this Article in detail. Article 17 (Prices between associated enterprises-residents) (1) Residents shall be deemed to be associated enterprises: 1. If they are associated in capital, management or control in such a way that one resident directly or indirectly holds at least 25% of the value or number of shares or equity holdings, shares in managing or control and/or voting rights of other residents or controls the other residents on the basis of a contract in a manner that differs from relations between non-associated enterprises; or 2.

If the same legal entities or individuals or their family members hold in two residents directly or indirectly at least 25% of the value or number of shares or equity holdings, shares in managing or control and/or voting rights and control the two residents on the basis of a contract in a manner that differs from relations between non associated enterprises; (2) A resident and an individual performing business shall also be considered associated enterprises if the

Unofficial and unauthorized translation 7 same individual or his/her family members hold in the resident at least 25% of the value or number of shares or equity holdings, shares in managing or control and/or voting rights and controls the resident on the basis of a contract in a manner that differs from relations between non-associated enterprises. (3) According to this Article, family members shall be considered: the person's spouse or person with whom the individual lives in a long-term relationship that under the Act governing marriage and family relations has the same legal consequences as marriage; a partner with whom a individual lives in a registered same-sex civil partnership under the Act regulating same-sex partnership registration; children, adopted children, step-children or children of the person with whom the individual lives in long-term relationship, under the Act governing marriage and family relations, which has the same legal consequences as marriage; children of a partner with whom the individual lives in a registered same-sex civil partnership under the Act regulating same-sex partnership registration; or parents or adoptive parents of a individual.

(4) In establishing a taxpayer’s revenue, it shall be taken into account transfer prices with associated enterprises as regards assets, including intangible assets and services, however at least the amount established by taking into account comparable market prices, established in accordance with the conditions and methods referred to in Article 16 of this Act.

(5) In establishing a taxpayer’s expenses, it shall be taken into account the transfer prices with associated enterprises as regards assets, including intangible assets and services, however up to the amount established by taking into account comparable market prices, established in accordance with the conditions and methods referred to in Article 16 of this Act. (6) Without prejudice to the stipulations of the fourth and the fifth paragraphs of this Article, in establishing the revenue and expenses of a resident relating to transactions conducted between two residents associated enterprises under this Article, the tax base shall not be increased or decreased, unless one of the residents: 1.

In the tax period for which revenue and expenses are established discloses an uncovered tax loss carried forward from previous tax periods; or 2. Pays tax at a 0% rate or at a special rate, lower than the general tax rate pursuant to Article 60 of this Act; or 3. Is exempt from paying tax under this Act.

(7) The Minister responsible for finance shall define the implementation of this Article in detail. Article 18 (Data relating to associated enterprises subject to Articles 16 and 17 of this Act) (1) A taxpayer associated enterprise under Article 16 of this Act shall ensure and store the data related to associated enterprises, and the scope and type of transactions conducted with them, as well as data on establishing comparable market prices, within a time limit and in a manner in compliance with the Act regulating tax procedure.

(2) A taxpayer associated enterprise under Article 17 of this Act shall, on request of the Tax Authority in the procedure of tax supervision, provide the data related to establishing comparable market prices within a time limit and in a manner in compliance with the Act regulating tax procedure.

Article 19 (Interest between associated enterprises) (1) In establishing revenue, interest charged on loans issued by associated enterprises shall be taken into account, however, no lower than the level of the most recently published, known or recognised interest rate at the time of approving the loan, unless the taxpayer proves that in equal or comparable circumstances a loan would also be issued to a loan recipient which is a non-associated enterprise at an interest rate which is lower than the recognised interest rate under this paragraph.

(2) In establishing expenses, interest charged on loans received from associated enterprises shall be taken into account, however, not exceeding the level of the most recently published, known or recognised interest rate at the time of approving the loan, unless the taxpayer proves that in equal or comparable circumstances he would also receive a loan at an interest rate above the recognised interest rate under this paragraph from a lender who is a non-associated enterprise. (3) Without prejudice to the first and the second paragraphs of this Article, a taxpayer may, in establishing revenue and expenses under the first and the second paragraphs of this Article take into account charged interest according to the first and the second paragraphs of this Article, up to the level of the most recently published interest rate known and recognised at the time of the calculation, when the interest is charged on a monthly basis and fixed interest rate is agreed and/or up to the level of the average monthly recognised interest rate when this interest is calculated for a period longer than one month but this period may not exceed one year.

(4) The average monthly recognised interest rate referred to in third paragraph of this Article shall be calculated as the arithmetic mean of the recognised interest rate of the first and last months of the period for

Unofficial and unauthorized translation 8 which interest is charged. (5) The recognised interest rate referred to in the first, second and third paragraphs of this Article shall be determined and published by the Minister responsible for finance prior to the beginning of the tax period to which it will apply, considering the fact that the interest rate in question has been or would be reached in the market between non-associated enterprises. (6) In establishing the revenue and expenses of a resident relating to transactions conducted between two residents associated enterprises under Article 17 of this Act, the tax base shall not be increased or decreased, unless one of the residents: 1.

For the tax period for which revenue and expenses are established discloses an uncovered tax loss forward from previous tax periods; or 2. Pays tax at a 0% rate or at a special tax rate, lower than the general tax rate pursuant to Article 60 of this Act; or 3. Is exempt from paying tax under this Act.

Article 20 (Provisions) (1) In establishing the tax base and recognising the expenses of a taxpayer, provisions set according to Article 12 of this Act shall be recognised as expenses in an amount corresponding to 50% of the provisions set, unless otherwise provided in this Act. (2) The following shall be considered as provisions pursuant to this Article: provisions given for warranties given at the sale of products or provision of services, provisions for restructuring, provisions for expected losses on onerous contracts, provisions for pensions, provisions for jubilee benefits and provisions for termination benefits.

Contingent long-term liabilities shall not be considered provisions. (3) The elimination or use of the provisions referred to in the first and second paragraphs of this Article that were not recognised as expenses shall be taken into account in the tax period in the following manner: – revenue from elimination or use of provisions shall be exempt from the tax base in the part where the creation of the provisions was not recognised as expenses, and – expenses from the use of provisions shall be recognised in the part where the creation of the provisions was not recognised as expenses.

(4) Creating and/or cancelling provisions subject to the first, second and third paragraphs of this Article shall also involve their adjustment to the present value of expected future expenditures as at the end of the accounting period. Article 21 (Revaluation and write-off of receivables) (1) Expenses from revaluation of receivables for impairment shall be recognised in the accounted amounts in accordance with Article 12 of this Act; however, the amounts of these expenses in the tax period shall not exceed the lower of the following amounts: – an amount equalling the arithmetic mean of actually written-off receivables in the last three tax periods under the conditions referred to in the sixth paragraph of this Article, or – an amount representing 1% of the taxable revenue of the tax period.

(2) In accordance with this Article, receivables shall be short-term and long-term operating receivables that do not involve accruals and deferrals.

(3) Reversal of impairment of receivables referred to in the first paragraph of this Article shall be taken into account in a manner that revenue from reversal of impairment which has not been recognized as expense shall be exempt from tax base. (4) Without prejudice to the first paragraph of this Article, expenses arising from revaluation and or recalculation of receivables, which in accordance with the Slovene Accounting Standards are revaluated as a consequence of a changed exchange rate, shall be recognised as expenses in the total amount. (5) Expenses arising from the revaluation of receivables which subject to the first paragraph of this Article are not recognised as expenses shall be recognised at the time of write-off of in the total amount of receivable or in a partial amount of receivables that has not been paid or settled, subject to the conditions referred to in the sixth paragraph of this Article.

(6) The write-off of receivables shall be recognised as expenditures on the basis of a final court ruling on a concluded bankruptcy proceeding or on the basis of a final court ruling on confirmation of a concluded compulsory settlement in the part where the receivables were not paid and/or were not paid in full. The write-off of receivables shall also be recognised as expenses on the basis of unsuccessfully completed judicial execution proceedings or without judicial proceedings for payment of receivables, if the taxpayer provides evidence that the

Unofficial and unauthorized translation 9 cost of judicial proceedings would exceed the amount of the payment of receivables and/or if he/she provides evidence that all actions that would be taken with the due diligence of a good businessperson have been taken to secure payment of receivables and/or that all further legal proceedings shall be economically unjustified.

(7) When expenses from the revaluation of receivables for impairment are recognised for tax purposes under the first paragraph of this Article, the tax base at the time of the write-off of receivables shall be increased by the expenses recognised for tax purposes arising from the revaluation of receivables of previous tax periods, if the write-off of receivables is not made subject to the conditions of the sixth paragraph of this Article. Article 22 (Revaluation of financial investments) (1) In determining the tax base, expenses from a revaluation as a consequence of the impairment of short term and long-term financial investments and/or financial instruments shall not be recognised.

(2) Reversal of impairment referred to in the first paragraph of this Article shall be considered in such a way that revenue arising from reversal of impairment, which was not recognised as revenue, shall be exempt from the tax base.

(3) Without prejudice to the first paragraph of this Article, expenses arising from revaluation of financial investments and/or financial instruments at fair value through profit or loss shall be recognised as expenses in the accounted amounts, in accordance with Article 12 of this Act. (4) Expenses arising from a revaluation for impairment, which subject to the first paragraph of this Article shall not be recognised and have not been reversed as referred to in the second paragraph of this Article, shall be recognised at the time of disposal, exchange or abolition of the financial investment and/or instrument.

(5) Without prejudice to the first paragraph of this Article, expenses arising from revaluation for impairment of loans, valued according to the method of amortised cost, shall be recognised as expenses for banks, however not exceeding the level laid down by the Act regulating banking.

Article 23 (Revaluation of goodwill) (1) Expenses arising from a revaluation for impairment in goodwill shall be recognised in the accounted amount in accordance with Article 12 of this Act, however not exceeding an amount equalling 20% of the initial goodwill value. (2) In accordance with Article 12 of this Act, when the accounted amount due to impairment in goodwill exceeds the amount recognised as expense in accordance with the first paragraph of this Article, the surplus amount, which in accordance with the first paragraph of this Article is not recognised as expense, shall be recognised in subsequent periods in such a way that this transferred amount plus the expense arising from revaluation for impairment in goodwill in the current tax period shall not exceed an amount equalling 20% of the initial goodwill value.

2. Revenue Article 24 (Exemption of dividends and income similar to dividends) (1) In determining the tax base of a taxpayer, received dividends or other shares in profit, including the income similar to dividends referred to in Article 74 of this Act, excluding the hidden reserves referred to in Article 74 of this Act that were not subject to taxation on the part of the payer, shall be excluded from the tax base of the recipient, provided that the payer is: 1. A taxpayer under this Act; or 2. according to the tax law of a Member State considered to be resident in that State for tax purposes and, under the terms of a double taxation agreement concluded with a third State, is not considered to be resident for tax purposes outside Community and, in addition, shall be subject to one of the taxes to which the common system of taxation, applicable in the case of parent companies and subsidiaries of different Members States applies, and which are defined by the Minister responsible for finance, and without the possibility of an option or of being exempt; or 3.

A taxpayer subject to income tax and/or profit tax, comparable to the tax under this Act, and not a resident of the state, and in the case of a business unit this is not located in a state where the general and/or average nominal rate of taxation applicable to profits generated by companies is lower than 12.5% and the state is listed on a published list in accordance with Article 8 of this Act; however, this indent does not apply to a payer who is a resident of another EU Member State pursuant to second point of this paragraph of this Article. (2) The provisions of the first paragraph of this Article shall apply to a non-resident recipient, provided that

Unofficial and unauthorized translation 10 his/her participation in the capital or management of the person distributing the profits is connected with the activities and/or business pursued by the non-resident, either in or through a business unit in Slovenia. (3) Income referred to in the first paragraph of this Article shall be excluded from the tax base of the recipient, if on this basis revenue was included in the tax base in previous tax periods. (4) The implementation of this Article shall be governed by the Act regulating tax procedure. Article 25 (Exemption of profits from disposal of equity holdings) (1) In establishing the tax base of a resident or non-resident performing activity and/or business in a business unit or through a business unit in Slovenia that earns profit from disposal of equity holdings in companies, cooperative societies or other types of organisations, 50% of that profit shall be exempt from the tax base of the taxpayer, if the taxpayer who earns profit has participated in capital and/or managing of another person in such a manner that he/she is the holder of a holding, shares or voting rights amounting to at least 8% and the time of this participation in capital and/or managing companies, cooperative societies and other types of organisations lasts at least 6 months and, continuously employed at least one person during that period on a full-time basis.

(2) Losses arising from disposal of equity holdings as referred to in the first paragraph of this Article shall not be recognised in the amount of 50%.

(3) The stipulations of the first paragraph of this Article shall not apply to profits from investments in ownership shares of companies, cooperative societies or other types of organisations that have a seat or place of actual operation of their management established in states where the general and/or average nominal rate of taxation applicable to the profits generated by companies is lower than 12.5% and the state is listed on a published list in accordance with Article 8 of this Act and the these states are not EU Member States. (4) In the case of liquidation or dissolution of a taxpayer or non-resident’s business unit in Slovenia within a period of 10 years of establishment, at the time of dissolution the tax base of the tax account shall be increased by the exempt share of profit subject to the first paragraph of this Article for the period of the five previous tax periods.

(5) A transaction in accordance with Chapter VII of this Act shall not be considered the liquidation or dissolution of a taxpayer or non-resident’s business unit in Slovenia. (6) Without prejudice to the first paragraph of this Article, in establishing the tax base of a taxpayer, resident or taxpayer, non-resident, performing activity and/or business in a business unit or through business unit in Slovenia that earns profits from disposal of equity holdings, acquired on the basis of venture capital investment (investments in the form of an increase of the share capital of the company by investments of the taxpayer or establishment of a company) in a venture capital company, established in accordance with the Act regulating venture capital companies, the total amount of such profit shall be exempt from the tax base of the taxpayer if this venture capital company held the status of venture capital company over the whole tax period and if this company held the status of venture capital company over the whole period of holding such a share of the taxpayer.

Losses arising from the disposal of equity holdings referred to in this paragraph shall not be recognised. (7) In establishing the tax base of a taxpayer resident or taxpayer non-resident performing activity and/or business in business unit or through a business unit in Slovenia that earns profit from the disposal of equity holdings and/or shares in banks in exchange for issuance or transfer of the own ownership shares or another company’s shares (hereinafter: exchange), the profit or loss arising from this exchange shall be exempt from the tax base of the taxpayer. When a taxpayer receives payment in cash, a proportional part of the profit or loss equalling the payment in cash shall be included in the tax base.

(8) The taxpayer referred to in the previous paragraph is liable to value the ownership holdings or shares received in exchange at the tax value that disposed ownership holdings or shares have in the time of exchange. Article 26 (Expenses relating to participation) (1) In establishing the tax base in accordance with Articles 24 and 25 of this Act, expenses related to managing and financing investments in the capital of companies, cooperative societies or other types of organisations allowing income, which is exempt in accordance with Articles 24 and 25 of this Act, shall not be recognised in an amount equalling 5% of the amount of dividends and profits received within the tax period which are exempt from the tax base of the taxpayer in accordance with Articles 24 and 25 of this Act.

(2) The taxpayer shall exempt from the tax base the expenses referred to in the first paragraph of this Article for the tax period in which he/she exempt income under Articles 24 and 25 of this Act from the tax base. Article 27

Unofficial and unauthorized translation 11 (Exemption of revenue arising from non-profit activities) In determining the tax base of a taxpayer referred to in Article 9 of this Act, revenue arising from a non-profit activity and the actual or proportional costs arising from that activity shall be exempt from the tax base. Article 28 (Exemption of income from write-off of debts in the compulsory settlement procedure) Revenue arising from write-off of debts in the compulsory settlement procedure, in the part related to the creation of reserves in compliance with the Act regulating financial operation of enterprises, shall not be included in the tax base.

3. Expenses Article 29 (General) (1) In determining profit, expenses required to acquire revenue that is taxable under this Act shall be recognised. (2) Expenses that are not required to acquire revenue are expenses for which, in respect of the facts and circumstances, it follows that:: 1. They are not a direct condition for performing activities and are not a consequence of performing activities; 2. They are of a private nature; 3. They do not conform with normal business practice. (3) Expenses shall be deemed not to conform with normal business practice if they are not customary in the operation of the individual activity in respect of past and other experience and in comparison with other activities as well as facts and circumstances, with the exception of expenses incurred by extraordinary and infrequent events such as natural disasters, or as a result of other extraordinary and infrequent events.

Article 30 (Non-recognised expenses) (1) The following shall not be recognised as expenses: 1. Income similar to dividends, including hidden profit distribution; 2. Expenses for covering losses from preceding years; 3. Costs relating to private life, such as those for entertainment, holidays, sports and recreation, including the respective value added tax; 4. Costs relating to compulsory collection of taxes and other levies; 5. Penalties imposed by the responsible authority; 6. Taxes paid by a partner as an individual; 7. Value added tax which in accordance with the Act regulating added value tax was not claimed by the taxpayer as a tax credit although he/she had the right in accordance with the Act regulating the value added tax; 8.

Interest: a) On late payment of taxes or other levies; b) On loans received from persons whose registered office or place of actual activities of management or place of residence is in states, unless EU Member States, where general and/or average nominal tax rate applicable to profits is below 12.5% and the state is listed on a published list in accordance with Article 8 of this Act.

9. Donations; 10. Bribes and other types of pecuniary benefits given to individuals or legal entities in order either to bring about or prevent a certain event which otherwise would not occur, for example that a certain act is performed faster or more favourably or is omitted. (2) The costs referred to in point 3 of the first paragraph of this Article shall be the following: 1. Costs relating to the private lives of the owners and/or associated enterprises referred to in Articles 16 and 17 of this Act, including the costs of assets owned or leased by the taxpayer relating to the private lives of such persons; 2.

Costs relating to the private lives of other persons, including the costs of assets owned or leased by the taxpayer relating to the private lives of such persons, with the exception of costs for providing benefits and other payments related to employment when they are subject to taxation according to the Act regulating the personal income tax.

(3) Without prejudice to the first and the second paragraphs of this Article, the costs referred to in the point 3 of the first paragraph of this Article shall be recognised in case of use against payment, however only up to the amount of such payment and/or reimbursement. The costs of the assets owned or leased by the taxpayer relating

Unofficial and unauthorized translation 12 to private life and incurred during the use of such assets for private use shall not be recognised in proportion to the extent of such use. Article 31 (Partially recognised expenses) (1) The following shall be recognised, at the level of 50%, as expenditures: 1.

Entertainment costs; 2. Supervisory board costs and/or costs of other body performing a supervisory function solely. (2) Entertainment costs shall be deemed to be costs for hospitality, entertainment, or gifts (with or without a logotype) to business contacts of the taxpayer with his/her business partners. Article 32 (Interest on loan surplus) (1) Except in the case of loan recipients that are banks and insurance undertakings, the interest paid on loans received from a shareholder or partner who at any time in the tax period directly or indirectly owns at least 25% of shares or holdings in the capital or voting rights of the taxpayer shall not be recognised as a deductable expenses, provided that the loans exceed, at any time in the tax period, four times the amount of the shareholder’s or partner’s holding in the taxpayer’s equity capital (hereinafter: loan surplus), established with regard to the amount and duration of the loan surplus in the tax period, unless the taxpayer provides evidence that he/she could have received the loan surplus from a lender who is a non-associated enterprise.

(2) Loans by third parties, including banks, for which a shareholder or partner gives a guarantee and loans if made in connection with a deposit by a shareholder and/or partner in third party and/or in the bank shall also be deemed loans by a shareholder and/or partner under the first paragraph of this Article. (3) The amount of the shareholder’s or partner’s holding in the loan recipient’s equity capital shall be determined for the tax period as an average on the basis of paid-in capital, retained earnings, and reserves as at the last day of each month in the tax period.

Article 33 (Depreciation) (1) Depreciation of tangible fixed assets, amortization of intangible assets or depreciation of investment property (hereinafter: depreciation) shall be recognised as expenditure in the accounted amount, but not more than the amount calculated using the straight-line depreciation method and the maximum depreciation rates referred to in the fifth paragraph of this Article. (2) When the accounted depreciation exceeds the amount calculated in accordance with the first paragraph this Article, the surplus amount of depreciation shall be recognised in the following tax periods in such a manner that for tax purposes the depreciation referred to in the previous paragraph shall be accounted until the final depreciation and/or disposal and/or elimination of recording the tangible fixed asset, intangible asset or investment in property.

In case of disposal and/or elimination of recording the tangible fixed asset, intangible asset or investment property, the revenue and expenses for tax purposes shall be calculated by taking into account the tax values of the assets. The tax value of a certain asset shall be the amount attributed to that asset when calculating the tax and/or the amount on the basis of which revenue, expenses, profits and losses are calculated when calculating the tax.

(3) Depreciation shall be calculated individually. (4) Assets which are being depreciated and the beginning of depreciation calculation shall be laid down by regulations and accounting standards. (5) The maximum annual depreciation rate subject to the provisions of the first paragraph of this Article shall, amount to: 1. 3% for buildings, including investment property; 2. 6% for parts of buildings, including investment property; 3. 20% for equipment, vehicles and machinery: 4. 33.3% for parts of equipment and equipment for research activities; 5. 50% for computer equipment, hardware and software; 6.

10% for crops lasting several years; 7. 20% for breeding animals; 8. 10% for other investments. (6) Without prejudice to the provisions of the first through fifth paragraphs of this Article, a write-off of the total acquisition cost may be recognised as expense at the time of transfer into use in those tangible fixed assets

Unofficial and unauthorized translation 13 whose useful life exceeds one year and whose acquisition cost does not exceed EUR 500. (7) Depreciation of tangible fixed assets, including expenses of their disposal, calculated on a part of the acquisition costs for the tangible fixed assets on the basis of the estimation of costs of decommissioning, removal or reconstruction of the site for which provisions were created, and using or cancelling of provisions in such a manner, shall be treated under the conditions of Article 20 of this Act.

Article 34 (Provisions for banks, brokerage companies and insurance undertakings) (1) For banks, provisions which must be created with regard to special risks shall be recognised as expenses in the accounted amounts, however not exceeding the level laid down by the Act regulating banking.

(2) Provisions which must be created by a brokerage company with regard to special risks shall be recognised as expenses in the accounted amounts, however not exceeding the amount laid down by the Act regulating the securities market.

(3) Technical provisions which an insurance undertaking is obliged to create in accordance with the Act regulating insurance shall be recognised as expenses in the accounted amounts, however not exceeding the amount or ceiling subject to the Act regulating insurance. Article 35 (Salaries and other payments related to employment) (1) Salaries, other payments related to employment and wage compensation for the time of absence from work due to annual leave or due to other absences from work as regards employees shall be recognised as expenses in the accounted amount.

(2) Salaries, other payments related to employment and wage compensation for the time of absence from work due to annual leave or other absences from work as regards business executives, procurators and employees with special powers and liabilities shall be recognised as expenses in the accounted amount, subject to law and/or an employment contract.

(3) Payments of benefits taxable under the Act regulating personal income tax shall be considered as other payments related to employment. (4) Apprentices pay shall be recognised as expenses in the accounted amount, subject to law. (5) Reimbursement for annual leave, jubilee benefits , termination benefits, solidarity aid, reimbursement of work-related expenses , i.e. meal allowances, travel allowances, fieldwork allowances, separation expenses, travel reimbursements, i.e.: 1. Daily allowance; 2. Travel cost reimbursement, including the reimbursement of costs incurred by using an employee's car for work-related purposes (mileage); and 3.

Reimbursement of the cost of lodging, shall be recognised as expenses in the accounted amount. 4. Losses Article 36 (Tax losses and covering tax losses) (1) Tax loss subject to this Act shall be the surplus of expenses over revenue laid down in this Act. (2) Unless otherwise stipulated by the Act, a taxpayer can cover a tax loss in a tax period by reducing the tax base in the subsequent tax periods.

(3) In reducing the tax base due to tax losses from preceding tax periods, the tax base shall first be reduced by the tax loss of a prior date. (4) A reduction of the tax base due to tax losses from preceding tax periods may only be allowed to maximum amount of the tax base for the tax period. (5) If during a tax period, the ownership of equity capital and/or equity holdings or voting rights of the taxpayer changes directly or indirectly by over 50% compared to the state of ownership at the beginning of the tax period and the taxpayer: 1. Did not perform the activity two years prior to the change in ownership; or 2.

Considerably changed the activity two years prior to or after the change in ownership,

Unofficial and unauthorized translation 14 the second paragraph of this Article shall not apply to the losses incurred in the year of the change in ownership or in the preceding tax periods. (6) When the activity of a taxpayer considerably changes within two years of the change in ownership, subject to the fifth paragraph of this Article, the tax base shall increase by the already claimed tax losses incurred in the year of the change in ownership or in the preceding tax periods. (7) Item 2 of the fifth paragraph of this Article shall not apply to a taxpayer who considerably changes his/her activity due to maintenance of employment or reorganisation of business.

Article 37 (Tax loss – special provision) A taxpayer who, in accordance with Article 28 of this Act, does not include in the tax base the revenue arising from write-off of debts in the compulsory settlement procedure, in the part related to creation of reserves in compliance with the Act regulating financial operation of enterprises, shall lose the right to cover tax losses incurred in the previous years in the amount of the revenue that, due to the creation of reserves, shall not be included in the tax base.

VII. TAXATION APPLICABLE TO TRANSFERS OF ASSETS AND LIABILITIES, EXCHANGES OF SHARES, MERGERS AND DIVISIONS Article 38 (Hidden reserves) (1) In mergers or divisions carried out in accordance with this Chapter of the Act, the taxpayer shall in the tax assessment disclose hidden reserves related to the remaining and/or transferred assets and shall include them in the tax base, unless otherwise provided by law. (2) The tax assessment referred to in the first paragraph of this Article shall be submitted within the time limit and in a manner stipulated by the Act regulating tax procedure.

(3) The amount representing the hidden reserves referred to in the first paragraph of this Article shall be calculated as the difference between the fair value and the tax value of the assets and liabilities as at the date of tax assessment, as referred to in the first paragraph of this Article.

(4) Fair value is the amount for which an asset could be sold or otherwise exchanged or a liability settled or at which an equity instrument granted could be exchanged between knowledgeable and willing parties in an arm’s length transaction.

(5) Tax value of a certain asset or liability is the amount attributed to the asset or liability for the purpose of tax and/or on the basis of which revenue, expenses, profits and losses have been calculated for the purpose of tax. 1. Taxation applicable to transfers of assets Article 39 (Transfer of assets) The transfer of assets in accordance with this Article shall mean an operation whereby a company (hereinafter: transferring company) transfers, without being dissolved, all or one or more branches of activity to another existing company or to a new company that it establishes (hereinafter: receiving company) in exchange for either the issuance or transfer of securities representing the capital of the acquiring company to the transferring company.

The branch of activity subject to this Article shall mean all the assets and liabilities of a division of a company which from an organisational point of view constitute an independent business and is an entity capable of functioning by its own means.

Article 40 (Rights and obligations) (1) In the transfer of a branch of activity: 1. The transferring company shall be exempt from the tax relating to profits generated in transferring the assets and liabilities belonging to the transferred branch or branches of activity; 2. The transferring company shall be exempt from the tax relating to losses incurred in transferring the assets and liabilities belonging to the transferred branch or branches of activity; 3. The transferring company shall be obliged to value the granted securities of the receiving company at their market value as at the day of transfer.

Unofficial and unauthorized translation 15 (2) The receiving company shall be entitled to: a) carry over the provisions which were created by the transferring company and can be attributed to the transferred branch or branches of activity, and assume rights and obligations related to these provisions as they would have applied to the transferring company if the operation had not taken place; b) take over the tax losses that could be attributed to the transferred branch or branches of activity according to the rules that would have applied to the transferring company if the operation had not taken place, including rules referred to in the fifth through seventh paragraphs of Article 36 of this Act.

(3) The receiving company shall be obliged to value the transferred assets and liabilities, to depreciate the transferred assets and calculate the profits and losses related to the transferred assets and liabilities by taking into account their tax values at the transferring company as at the date of transfer and/or as if the operation had not taken place.

Article 41 (Conditions) (1) The transferring company and receiving company shall have the rights referred to in Article 40 of this Act, provided that they are residents of Slovenia and/or residents of an EU Member State other than Slovenia, as follows: 1. Where the transferring company and receiving company are residents of Slovenia, for transferring the branch or branches of activity either in Slovenia or an EU Member State other than Slovenia; 2. Where the transferring company is a resident of an EU Member State other than Slovenia and the receiving company is a resident of Slovenia, for transferring the branch or branches of activity situated in Slovenia, if the transferred assets, liabilities, provisions, reserves and losses do not, after the transfer, belong to the acquiring company’s business unit outside Slovenia.

3. Where the receiving company is a resident of an EU Member State other than Slovenia and the transferring company is a resident either of Slovenia or an EU Member State, provided that the transferred assets, liabilities, provisions, reserves and losses do, after the transfer, belong to the receiving company’s business unit in Slovenia. (2) Residents of an EU Member State other than Slovenia shall be considered companies which: 1. take one of the forms to which the common system of taxation applicable to mergers, divisions, partial divisions, transfers of assets and exchanges of shares concerning companies of different Member States and to the transfer of the registered office of an European Company (hereinafter: SE) or European Cooperative Society (hereinafter: SCE) between Member States applies and which are defined by the Minister responsible for finance; 2.according to the tax law of a Member State are considered to be residents in that State for tax purposes and, under the terms of a double taxation agreement concluded with a third State, are not considered to be residents for tax purposes outside Community; and 3.

are subject to one of the taxes with regard to which the common system of taxation applicable to mergers, divisions, partial divisions, transfers of assets and exchanges of shares concerning companies of different Member States and to the transfer of the registered office of an SE or SCE between Member Stats applies, and which are laid down by the Minister responsible for finance, and without the possibility of an option or of being exempt.

Article 42 (Special regulation in the case of a business unit) If the transferring company is a resident of Slovenia and the receiving company is a resident of an EU Member State other than Slovenia, the first paragraph of Article 40 of this Act shall not apply to the transfer of one or more branches of activity representing one or more business units located in an EU Member State other than Slovenia. However the transferring company shall have the right to a relief for the tax, resulting from the transfer, which would have been charged if the regulation regarding the common system of taxation applicable to mergers, divisions, partial divisions, transfers of assets and exchanges of shares concerning companies of different Member States and to the transfer of the registered office of an SE or SCE between Member States was not introduced.

Article 43 (Notification) (1) The rights and obligations referred to in Articles 40 and 42 of this Act shall be recognised in the case of the transferring and acquiring company, provided that the conditions subject to Articles 40 through 42 of this Act are met and on the basis of notification of the transaction to the Tax Authority. (2) If the conditions referred to in the first paragraph of this Article have not been met, the transferring and acquiring company shall have no rights and obligations referred to in these Articles. (3) On the basis of the notification, the Tax Authority can in whole or in part refuse the rights referred to in Article 40 of this Act where it appears that transfer of assets has its principal objective or one of its principal

Unofficial and unauthorized translation 16 objectives tax evasion and/or tax avoidance . (4) This Article shall be implemented in a manner stipulated by the Act regulating tax procedure. 2. Taxation applicable to exchanges of shares Article 44 (Exchange of shares) (1) An exchange of shares shall mean an operation whereby an existing or new company (hereinafter: acquiring company) acquires a holding in the capital of another company (hereinafter: acquired company) such that it obtains a majority of the voting rights in the acquired company, or, holding such a majority, acquires a further holding, in exchange for the issue or transfer to the shareholders of the acquired company, in exchange for their securities (hereinafter: securities of the acquired company), of securities representing the capital of the acquiring company (hereinafter: securities of the acquiring company).The acquisition conducted by the acquiring company through a recognised stock exchange shall be deemed as one operation, provided that it is conducted within a period of six months.

A recognised stock exchange shall be a stock exchange whose organiser is a full member of the World Federation of Exchanges – WFE or Federation Internationale des Bourses de Valeurs – FIBV.

(2) In addition to the issue or transfer of securities subject to the first paragraph of this Article, the acquiring company may make a cash payment to the shareholders of the acquired company not exceeding 10% of the nominal value or, in the absence of a nominal value, of the total of the smallest issue amounts of the issued or transferred securities. A cash payment may be made, in whole or in part, to the minority shareholders of the acquired company instead of the issue or transfer of securities, however not exceeding 5% of the nominal value or, in the absence of a nominal value, of the total of the smallest issue amounts of the issued or transferred securities.

Article 45 (Rights and obligations) (1) Exchange of shares subject to Article 44 of this Act shall not, of itself, give rise to any taxation of the profits or losses of the shareholder of an acquired company, unless a cash payment. (2) In case of a cash payment, the shareholder shall be subject to the tax in proportion to the cash payment, while the pro rata profit or loss thus generated shall be added to the cash payment and the fair value of the securities of the acquiring company. (3) The shareholder shall value the securities of the acquiring company at the tax value which the securities of the acquired company held by him had as at the time of exchange.

(4) The acquiring company shall value the received securities of the acquired company at their fair value as at the day of exchange. Article 46 (Conditions) (1) A shareholder shall have the rights referred to in Article 45 of this Act: 1. If the acquiring company and the acquired company are residents of Slovenia and/or residents of an EU Member State other than Slovenia; and 2. If the shareholder is a resident of Slovenia or is not a resident of Slovenia and holds the securities of the acquired company and the acquiring company through a business unit located in Slovenia. (2) The residents of an EU Member State other than Slovenia shall be considered companies which: 1.

take one of the forms to which the common system of taxation applicable to mergers, divisions, partial divisions, transfers of assets and exchange of shares concerning companies of different Member States and to the transfer of the registered office of an SE or SCE between Member States applies, unless entities established in accordance with the law of Slovenia, and which are laid down by the Minister responsible for finance; 2. according to the tax law of a Member State are considered to be residents in that State for tax purposes and, under the terms of a double taxation agreement concluded with a third State, are not considered to be residents for tax purposes outside Community,; and 3.

are subject to one of the taxes with regard to which the common system of taxation applicable to mergers, divisions, partial divisions, transfers of assets and exchange of shares concerning companies of different Member States and to the transfer of the registered office of an SE or SCE between Member States applies, and which are laid down by the Minister responsible for finance, and without the possibility of an option or of being exempt.

Article 47

Unofficial and unauthorized translation 17 (Notification) (1) The rights and obligations referred to in Article 45 of this Act shall be recognised in the case of shareholders who exchange securities, provided that the conditions subject to Articles 44 to 46 of this Act are met and on the basis of notification of the transaction to the Tax Authority. (2) If the conditions referred to in the first paragraph of this Article have not been met, the shareholder shall have no rights or obligations under Article 45 of this Act.

(3) On the basis of the notification, the Tax Authority can refuse the rights referred to in Article 45 of this Act where it appears that exchange of shares has as its principal objective or one of its principal objectives tax evasion and/or tax avoidance .

(4) This Article shall be implemented in a manner stipulated by the Act regulating tax procedure. 3. Taxation applicable to mergers and divisions Article 48 (Mergers and divisions) (1) Operations carried out in compliance with the stipulations of the Act regulating restructuring of companies shall be considered mergers and divisions.

(2) For partial divisions and divisions by acquisition, the provisions of this Chapter apply only in cases of partial divisions and divisions of one or more branches of activities of the transferring company. (3) For partial division, the provisions of this Chapter apply only when after the partial division at least one branch of activity remains in the transferring company. (4) The branch of activity subject to this Article shall mean all the assets and liabilities of a division of a company which from an organisational point of view constitute an independent business and is an entity capable of functioning by its own means.

Article 49 (Rights and obligations) (1) The following shall apply to mergers and divisions: 1. The transferring company shall be exempt from the tax relating to hidden reserves and/or profits, and losses that can be attributed to the transferred assets and liabilities. Profit or loss shall be calculated as the difference between the fair value and the tax value of the assets and liabilities as at the cut-off date of the merger or division, as if the assets and liabilities, as at the cut-off date of merger or division, were disposed to a nonassociated enterprises against payment; 2. The receiving company shall have the right to: a) carry over the provisions which were created by the transferring company and assume rights and obligations related to the these provisions as they would have applied to the transferring company b) take over the tax losses of the transferring company according to the rules that would have applied to the transferring company if the operation had not taken place, including rules referred to in the fifth through seventh paragraphs of Article 36 of this Act.

c) not be liable to taxation relating to any gains accruing on the cancellation of its holding in the capital of the transferring company, provided that prior to the merger or division the receiving company has a holding in the capital of the transferring company. (2) The receiving company shall be obliged to value the acquired assets and liabilities, to depreciate the acquired assets and calculate the profits and losses related to the transferred assets and liabilities by taking into account their tax values at the transferring company as at the cut-off date of the merger or division as if the operation had not taken place.

(3) On merger or division, the allotment of securities representing the capital of the receiving company to a shareholder of the transferring company in exchange for securities representing the capital of the transferring company shall not, of itself, give rise to any taxation of the profits or losses of that shareholder, unless a cash payment, if as follows: 1. the shareholder is a resident of Slovenia; or 2. the shareholder is not a resident of Slovenia and holds securities of the transferring company and of the receiving company through a business unit located in Slovenia.

(4) In case of cash payment the shareholder referred to in the third paragraph of this Article shall be subject to tax in proportion to the cash payment, while the pro rata profit or loss shall be added to the cash payment and the fair value of the securities of the receiving company.

The shareholder shall value the received securities at the tax

Unofficial and unauthorized translation 18 value which the securities of the transferring company held by him had as at the time of merger or division. Article 50 (Conditions) (1) The transferring company and the receiving company shall have the rights referred to in Article 49 of this Act, provided that they are residents of Slovenia and/or residents of an EU Member State other than Slovenia, as follows: 1. Where the transferring company and the receiving company are residents of Slovenia, regardless of whether the branch of activity or branches of activities of the transferring company are located in Slovenia or in an EU Member State other than Slovenia; 2.

Where the transferring company is a resident of an EU Member State other than Slovenia and the receiving company is a resident of Slovenia, provided that the transferred assets, liabilities, provisions, reserves and losses do not, after the merger or division, belong to the receiving company’s business unit outside Slovenia; 3. Where the receiving company is a resident in an EU Member State other than Slovenia and the transferring company is a resident either of Slovenia or another EU Member State, provided that the transferred assets, liabilities, provisions, reserves and losses, after the merger or division, belong to the receiving company’s business unit in Slovenia.

(2) Residents of an EU Member State other than Slovenia shall be considered companies which: 1. take one of the forms to which the common system of taxation applicable to mergers, divisions, partial divisions, transfers of assets and exchange of shares concerning companies of different Member States and to the transfer of the registered office of an SE or SCE between Member States applies, unless entities established in accordance with the law of Slovenia, and which are laid down by the Minister responsible for finance; 2. according to the tax law of a Member State are considered to be residents in that State for tax purposes and, under the terms of a double taxation agreement concluded with a third State, are not considered to be residents for tax purposes outside Community; and 3.

are subject to one of the taxes with regard to which the common system of taxation applicable to mergers, divisions, partial divisions, transfers of assets and exchange of shares concerning companies of different Member States and to the transfer of the registered office of an SE or SCE between Member States applies, and which are laid down by the Minister responsible for finance, and without the possibility of an option or of being exempt.

Article 51 (Special provisions) If the merger or division involves the transfer of a branch of activity or branches of activities representing a business unit in an EU Member State other than Slovenia provided the transferring company is a resident of Slovenia and the receiving company is a resident of an EU Member State other than Slovenia, point 1 of the first paragraph of Article 49 of this Act shall not apply .However the transferring company shall have the right to a relief for the tax from the merger or division and which would have been charged due to the merger or division in question if the regulation regarding the common system of taxation applicable to mergers, divisions, partial divisions, transfers of assets and exchange of shares concerning companies of different Member States was not introduced.

Article 52 (Application of the provisions of Articles 48 to 53 of this Act) The provisions of Articles 48 to 53 of this Act applying to a transferring company or a receiving company shall apply mutatis mutandis to two or more transferring companies or two or more receiving companies. Article 53 (Notification) (1) The rights and obligations referred to in Article 49 of this Act shall be recognised in the case of the transferring company, receiving company and shareholder, provided that the conditions subject to Articles 48 to 53 of this Act are met and on the basis of notification of the operation to the Tax Authority.

(2) If the conditions referred to in the first paragraph of this Article have not been met, the transferring company, receiving company and shareholder shall have no rights and obligations under Article 49 of this Act. In such a case, the transferring company shall include the hidden reserves referred to under point 1 of the first paragraph of Article 49 of this Act in the tax base.

(3) On the basis of the notification of a merger or a division, the Tax Authority can in whole or in part refuse the rights referred to in Article 49 of this Act where it appears that a merger or a division has as its principal objective or one of its principal objectives tax evasion and/or tax avoidance.

Unofficial and unauthorized translation 19 (4) This Article shall be implemented in a manner stipulated by the Act regulating tax procedure. 4. Joint provision Article 54 (Application of the provisions of Articles 38 to 53 of this Act and application of provisions upon the transfer of the SE's and SCE's registered offices) (1) For the purpose of taxation applicable to transfers of assets, taxation applicable to exchanges of shares, and taxation applicable to mergers and divisions subject to Articles 39 to 53 of this Act, the provisions relating to transfers of securities representing a holding in the capital shall also apply to companies, such as limited liability companies, the capital of which is not represented by securities.

(2) For the purpose of taxation applicable to transfers of SE’s and SCE’s registered offices from Slovenia to an EU Member State other than Slovenia and from an EU Member State other than Slovenia to Slovenia, the SE and SCE shall have mutatis mutandis to rights and obligations regarding exemption from the tax relating to profits, losses, depreciation, provisions referred to in the first paragraph of Article 40 of this Act when profits, losses, depreciation and provisions derived form and/or are related to assets or liabilities that remain effectively connected with a business unit of the SE and SCE in Slovenia or in a Member State.

VIII. TAX RELIEF Article 55 (Tax relief for investments in research and development) (1) A taxpayer may claim a reduction of the tax base of 40% of the amount invested in research and development during the period, but not exceeding the amount of the tax base. Investments referred to in this paragraph shall be investments in: 1. Internal research and development activities of the taxpayer, including the purchase of research and development equipment which is exclusively and permanently used for the research and development activities of the taxpayer; 2. Purchase of research and development services (performed by other persons, including associated enterprises, or by other public or private research organisations).

Without prejudice to the first sentence of this paragraph, a taxpayer may claim a reduction of the tax base of 50% of the amount invested in research and development in accordance with this paragraph when the taxpayer has a registered office and performs its activities in areas of the state whose gross domestic product per capita is lower that the average gross domestic product per capita for the whole state by up to 15%, and of 60% of the amount invested in research and development in accordance with this paragraph when the taxpayer has the registered office and performs its activities in areas of the state whose gross domestic product per capita is lower than the average gross domestic product per capita for the whole state by more than 15%, however not exceeding the amount of the tax base (hereinafter: regional tax relief).

With a decree, the Government of the Republic of Slovenia shall lay down a scheme for the implementation of regional tax relief. In establishing the amount for which a taxpayer can reduce the tax base in accordance with this paragraph, amounts invested in accordance with this paragraph shall be taken into account in accordance with the stipulations of this Act on establishing the tax base. Regarding relations with associated enterprises, the amounts established in accordance with the stipulations of this Act on establishing the tax base applicable to the transactions conducted among associated enterprises shall be taken into account.

The taxpayer must define investments in research and development in accordance with this paragraph in his/her business plan or in a special development project and/or programme. (2) For the unused part of the tax relief subject to this Article in the tax period concerned, the taxpayer may reduce the tax base in the subsequent five tax periods.

(3) In reducing the tax base due to the unused portion of the tax relief from preceding tax periods, the tax base shall first be reduced by the oldest unused portion of the tax relief. (4) Reduction of the tax base due to the unused portion of the tax relief from the preceding tax periods shall only be allowed up to the amount of the tax base of the tax period. (5) A taxpayer cannot claim tax relief for investments subject to the first paragraph of this Article in the part where assets for investments are financed from the Budget of the Republic of Slovenia or EU budget. (6) The Minister responsible for finance shall regulate the implementation of this Article in detail.

Article 55a (Relief for investments) (1) A taxpayer may claim a reduction of the tax base of 30 % of the amount invested in equipment and intangible assets, but not more than EUR 30,000 and not exceeding the amount of the tax base.

Unofficial and unauthorized translation 20 (2) The following shall not be deemed equipment referred to in the preceding paragraph: 1. furniture and office machinery excluding computer equipment, and 2. motor vehicles excluding personal hybrid or electric cars, hybrid or electric-powered buses, and freight motor vehicles with motors complying with at least EURO VI emission standards. (3) Goodwill and capitalised costs of investments in property, plant and equipment of other entities shall not be deemed intangible assets referred to in the first paragraph of this Article.

(4) In the case of financial lease, a taxpayer who has acquired equipment on the basis of financial lease may claim a reduction of the tax base in accordance with this Article.

(5) For the unused part of the tax relief subject to the first paragraph of this Article, the taxpayer may reduce the tax base in the subsequent five tax periods following the investment period; however, the reduction may not exceed the amount of EUR 30,000 in an individual tax period together with the reduction for such investments in the current tax period and not exceeding the amount of the tax base.

(6) If the taxpayer shall sell or dispose of equipment or intangible assets with regard to which the tax relief subject to this Article was claimed prior to the end of a three-year period following the year of investment or prior to the final depreciation pursuant to this Act, on the condition that this period is shorter than three years, the tax base must be increased in the year of the sale or disposal of equipment or intangible assets in question by the amount of the tax relief claimed. (7) Dissolution of a taxpayer and, where dissolution is the result of bankruptcy or liquidation, the initiation of bankruptcy or liquidation proceedings shall also be deemed to be disposal referred to in the sixth paragraph of this Article.

Transfer of assets and liabilities, exchange of shares, merger and division subject to Articles 38 to 54 of this Act shall not be deemed to be disposal of an asset. Tax relief and conditions shall be taken into account that would apply if there were no transfer of assets and liabilities, exchange of shares, merger and division. (8) In the case of financial lease, the provision of the sixth paragraph of this Article shall also apply if the leaser loses the right to use the equipment in question.

(9) A taxpayer cannot claim tax relief for investments subject to this Article in the part where the assets for investment are financed from the budgets of local authorities, the Budget of the Republic of Slovenia or EU budget, when these assets are granted. Article 55b (Tax relief for employment) (1) A taxpayer that employs a person under the age of 26 or a person above the age of 55 who has been prior to employment at least six months registered as unemployed with the Employment Service of the Republic of Slovenia and has not been employed with this taxpayer or his/her associated enterprise for the last 24 months, may claim a reduction of the tax base by 45% of the person’s salary, however, only up to the amount of the tax base.

(2) The taxpayer may claim a tax relief referred to in the first paragraph of this Article if he or she employs a person referred to in the first paragraph of this Article for an indefinite period of time on the basis of an employment contract and in accordance with regulations governing employment relationships. The tax relief may be claimed for the first 24 months of employment of such persons in the tax year of employment and in the following tax years until the end of the 24- month period.

(3) The taxpayer may claim the relief under this Article only if he/she increases the total number of employees in the tax period within which an employee for whom the taxpayer claims the relief is newly employed, provided that the number of employees is considered as increased if the number of employees on the last day of the tax period exceeds the average of the last 12 months in that tax period or the average of less than 12 months if that period was shorter. In establishing the increase in the number of employees, part-time employees shall be considered proportionally, while fixed-term employees shall not be considered at all.

(4) In the event of taxation applicable to transfers of assets, exchanges of shares, mergers and divisions referred to in Articles 38 to 54 of this Act, the relief under this Article may be transferred to the acquiring company under the conditions that would have applied if the transfer of assets, exchange of shares, merger and division had not taken place. (5) The relief under this Article shall exclude the relief for employment of the disabled under this Act and the relief for employment under the Act on Development Support to the Pomurje Region in the 2010–2015 Period (Uradni list RS, No.

87/09) and under the Economic Zones Act (Uradni list RS, No. 37/07 – official consolidated text, and 19/10). Article 56 (Relief for employment of disabled people) (1) A taxpayer employing a disabled persons may, subject to the Act regulating vocational rehabilitation and

Unofficial and unauthorized translation 21 employment of disabled persons, claim a reduction of the tax base of 50% of the salaries paid to such a persons, however not exceeding the amount of the tax base, and a taxpayer employing a disabled persons with a 100% physical disability or deaf persons by 70% of the salaries paid to such a persons, however not exceeding the amount of the tax base. (2) A taxpayer employing disabled persons as referred to in the first paragraph of this Article above the prescribed quota, and whose disability is not the consequence of a occupational injury or professional illness at the same employer may, subject to the Act regulating vocational rehabilitation and employment of disabled persons, claim a reduction of the tax base by 70% of the salaries paid to such a persons, however not exceeding the amount of the tax base.

For the purpose of this paragraph, the persons referred to in this paragraph shall be included in the quota on the basis of the date on which their employment contracts were concluded, i.e. the persons whose employment contracts were concluded on older dates shall be the first to be included. The relief subject to this paragraph shall be mutually exclusive with the relief subject to the first paragraph of this Article. Article 57 (Tax relief for carrying out practical training within professional training) A taxpayer who accepts an apprentice, or secondary-school or university student under a contract for carrying out practical training within the educational process may claim a reduction of the tax base in the amount of payments to these persons but not more than 20% of the average monthly wage in the Republic of Slovenia for every month of carrying out the practical training of an individual involved in the educational process.

Article 58 (Relief for voluntary supplementary pension insurance) A taxpayer – employer – financing a pension collective insurance scheme and meeting the conditions referred to in Articles 302 to 305 of the Pension and Disability Insurance Act (Uradni list RS (Official Gazette of the Republic of Slovenia), No 109/06-official consolidated text) may claim a reduction of the tax base by the amount of the voluntary supplementary pension insurance premiums paid by him, either in full or in part, for the benefit of the employees – insured persons, to the pension scheme provider, whose registered office is in Slovenia or in an EU Member State, in accordance with a pension scheme approved and entered in a special register in compliance with the regulations regulating voluntary supplementary pension and disability insurance, for the year in which the premiums were paid, however not exceeding an amount equalling 24% of the compulsory contributions for pension and disability insurance relating to employees – insured persons, and not exceeding EUR 2,390 a year, however not exceeding the amount of the tax base for the tax period in question.

As regards premium valuation and the manner of publishing valued premium amounts, the provisions of the Act regulating personal income tax shall apply.

Article 59 (Relief applicable to donations) (1) A taxpayer may claim a reduction of the tax base for amounts paid in cash and in kind for humanitarian purposes, disabled persons assistance, social assistance, charitable, scientific, educational, health, sporting, cultural, ecological and/or religious purposes; this shall only apply to payments made to residents of Slovenia and to residents of an EU Member State other than Slovenia, with exception of the business units of residents of an EU Member State situated outside of an EU Member State who, subject to special regulations, are set up for the performance of such activities as non-profitable activities, up to an amount corresponding to 0.3% of the taxpayer’s taxable revenue in the tax period concerned, however not exceeding the amount of the tax base for the tax period in question.

(2) In addition to a reduction of the tax base in accordance with the first paragraph of this Article, a taxpayer may claim an additional reduction of the tax base up to an amount corresponding to 0.2% of the taxpayer’s taxable revenue in the tax period concerned, for amounts paid in cash or in kind for cultural purposes and for such payments made to voluntary societies established for protection against natural disasters and other accidents and who in the public interest perform activities for aforementioned purposes; this shall only apply to payments made to residents of Slovenia and to residents of an EU Member State other than Slovenia, with exception of the business units of residents of an EU Member State situated outside of an EU Member State that, subject to special regulations, are set up for the performance of such activities as non-profitable activities, however only up to the amount of the tax base for the tax period in question.

(3) A taxpayer may also claim a reduction of the tax base for amounts paid in cash or in kind to political parties, up to an amount equalling three times the average monthly salary paid to the taxpayer’s employees, however not exceeding the amount of the tax base for the tax period in question. (4) The amount of all payments made in the entire tax period shall be deemed the amount corresponding to 0.3% of the taxpayer’s taxable revenue in the tax period referred to in the first paragraph of this Article, and the amount corresponding to 0.2% of the taxpayer’s taxable revenue in the tax period referred to in the second paragraph of this Article and the amount equalling three times the average monthly salary paid to the taxpayer’s

Unofficial and unauthorized translation 22 employees referred to in the third paragraph of this Article. (5) A taxpayer may, for an amount exceeding the amount by which the tax base is reduced subject to this Article for the purposes and payments made under the second paragraph of this Article, claim a reduction of the tax base in the subsequent three tax periods together with the reduction of the tax base for the aforementioned purposes for the current tax period, however the total amount not exceeding the limit defined in the first and second paragraphs of this Article and only up to the amount of the tax base.

(6) The taxpayer may also claim a relief applicable to donations pursuant to the first and second paragraph of this Article in the event of amounts paid to member states of the European Economic Area (hereinafter: EEA) not being EU Member States at the same time. (7) Notwithstanding the first, second and sixth paragraph of this Article, tax relief cannot be claimed for amounts paid to countries with which no exchange of information is provided that would enable the monitoring of these payments. The decision establishing a list of such countries shall be published in the Uradni list Republike Slovenije by the minister responsible for finance.

IX. TAX RATE Article 60 (General rate) Tax shall be paid at the rate of 20% of the tax base. Article 61 (Special rate) (1) Investment funds subject to tax under this Act which are established in accordance with the Act regulating investment funds and fund management companies shall pay the tax for the tax period at a rate of 0% of the tax base, provided that at least 90% of the operating profit generated in the preceding tax period is distributed by 30 November of the tax period in question. (2) Pension funds subject to tax under this Act which are established in accordance with the Act regulating pension and disability insurance shall pay the tax at a rate of 0% of the tax base.

(3) Insurance undertakings which are authorised to implement the pension scheme in accordance with the Act regulating pension and disability insurance shall pay tax, as regards activities relating to implementing the pension scheme, at a rate of 0% of the tax base, provided that a separate tax return is submitted for this pension scheme only.

(4) A venture capital company established in accordance with the Act regulating venture capital companies shall pay tax, as regards activities relating to implementing the authorised investments of the venture capital in accordance with the Act regulating venture capital companies, at a rate of 0% of the tax base, provided that a separate tax return is submitted for this part of the activity only. X. ELIMINATION OF DOUBLE TAXATION APPLICABLE TO A RESIDENT’S INCOME WHOSE SOURCE IS OUTSIDE SLOVENIA Article 62 (Foreign tax credit) (1) A resident may deduct from his/her tax liability, subject to the tax return for an individual tax period, an amount equalling the tax corresponding to the tax subject to this Act which was paid by him/her with regard to income whose sources are outside Slovenia (hereinafter: foreign tax) and with regard to income whose sources are outside Slovenia (hereinafter: foreign income) which is included in his/her tax base.

(2) Without prejudice to the first paragraph of this Article, a resident can claim a foreign income tax refund, which was involved in his/her tax base in previous tax periods, on the conditions applying to tax credit in accordance with this Chapter and in a manner stipulated by the Act regulating tax procedure. Article 63 (Foreign tax credit ceiling) (1) The tax credit referred to in Article 62 of this Act may not exceed the lower of the following: 1. The amount of foreign tax on foreign income which was final and actually paid; or 2. The amount of tax which would, subject to this Act, be payable on foreign income, if the tax credit were not possible.

Unofficial and unauthorized translation 23 (2) If Slovenia has concluded a double taxation agreement concluded with a third State, the foreign tax amount calculated at the rate laid down in the double taxation agreement shall be deemed the final foreign tax on the income from that state. (3) The amounts referred to in points 1 and 2 of the first paragraph of this Article shall be calculated separately for each individual state in which foreign income has a source. Article 64 (Evidence in connection with tax credit) (1) A taxpayer claiming the tax credit subject to Article 62 of this Act shall provide evidence containing the data on the tax liability outside Slovenia on the amount of foreign tax on foreign income, the basis for the tax and the amount of tax paid.

(2) The manner of submitting the evidence and the contents thereof are laid down in the Act regulating tax procedure. Article 65 (Changes in tax credit) If due to certain changes in particular refunds and subsequent payments of foreign tax there is a change in the tax credit, a taxpayer shall be obliged or may to increase or decrease the tax, in the period in which the change occurred, by the amount equalling the difference between the recognised tax credit and the tax credit which would be possible if the change were taken into account.

Article 66 (Transfer of tax credit surplus) If the amount referred to in point 1 of the first paragraph of Article 63 of this Act exceeds the amount referred to in point 2 of the first paragraph of Article 63 (tax credit surplus), the difference may not be transferred between states or claimed as a tax credit in subsequent or prior tax periods.

Article 67 (Lower tax credit) (1) If the amount of tax subject to this Act is lower than each of the individual amounts referred to in points 1 and 2 of the first paragraph of Article 63 of this Act, the highest possible tax credit shall be a tax credit equalling the amount of the tax.

(2) A tax credit exceeding the amount of the tax shall not be transferred to subsequent or prior tax periods. XI. CALCULATION AND PAYMENT OF TAX 1. Obligation to pay tax Article 68 (Obligation to calculate and pay tax) (1) Taxpayers shall by themselves calculate and pay tax. (2) Notwithstanding the first paragraph of this Article, in the case of a withholding tax referred to in Article 70 of this Act, the tax shall be calculated, withheld and paid by the payer of the tax in the manner and following the procedure provided by the Act regulating tax procedure.

(3) The form and manner of submission of the tax return for a resident's tax or a non-resident's tax on activities performed in or through a business unit in Slovenia shall be provided by the Act regulating tax procedure.

(4) The form and manner of submission of the tax return for withholding tax referred to in Article 70 of this Act shall be provided by the Act regulating tax procedure. (5) Notwithstanding the first paragraph of this Article, the Bank of Slovenia shall neither assess nor pay tax. Article 69 (Obligation relating to tax prepayments)

Unofficial and unauthorized translation 24 (1) Unless otherwise laid down in this Act or the Act regulating tax procedure, tax prepayments shall be paid during the tax period on a resident's income or a non-resident's income from activities performed in or through a business unit in Slovenia as provided by this Act. (2) The tax prepayment shall be determined, calculated and paid in the time periods and in the manner laid down by this Act or the Act regulating tax procedure. (3) A resident’s or non-resident’s liability to pay tax under the tax return for a particular tax period shall be reduced by the tax prepayment paid on income obtained thereby from the performance of activities in or through a business unit in Slovenia in a manner stipulated by this Act or the act regulating the tax procedure.

XII. TAXATION OF INCOME ORIGINATING IN SLOVENIA Article 70 (Withholding tax) (1) The tax shall be calculated, withheld and paid at the rate of 15% on the income of residents and nonresidents – other than dividends and income similar to dividends paid through a non-resident’s business unit located in Slovenia – whose source is in Slovenia, i.e.: 1. on payments of dividends, where a dividend shall be: a) a dividend representing profit or the surplus of revenue over expenses paid out to partners or members with regard to participation in the payer’s profit; b) income similar to dividends as referred to in Article 74 of this Act; 2.

on interest payments other than the interest: a) on loans raised by and securities issued by Slovenia; b) on loans raised with and debt securities issued by an authorised institution in accordance with the law regulating insurance and financing of international business transactions for which, subject to the aforementioned law, guarantees are issued by Slovenia; c) paid by banks, other than on interest paid to persons who have their seat or place of effective management or residence in countries other than the EU Member States, where the general and/or average nominal profit tax rate is lower than 12.5% and the country is published on a list of countries pursuant to Article 8 of this Act.

For the purpose of this Article, interest shall comprise the income arising from all types of receivables, regardless of whether they are collateralised with a mortgage, and interest arising from all debt securities and other debt financial instruments, including premiums and bonuses belonging to such securities and financial instruments, other than interest for late payment. 3. payments made for the use of or for the right to use copyrights, patents, trademarks and other property rights and other similar income; For the purposes of this Article, payments relating to the use of property rights shall comprise payments of any kind received as a consideration for the use of or for the right to use any copyright for literary, artistic or scientific work, including cinematographic films and software, any patent, trademark, design or model, plan, secret formula or process, or for information concerning industrial, commercial or scientific experience; 4.

on payments for leasing real estate located in Slovenia; 5. on payments made for services provided by performing artists or sportsmen, on the condition that the payments in question belong to another person; 6. on payments for services where payments are made to persons with a head office or place of effective management located in countries other than the EU Member States, where the general and/or average nominal profit tax rate is lower than 12.5% and where the country is published on the list pursuant to Article 8 of this Act. (2) The tax shall not be calculated, withheld and paid on the income referred to in the first paragraph of this Article which is paid to: 1.

Slovenia or a local authority in Slovenia; 2. the Bank of Slovenia; 3. a resident taxpayer who has notified the payer of his/her tax number; 4. a non-resident taxpayer liable for the tax on income obtained by performing activities in or through a business unit in Slovenia and who has informed the payer about his tax number, provided the income was paid to that business unit.

(3) The tax shall not be calculated, withdrawn and paid on income referred to in point 1 of the first paragraph of this Article which is paid to a non-resident, who is resident of the EU and/or EEA member states other than Slovenia, and is a person liable for tax on income in the country of residence, on the condition that this is not an income paid to a business unit of that non-resident in Slovenia and if that non-resident cannot claim the tax under the first paragraph of this Article in the country of residence, as he or she for example claims exemptions of dividends from the tax base, and the purpose of the transaction is not tax avoidance.

(4) The tax amount calculated, withdrawn and paid under the first paragraph of this Article may be, upon a request addressed to the Tax Authority, refunded in full or in part in the event that the non-resident could not claim it in full or in part and the inability to claim the tax in question occurred after the calculation, withdrawal and payment of tax.

Unofficial and unauthorized translation 25 (5) The tax shall not be calculated, withdrawn and paid on income referred to in point 1 and 2 of the first paragraph of this Article which was paid to non-residents – pension funds, investment funds and insurance undertakings authorised to implement the pension scheme under the conditions referred to in the third paragraph of Article 61 of this Act, on the condition that they are residents of an EU and/or EEA member state other than Slovenia, and provided that the income was not paid to a business unit of this non-resident in Slovenia and the non-resident cannot claim the tax pursuant to the first paragraph of this Article in the country of residence.

Exemption from taxation or taxation of income of these taxpayers under this paragraph in the country of residence at a 0 % rate shall also be deemed to be inability to claim tax. (6) The provisions of the fourth paragraph of this Article shall also apply to the cases referred to in the fifth paragraph of this Article.

(7) Notwithstanding the provisions of the third and fifth paragraph of this Article, tax shall be calculated, withdrawn and paid and/or the refund referred to in the forth and sixth paragraph of this Article shall not be claimed for payments to countries with which no exchange of information is provided that would enable the monitoring of taxation or non-taxation of income. The decision on the list of such countries shall be published by the minister responsible for finance in the Uradni list Republike Slovenije.

(8) Slovenia, local authorities and the Bank of Slovenia shall be deemed residents if the income referred to in the first paragraph of this Article is either paid out by or charged to Slovenia, local authorities and the Bank of Slovenia.

Article 70a (Special regulation of withholding tax on interest arising from debt securities) Notwithstanding Article 70 of this Act, taxes shall not be calculated, deducted and paid in respect of payments on interests arising from debt securities issued by a company established under the regulations applicable in the Republic of Slovenia, if: – they do not contain the option of exchange for an equity security (or if they do not contain the holders' option by way of which an exchange for an equity security could be achieved if the issuer of a debt security is a bank) and – they are admitted to trading on a regulated market or are traded in a multilateral trading system in an EU Member State or in a OECD member country, with the exception of debt securities issued for the payment of damages under the law regulating denationalisation.

Article 71 (Taxation applicable to parent companies and subsidiaries of different EU Member States) (1) Tax shall not be withheld from payments of dividends and income similar to dividends which are distributed to persons assuming one of the forms to which the common system of taxation applicable in the case of parent companies and subsidiaries of different EU Member States applies, provided that: 1. The recipient holds at least 10% of the value or number of shares or holdings in the equity capital, share capital or voting rights of the person distributing the profits; 2. The duration of the minimum participation referred to in point 1 of this paragraph is at least 24 months; and 3.

The recipient is one of the following: a) A person assuming one of the forms to which the common system of taxation applicable in the case of parent companies and subsidiaries of different EU Member States applies and which are laid down by the Minister responsible for finance; b) According to the tax law of a Member State are considered to be residents in that State for tax purposes and, under the terms of a double taxation agreement concluded with a third State, are not considered to be residents for tax purposes outside Community; and c) Subject to one of the taxes to which the common system of taxation applicable in the case of parent companies and subsidiaries of different EU Members States applies and which are laid down by the Minister responsible for finance, and without the possibility of an option or of being exempt.

(2) The provision referred to in the first paragraph of this Article shall not apply to the amount of income similar to dividends regarded as hidden profit distribution where the amount of payments is not in accordance with Article 16 of this Act. This paragraph does not apply to income subject to the second paragraph of Article 72. (3) A dividend paid out to a person who has not yet met the condition of 24 months, subject to point 2 of the first paragraph of this Article, but nevertheless meets the conditions referred to in the first paragraph of this Article may be paid out without withholding tax provided that the payer of the dividend or an agent provides to the competent tax authority an appropriate bank guarantee, in order to secure a possible tax liability,.

The amount of the bank guarantee shall be the amount of the tax calculated on a base equal to the amount of the dividend calculated on the basis of the converted rate.

Unofficial and unauthorized translation 26 (4) The competent tax authority may call in the guarantee if the dividend recipient fails to hold the minimum participation referred to in point 1 of the first paragraph of this Article for 24 months. The guarantee shall expire upon the expiry of 24 months of the minimum participation. (5) A bank guarantee issued by a bank with a registered office in Slovenia or in an EU Member State, whereby the bank irrevocably undertakes, upon the first call of the competent tax authority and without objection, to pay to the competent tax authority’s special account the amount referred to in the second paragraph of this Article, with a validity period up to the date of compliance with the condition relating to the duration of participation, subject to point 2 of the first paragraph of this Article shall be deemed an appropriate bank guarantee.

Article 72 (Taxation applicable to interest payments and royalty payments made between associated companies of different EU Member States) (1) Tax shall not be withheld on interest payments and royalty payments made to companies assuming one of the forms to which the common system of taxation applicable to interest and royalties payments made between associated companies of different EU Member States and which are laid down by the Minister responsible for finance, provided that, at the time of payment: 1. The interest payments and the royalty payments are made to the beneficial owner, which is either a company of an EU Member State other than Slovenia or a business unit of a company of an EU Member State located in another EU Member State; 2.

The payer of the tax and the beneficial owner are related so that: a) The payer of the tax directly participates in the beneficial owner’s capital with at least 25%, or b) The beneficial owner directly participates in the capital of the payer of the tax with at least 25%; c) The same company directly participates in the capital of the payer of the tax and beneficial owner's capital with at least 25%, where participation between companies of the EU Member States is concerned; 3. The duration of the minimum participation referred to in point 2 of this paragraph is at least 24 months; and 4. The payer of the tax or beneficial owner is one of the following: a) A company assuming one of the forms to which the common system of taxation applicable to interest payments and royalty payments made between associated companies of different EU Member States and which are laid down by the Minister responsible for finance; b) According to the tax law of a Member State are considered to be residents in that State for tax purposes and, under the terms of a double taxation agreement concluded with a third State, are not considered to be residents for tax purposes outside Community; and c) Subject either to one of the taxes to which the common system of taxation applicable to interest payments and royalty payments made between associated companies of different EU Member States and are laid down by the Minister responsible for finance, where a company exempt from the tax is not deemed a taxpayer, or to a tax which is identical or substantially similar and is either additionally introduced or replaces the existing tax.

(2) The provision of the first paragraph of this Article shall only apply to the amount of the interest payment subject to the second paragraph of Article 19 of this Act and the amount of the royalty payment subject to the fourth paragraph of Article 16 of this Act.

(3) A business unit shall be deemed a payer of interest and royalty payments subject to this Article, provided that those interest payments and the royalty payments represent its expenses subject to this Act. (4) The beneficial owner of the interest payments and royalty payments referred to in the first paragraph of this Article shall be a company of an EU Member State other than Slovenia which is the recipient of interest payments and royalty payments for its own benefit. An agent acting as deputy, authorised person or authorised signatory (representative) for another person shall not be deemed a beneficial owner.

(5) A business unit shall be deemed a beneficial owner of interest payments and royalty payments, provided that: a) The receivables, right or use of information with regard to which the interest payments and the royalty payments arise is in fact connected with this business unit; and b) Interest payments and royalty payments represent an income for which the business unit in the EU member state in which it is located is a taxpayer, subject to one of the taxes to which the common system of taxation applicable to interest and royalty payments made between associated companies of different EU Member States and are laid down by the Minister responsible for finance, where a company exempt from the tax is not deemed a taxpayer, or to a tax which is identical or substantially similar and is either additionally introduced or replaces the existing tax.

(6) Where a business unit of a company of an EU Member State is deemed a payer of the tax or a beneficial owner of interest payments or royalty payments, no other part of the company concerned shall be deemed a payer of the tax or beneficial owner of those interest payments or royalty under this Article. (7) The provisions of this Article shall not apply to interest payments and royalty payments made by or to a

Unofficial and unauthorized translation 27 business unit of a company of an EU Member State which is located in a third country and through which the company's operations are conducted either in full or in part.

(8) For the purposes of this Article, interest shall comprise income arising from all types of receivables regardless of whether they are collateralised with a mortgage and regardless of whether they have the right to participate in the debtor’s profit, and in particular the income from securities and income from bonds or promissory notes, including premiums and bonuses belonging to such securities, bonds and promissory notes. Penalties for late payment shall, for the purposes of this Article, not be deemed interest. (9) For the purposes of this Article, royalty payments shall comprise payments of any kind received as a consideration for the use of, or to the right to use, any copyright of literary, artistic or scientific work, including cinematograph films and software, any patent, trade mark, design or model, plan, secret formula or process or information about industrial, commercial or scientific experience.

(10) The entitlement under this Article shall be recognised on the basis of permission of the Tax Authority, provided that the conditions referred to in this Article are met. Permission shall be issued on the basis of an application. The application and the procedure with regard to the application and to the issue of the permission shall be regulated by the act regulating tax procedure. Article 73 (Application of the provisions of Article 72 of this Act) The provisions of Article 72 of this Act shall not apply to: 1. Payments whose nature is that of profit sharing and repayment of capital; 2.

Interest on loans involving the right to participate in the debtor’s profits; 3. Interest on loans that give the lender the right to convert the right to the interest into the right to participate in the profits; 4. Payments from loans which do not contain provisions relating to the repayment of principal, or when the repayment of principal falls due 50 years after the occurrence.

Article 74 (Income similar to dividends) Income similar to dividends shall be considered: 1. Profit paid out with regard to securities and loans ensuring participation in the payer’s profit; 2. Profit, revenue reserves, share capital from the part formed from the preliminary increase of share capital from profits or revenue reserves and hidden reserves of the payer upon the dissolution of the payer. Hidden reserves shall be calculated as the difference between the fair value and tax value of assets and liabilities according to the balance as at the day before the entry of the conclusion of liquidation in the register of companies.

Fair value shall be the sum which allows the sale or other manner of exchange of an asset, or which allows the settling of liabilities, or which allows the exchange of an issued capital instrument between well informed and willing parties in a business where the parties are equal and independent of one another. The tax value of an individual asset or liability shall be the amount assigned to the asset or liability in the calculation of tax, or serving as the basis for the calculation of revenue, expenses, profits and losses in the calculation of tax.

3. The paid-out value of shares or holdings decreased by their emission value and by the proportional share of capital surplus (share premium), upon exclusion or withdrawal of a shareholder, partner or member of the payer; 4.

Payment on the basis of regular reduction of share capital of the payer in the part formed from the preliminary increase of the share capital from profits or revenue reserves; 5. Paid-out value of acquired own shares or own business and other own stakes decreased by their emission value and by the proportional share of capital surplus (share premium); 6. Profits brought forward on the basis of an agreement between business enterprises subject to the Act regulating companies; 7. Hidden profit distribution made to a person who directly or indirectly holds at least 25% of the value or number of shares or holdings in the capital, management or control of the payer or controls the payer on the basis of a contract or in a manner different from relations between non-associated enterprises.

Hidden profit distribution shall be any fee guaranteed by the payer to the person referred to in the preceding sentence, especially the provision of all forms of assets and provision of services, including release from a debt, without payment or at a price lower than the comparable market price referred to in Articles 16 and 17 of this Act, or payment for the purchase of all forms of assets and services at a price higher than the comparable market price referred to in Articles 16 and 17 of this Act, or payment for assets and services where assets were not acquired or services were not provided.

Furthermore, hidden profit distribution shall be interest on loans granted on a lower or received on a higher interest rate than the recognised interest rate referred to in Article 19 of this Act, and interest on the surplus of loans referred to in Article 32 of this Act.

Article 75

Unofficial and unauthorized translation 28 (Inclusion of withholding tax in the tax base) (1) A resident receiving income from which tax is withheld subject to the provisions of this Chapter shall include the income in his/her tax base prior to reducing it by the tax withheld. (2) A non-resident receiving income from which tax is withheld subject to the provisions of this Chapter with regard to activity and/or business performed in or through a business unit located in Slovenia shall include the income in his/her tax base prior to reducing it by the tax withheld.

(3) The taxpayer’s liability referred to in the first and second paragraphs of this Article relating to the payment of tax on the basis of the tax return for an individual tax period shall be reduced by the paid amount of the tax withheld, in the manner laid down in this Act or the Act regulating tax procedure. XIII. SPECIFIC PROVISION Article 76 (Detailed regulations) Detailed regulations on the implementation of this Act shall be prescribed by the Minister responsible for finance. XIV. TRANSITIONAL PROVISIONS Article 77 (Application of the provisions of the Corporate Profit Tax Act and Corporate Income Tax Act relating to relief) (1) A taxpayer with regard to whom the time limits subject to Article 40 of the Corporate Profit Tax Act (Uradni list RS, No 14/03-official consolidated text) started to run prior to the date of application of this Act shall, as regards those time limits and/or consequences related to those time limits, be treated in compliance with the present regulations.

(2) A taxpayer with regard to whom the time limits subject to Articles 49 and 50 of the Corporate Income Tax Act (Uradni list RS, No 33/06-official consolidated text) started to run prior to the date of application of this Act shall, as regards those time limits and/or consequences related to those time limits, be treated in compliance with the present regulations. Article 78 (Application of the provisions of the Corporate Income Tax Act relating to relief applicable to employment) A taxpayer who, as at the date of application of this Act, has the right to reduce the tax base subject to the first and second paragraphs of Article 50 of the Corporate Income Tax Act (Uradni list RS, No 33/06 – official consolidated text) may reduce the tax base by the end of the period of 12 months subject to Article 50 of the Corporate Income Tax Act (Uradni list RS, No 33/06 – official consolidated text).

Article 79 (Accounting of inventories) A taxpayer accounting inventories pursuant to Article 24 of the Corporate Income Tax Act (Uradni list RS, No 33/06 – official consolidated text) may select a different method of inventory accounting as at the day this Act applies.

Article 80 (Changes in depreciation rates) With taxpayer who started to depreciate tangible fixed assets and intangible long-term assets prior to the date of application of this Act, the depreciation of those tangible fixed assets and intangible long-term assets up to the final depreciation in an amount subject to Articles 15, 16 and 17 of the Corporate Profit Tax Act (Uradni list RS, No 14/03 – official consolidated text) or Article 26 of the Corporate Income Tax Act (Uradni list RS, No 33/06 – official consolidated text) shall be recognised as expenses.

Article 81 (Application of Article 32 of this Act)

Unofficial and unauthorized translation 29 (1) Interest not recognised as expenses as referred to in Article 32 of this Act shall be interest on loans accrued after the date of application of the Corporate Income Tax Act (Uradni list RS, No 33/06 – official consolidated text). (2) Notwithstanding the provision of Article 32 of this Act, interest not recognised as expenses shall be the interest on the loans other than those raised by banks and insurance undertakings received by a shareholder who, at any point in the tax period concerned, directly or indirectly holds at least 25% of shares or holdings in the capital or voting rights of the taxpayer, provided that at any point in the tax period concerned those loans exceed: 1.

In the first year after the date of application of this Act, a factor of eight; 2. In the second, third and fourth year, a factor of six; 3. And in the fifth year, a factor of five times the amount of this shareholder's holding in the taxpayer’s capital, established with regard to the amount and period of duration of the surplus of loans in the tax period concerned.

Article 82 (Application of the provisions of the Corporate Profit Tax Act and the Corporate Income Tax Act relating to the taxation of transfer of assets and liabilities, exchanges of shares and mergers and divisions) (1) With regard to the taxation of transfer of assets and liabilities, exchanges of shares, and mergers and divisions subject to Articles 38 to 54 of this Act, transfer of assets and liabilities, exchanges of shares, and mergers and divisions shall not be deemed events which, pursuant to Article 40 of the Corporate Profit Tax Act (Uradni list RS, No 14/03– official consolidated text) and Articles 49 and 50 of the Corporate Income Tax Act (Uradni list RS, No 33/03 – official consolidated text) result in a situation in which the taxpayer must increase the tax base in the year in which such an event is recorded for the amount of tax relief exercised.

Tax relief and conditions shall be taken into account that would apply if there were no transfer of assets and liabilities, exchange of shares, merger or division.

(2) The provisions of the Corporate Profit Tax Act (Uradni list RS, No 14/03 – official consolidated text) and the Corporate Income Tax Act (Uradni list RS, No 33/06 – official consolidated text), which are regulated by a transitional regulation, shall, with regard to the taxation of transfer of assets and liabilities, the exchange of shares and mergers and divisions subject to Articles 38 to 54 of this Act, be taken into account in such a manner that would apply if there were no transfer of assets and liabilities, exchange of shares, merger or division. Article 83 (Application of Article 20 of this Act) The provisions of the third paragraph of Article 20 of this Act shall also apply for the provisions subject to Articles 16 and 27 of the Corporate Income Tax Act (Uradni list RS, No 33/06 – official consolidated text) that were created prior to the date of application of this Act and subject to Article 23 of the Corporate Profit Tax Act (Uradni list RS, No 14/03 – official consolidated text).

Article 84 (Previous losses) Losses from tax periods from 2000 to 2006 may be covered pursuant to Article 36 of this Act, except losses that were not covered pursuant to the fifth paragraph of Article 29 of the Corporate Income Tax Act (Uradni list RS, No 33/06 – official consolidated text). Article 85 (Application of Article 70 of this Act) (1) The provisions of Article 70 of this Act shall not apply to the payments set out in points 2 to 6 of the first paragraph of Article 70 of this Act which are accounted for periods prior to 1 January 2005. (2) The provisions of Article 68 of the Corporate Income Tax Act (Uradni list RS, No 33/06 – official consolidated text) shall be applied for the payments set out in points 2 to 5 of the first paragraph of Article 68 of the Corporate Income Tax Act (Uradni list RS, No 33/06 – official consolidated text) which are accounted for periods prior to the date of application of this Act, even if they are paid after the date of application of this Act.

(3) The provisions of Article 70 of this Act shall not apply to the payments set out in points 2 to 6 of the first paragraph of Article 70 of this Act which are accounted for periods prior to 1 January 2007 (prior to the date of application of this Act). Article 86 (Application of Article 65 (c) of the Corporate Profit Tax Act)

Unofficial and unauthorized translation 30 The provision of Article 65 (c) of the Corporate Profit Tax Act (Uradni list RS, No 14/03 – official consolidated text), which specifies that the tax base shall be reduced by the interest charged on long-term and short-term securities issued prior to 8 April 1995 by Slovenia, municipalities or public companies established by Slovenia or municipalities, not to exceed the amount of the tax base, shall also apply following the application of this Act.

Article 87 (Selected tax period and transition to the selected tax period) (1) In the transition to a tax period that differs from the calendar year, the taxpayer’s income in the tax period that is the period form the end of the calendar year to the beginning of the next tax period that differs from the calendar year shall be taxed as if it were a whole tax period.

(2) In the transition to a tax period that does not differ from the calendar year, the taxpayer’s income in the tax period that is the period form the end of the tax period that differs from the calendar year to the beginning of the next tax period that does not differ from the calendar year shall be taxed as if it were a whole tax period. (3) The taxpayer’s income in the period of the transition from a tax period that differs from the calendar year to another tax period that also differs from the calendar year shall be taxed in the manner from the first and the second paragraphs of this Article.

(4) The provision of the third paragraph of Article 10 of this Act shall also apply to taxpayer’s that, in 2005 and 2006, opted for a tax period that differs from the calendar year. Article 88 (Application of the provisions of Article 6 of this Act relating to a permanent establishment) A construction site, a project involving construction, assembly or mounting, or the related supervision, shall be considered a business unit of a non-resident if the construction site was created or work began prior to the date of application of this Act and if the activities or business last longer than the period set out in Article 6 of this Act.

Article 89 (Group taxation until the end of a period) Taxpayers that determine tax based on group taxation in accordance with point a) or b) of Article 81 of the Corporate Income Tax Act (Uradni list RS, No 33/06 – official consolidated text) may continue in this manner until the end of the period for which permission for group taxation was issued in accordance with Article 81 of the Corporate Income Tax Act (Uradni list RS, No 33/06 – official consolidated text) pursuant to Article 200 of the Tax Procedure Act (Uradni list RS, No 18/96, 78/96, 87/97, 35/98, 76/98, 82/98, 91/98, 1/99, 108/99, 37/01, 97/01, 52/02, and 33/03) or pursuant to Articles 63 to 67 of the Corporate Income Tax Act (Uradni list RS, No 33/06 – official consolidated text).

Article 90 (Application of Article 18) A taxpayer that, prior to the date of application of this Act, exempted dividends or other shares in profit from the tax base and treated this exemption pursuant to the third paragraph of Article 18 of the Corporate Income Tax Act (Uradni list RS, No 33/06 – official consolidated text) shall, with regard to the duration of the participation set out in point 2 of the first paragraph of Article 18 and the bank guarantee set out in the third paragraph of the same Article of the same Act, be treated pursuant to the third paragraph of Article 18 of the Corporate Income Tax Act (Uradni list RS, No 33/06 – official consolidated text).

Article 91 (Transitional period for taxation of the transfer of assets and liabilities, exchanges of shares, mergers and divisions) Taxpayers that were issued permission pursuant to Articles, 35, 40 and 47 of the Corporate Income tax Act (Uradni list RS, No 33/06 – official consolidated text) prior to the date of application of this Act, with regard to rights, conditions and other treatment in connection with transactions for which the permission was issued, shall be treated pursuant to the provisions of Articles 30 to 48 of the Corporate Income tax Act (Uradni list RS, No 33/06 – official consolidated text).

Article 92 (Transitional period with regard to participation pursuant to Article 71 of this Act) Notwithstanding the provisions of point 1 of the first paragraph of Article 71 of this Act, a rate of 15% shall be

Unofficial and unauthorized translation 31 applied until 31 December 2008. Article 93 (Transition to a new accounting method) For taxpayers that, on the day of or on the day following the application of this Act, change the method of compiling financial statements during the transitions defined by the Act regulating companies or other Act that defines the transition to a different method of compiling financial statements, and for taxpayers that, prior to the date of application of this Act, change the method of compiling financial statements during the transitions defined by the Act regulating companies or other Act that defines the transition to a different method of compiling financial statements, the transitional provision of Article 14 of the Act Amending the Corporate Income Tax Act (Uradni list RS, No 108/05) shall also be applied following the date of application of this Act.

Article 94 (Tax rate for investment funds) Notwithstanding the first paragraph of Article 61 of this Act, for investments funds subject to taxation pursuant to this Act that were established pursuant to the Act regulating investment funds and fund management companies, the transitional provision of the second paragraph of Article 16 of the Act Amending the Corporate Income Tax Act (Uradni list RS, No 108/05) shall also be applied following the date of application of this Act. Article 95 (Application of Article 15 of the Corporate Income Tax Act) (1) Article 15 of the Corporate Income Tax Act (Uradni list RS, No 33/06 – official consolidated text) shall be applied for interest on loans given to or received from associated enterprises that were concluded prior to the date of application of this Act.

(2) Without prejudice to the first paragraph of this Article, in establishing revenue and expenses relating to interest on loans given to and received from associated enterprises and concluded prior to the date of application of this Act, interest charged up to the level of the most recently published, known and recognized interest rate at the time of interest calculation shall be taken into consideration, if interest is calculated on a monthly basis and a flexible interest rate has been agreed, or up to the level of the average monthly recognized interest rate, if the interest is calculated for a period exceeding one month, however, this period shall not exceed one year.

(3) Without prejudice to the first paragraph of this Article, in establishing revenue and expenses relating to interest on loans given to and received from associated enterprises and concluded prior to the date of application of this Act, the first and second paragraphs of Article 19 of this Act may apply to interest charged for the periods from 7 June 2008 onwards. Article 96 (Application of Article 17 of the Corporate Income Tax Act) For revaluation expenses as set out in Article 17 of the Corporate Income Tax Act (Uradni list RS, No 33/06 – official consolidated text) that were not recognised in periods prior to the date of application of this Act in accordance with the first and second paragraphs of Article 17 of the Corporate Income Tax Act (Uradni list RS, No 33/06 – official consolidated text), the provisions of the second and third paragraphs thereof regarding the reversal of impairments and the recognition of these expenses shall also be applied following the date of application of this Act.

Article 97 (Application of Article 60 of this Act) Notwithstanding Article 60 of this Act, tax shall be paid at the rates of 23%, 22% and 21% of the tax base for 2007, 2008 and 2009, respectively. Article 98 (Provisions during transition to a new accounting method) (1) During the transition to a new method of compiling financial statements, including the transition to a new method of compiling financial statements pursuant to Article 14 of the Act Amending the Corporate Income Tax Act (Uradni list RS, No 108/05), the additional creation or elimination of provisions for pensions, jubilee benefits and termination benefits shall be considered changes to the accounting policies of the taxpayer pursuant to Article 14 of this Act.

(2) The provision of the previous paragraph of this Article shall also be applied during the compiling of the

Unofficial and unauthorized translation 32 2006 tax return. XV. FINAL PROVISIONS Article 99 (Cessation of validity) (1) The Corporate Income Tax Act (Uradni list RS, No 40/04, 70/04 [amended], 139/04, 17/05 [official consolidated text], 108/05 and 33/06 – official consolidated text) and the following regulations issued on the basis thereof: – Rules on the Implementation of the Corporate Income Tax Act (Uradni list RS, No 49/04), – Rules on the Recognised Rate of Interest (Uradni list RS, No 130/04 and 142/04), – Rules on the Fixing of Comparable Market Prices (Uradni list RS, No 130/04), and the – Rules on Claiming Tax Relief for Investments in Research and Development (Uradni list RS, No 79/06) shall cease to be in force on the day this Act enters into force and shall be applied until 31 December 2006.

(2) On the date of the application this Act, the second and third paragraphs of Article 18 of the Financial Operations of Companies Act (Uradni list RS, No 54/99, 110/99, 50/02 and 93/02), in the part relating to the creation of reserves and to taxpayers under this Act, shall cease to be in force. Article 100 (Entry into force and application) (1) This Act shall enter into force on the day following its publication in the Uradni list RS and shall be applied as of 1 January 2007, except the following: – The provision of the first paragraph of Article 55 of this Act in the part that defines regional relief, which shall enter into force on the day the European Commission approves the relief scheme, and – The sixth paragraph of Article 25 and the fourth paragraph of Article 61 of this Act, which shall enter into force on the day the European Commission approves the state aid scheme.

(2) The Minister responsible for finance shall publish the date of entry into force and application of the relief referred to in the first paragraph of this Article in the Uradni list RS. The Act Amending the Corporate Income Tax Act – ZDDPO-2A (Uradni list RS, No. 56/08) contains the following transitional and final provisions: TRANSITIONAL AND FINAL PROVISIONS Article 4 – observance of ZDavP-2B (ceased to be valid) Article 5 This Act shall enter into force on the day following its publication in Uradni list Republike Slovenije. The Act Amending the Corporate Income Tax Act – ZDDPO-2B (Uradni list RS, No.

76/08) contains the following transitional and final provisions: TRANSITIONAL AND FINAL PROVISIONS Article 2 Notwithstanding the provisions referred to in the second paragraph of Article 55a of this Act, the taxpayer may claim for the year 2008 the reduction of the tax base for investments into freight motor vehicles with motors complying with at least EURO V emission standards pursuant to Article 55a.

Article 3 This Act shall enter into force on the day following its publication in the Uradni list Republike Slovenije and shall apply from 1 January 2008. The Act Amending the Corporate Income Tax Act – ZDDPO-2C (Uradni list RS, No. 5/09) contains the

Unofficial and unauthorized translation 33 following transitional and final provisions: Article 2 This Act shall apply for tax returns for the year 2008, for investments made from 1 January 2008. Article 3 Notwithstanding the provisions referred to in the second paragraph of Article 55a of this Act, the taxpayer may claim for the year 2008 the reduction of the tax base for investments into buses with motors complying with at least EURO IV emission standards pursuant to Article 55a.

Article 4 Notwithstanding the provisions referred to in the second paragraph of Article 55a of this Act, the taxpayer may claim for the years 2009 and 2010 the reduction of the tax base for investments into buses with motors complying with at least EURO IV emission standards and into freight motor vehicles with motors complying with at least EURO V emission standards pursuant to Article 55a.

Article 5 This Act shall enter into force on the day following its publication in the Uradni list Republike Slovenije. The Act Amending the Corporate Income Tax Act –ZDDPO-2D (Uradni list RS, No. 96/09) shall contain the following transitional and final provision: TRANSITIONAL AND FINAL PROVISION Article 2 (Procedural provision) (1) Taxpayers who claim a change in the tax treatment of interest pursuant to the second or third paragraph of Article 95 of this Act may request a tax refund if their tax liability was reduced due to the changed tax treatment. (2) Taxpayers shall request a tax refund under the first paragraph of this Article by way of a special adjustment of the tax return for that purpose, which must be submitted, irrespective of the periods laid down in the law governing the tax procedure, no later than 31 March 2010.

Article 3 (Entry into force) This Act shall enter into force on the day following its publication in the Uradni list Republike Slovenije. The Act Amending the Corporate Income Tax Act –ZDDPO-2E (Uradni list RS, No. 43/10) shall contain the following final provision: FINAL PROVISION Article 4 This Act shall enter into force on the day following its publication in Uradni list Republike Slovenije. The amended first paragraph of Article 55 of this Act and the new Article 55b shall apply as from 1 January 2010.

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