Hong Kong-Slovenia Double Tax Agreement: Lower Withholding

Hong Kong signed a double taxation agreement with Slovenia on 4 September 2026. The Secretary for Financial Services and the Treasury, Christopher Hui, signed for Hong Kong; Slovenia’s Ambassador to China signed for the other side. The Hong Kong-Slovenia double taxation agreement is the 60th tax treaty in Hong Kong’s network and the fifth the government has signed this year, and for once the headline numbers are worth reading closely: Slovenian withholding tax on dividends paid to Hong Kong residents falls from up to 25 per cent to a maximum of 10 per cent, and the rate on interest and royalties falls from up to 25 per cent to 5 per cent.

The trap sits in the timing. Signing does not switch the lower rates on. The Inland Revenue Department’s own release states the agreement “will come into force after completion of ratification procedures by both sides,” and until that happens the old Slovenian rates still apply to a Hong Kong recipient. Any finance or tax-reporting team with dividend, interest, or licensing flows between the two jurisdictions has a live question to answer: which rate governs the payment landing this quarter, and what has to be in place before the lower one can be claimed.

Related reading: Hong Kong Carried Interest Tax Concession Bill 2026

The dates that decide when relief starts

This is a thin announcement with a long tail, so the calendar matters more than the prose around it.

• 4 September 2026: agreement signed in Hong Kong, the 60th treaty in the network.
• Entry into force: after both Hong Kong and Slovenia complete their ratification procedures. No date is fixed yet.
• Force of law in Hong Kong: given effect by an order of the Chief Executive in Council under section 49(1A) of the Inland Revenue Ordinance (Cap. 112), laid before the Legislative Council for negative vetting.
• First period covered: Article 28 provides that Hong Kong tax applies for any year of assessment beginning on or after 1 April of the calendar year following the year in which the agreement enters into force. In Slovenia, the withholding-tax provisions apply to income derived on or after 1 January of that following calendar year, while the other income-tax provisions apply to taxable years beginning on or after that date. The actual calendar dates cannot be known until entry into force occurs.

Read that list as a build schedule, not a countdown. The section 49(1A) order is a Hong Kong internal-law step. Article 28 separately controls treaty entry into force and when its provisions have effect: entry into force occurs on the later completion notification, and Slovenia’s withholding provisions apply only from 1 January of the following calendar year.

What the Hong Kong-Slovenia double taxation agreement caps

Hong Kong does not levy withholding tax on dividends or interest. For Slovenian-source dividends paid to a Hong Kong resident beneficial owner, Article 10 caps source tax at 5 per cent of the gross amount where the beneficial owner is a company that directly holds at least 10 per cent of the payer’s capital throughout a 365-day period including the payment date, subject to the treaty’s corporate-reorganisation rule, and at 10 per cent in all other cases. Article 11 generally caps source tax on interest at 5 per cent, but specified government and public-sector beneficial owners are exempt. A Slovenian resident receiving Hong Kong dividends or interest remains outside any Hong Kong withholding charge.

Royalties are the symmetric case. Hong Kong can charge a non-resident recipient to profits tax on specified royalties and licence fees under section 15, including sums for the use of relevant intellectual property in Hong Kong and certain sums for use outside Hong Kong where the payment is deductible in ascertaining Hong Kong assessable profits. Under the non-resident collection rules, the Hong Kong payer must deduct at the time of payment or credit an amount sufficient to meet the tax due. The treaty’s 5 per cent ceiling therefore constrains both sides: a Slovenian licensor into Hong Kong and a Hong Kong licensor into Slovenia each gain a capped source-country rate. The dividend and interest caps are the headline rates; the royalty cap is the provision a cross-border licensing structure will need to model.

The double-counting problem the treaty exists to solve is handled on the Hong Kong side by a credit. The release confirms that tax a Hong Kong resident pays in Slovenia on the same income “will be allowed as a credit against the tax payable in Hong Kong,” subject to the Inland Revenue Ordinance. Article 22 allows credit for Slovenian tax only where it is paid under Slovenian law and in accordance with the agreement in respect of Slovenia-source income of a Hong Kong resident, and only against Hong Kong tax payable in respect of that same income. The credit cannot exceed the Hong Kong tax computed in respect of that income and remains subject to Hong Kong law.

Claiming the lower rate is a documentation exercise

The Article 10 to 12 source-tax limits are available only where the relevant treaty conditions are met, including the applicable residence and beneficial-ownership conditions, and treaty benefits remain subject to Article 27. For Slovenian relief at source, FURS requires the applicable pre-payment KIDO request: KIDO 1 for dividends, KIDO 2 for interest or KIDO 3 for royalties. The Slovenian payer may apply the treaty reduction or exemption only after the tax authority has confirmed the request. Hong Kong’s Inland Revenue Department issues a Certificate of Resident Status as evidence of Hong Kong residence only after the relevant DTA has become effective; its target processing time is 21 working days for a properly completed application.

Treaty eligibility cannot be inferred from group location alone. Article 4 expressly includes a company incorporated in Hong Kong as a Hong Kong resident; the ‘normally managed or controlled in Hong Kong’ test applies to a company incorporated outside Hong Kong. If a non-individual is resident in both jurisdictions, Article 4(3) requires the competent authorities to determine treaty residence by mutual agreement, and in the absence of agreement treaty relief is unavailable except to the extent they agree. Those are questions to settle against the treaty text and the department’s guidance once published, not on the assumption the lower rate applies because the counterparty is in Hong Kong.

Information exchange under the treaty runs on request

Hong Kong’s tax treaties carry an exchange-of-information article that lets the two tax administrations share taxpayer information to counter avoidance and evasion, and the Inland Revenue Department describes information exchange as a standing feature of its double taxation agreements. Article 25 provides for competent-authority exchange of foreseeably relevant information and expressly addresses information requested by one party from the other. Its scope is not confined to the income taxes listed in Article 2: paragraph 8 of the Protocol also applies Article 25 in Slovenia to inheritance and gift tax, value-added tax, excise duties and real-estate transaction tax.

The point most likely to be confused is the boundary between this article and automatic exchange. Treaty exchange of information on request is a different mechanism from the automatic exchange of financial account information under the Common Reporting Standard, which runs on its own legal footing and its own reporting obligations for financial institutions. A new Hong Kong-Slovenia treaty does not, by itself, create a fresh CRS obligation or a new account-reporting return; it adds a bilateral request channel between two revenue authorities. Within the EU, Council Directive 2011/16/EU provides a separate exchange-of-information-on-request mechanism between Member States under Article 5. DAC6 and DAC7 amend that administrative-cooperation framework but concern mandatory reporting and automatic exchange for reportable cross-border arrangements and platform-seller information respectively, rather than treaty-style exchange on request. Cross-border cooperation between the two financial systems also sits alongside supervisory channels such as the HKMA-MAS banking supervision arrangements, which serve a different purpose again.

Frequently Asked Questions

Can a Hong Kong company apply the 10 per cent dividend rate to a Slovenian dividend received now?

Not yet. The reduced rate depends on the treaty entering into force after both sides ratify, and then on the treaty’s own effective-date article. Until entry into force the existing Slovenian withholding rate applies, so a payment received in the current period is measured against the old rate.

Is this a new reporting obligation for financial institutions?

The treaty’s exchange-of-information article creates a request-based, competent-authority channel between the two tax administrations. That channel is distinct from the account-level automatic exchange that financial institutions file under the Common Reporting Standard. Institutions should keep those two regimes distinct in their controls.

What evidence supports a claim for the reduced Slovenian rates?

For the Article 10 to 12 source-tax limits, the relevant residence and beneficial-ownership conditions must be satisfied. A Hong Kong Certificate of Resident Status is evidence of Hong Kong residence, but Slovenian relief at source follows the FURS KIDO procedure: the applicable KIDO 1, KIDO 2 or KIDO 3 request must be made before payment, and the payer may use the treaty reduction or exemption only after tax-authority confirmation.

Related Articles

• Hong Kong Carried Interest Tax Concession Bill 2026: How Hong Kong is using tax measures to attract fund and investment activity.
• DAC6 Mandatory Disclosure Rules: The EU regime for reporting cross-border tax arrangements and the information it exchanges.
• DAC7 Reporting for Luxembourg Platform Operators: How platform operators report seller income into the EU exchange network.
• HKMA-MAS Banking Supervision MOU: A cross-border supervisory cooperation channel that sits alongside tax information exchange.

Key Takeaways

• Signing does not activate the lower rates. Under Article 28, the agreement enters into force on the date of the later written notification that each side has completed its required procedures, but Slovenia’s withholding provisions apply only to income derived on or after 1 January of the following calendar year. For dividends, Article 10 provides a 5% rate for a qualifying corporate beneficial owner meeting the 10%-for-365-days condition and 10% in all other cases; interest and royalties are generally capped at 5%, subject to the treaty’s specific interest exemptions and other article conditions.
• Until the agreement has entered into force and Article 28’s Slovenian effective date has been reached, apply the currently applicable Slovenian domestic treatment. Do not assume that every Slovenian tax amount is a Hong Kong profits-tax credit: Article 22 permits credit only against Hong Kong tax payable in respect of the same Slovenia-source income, subject to Hong Kong law and the treaty’s credit limit.
• Treaty-rate claims require the relevant residence and beneficial-ownership conditions to be met. Inland Revenue Department guidance states that it will issue a Hong Kong Certificate of Resident Status only after the relevant DTA has become effective, so do not assume that a certificate can be obtained in advance; build the Slovenian KIDO relief-at-source procedure and its tax-authority confirmation into the implementation plan.
• The treaty’s exchange-of-information article is a request-based, competent-authority channel. It does not generate a new CRS account-reporting obligation or any new return for financial institutions.

Sources and References

• Inland Revenue Department, press release “Hong Kong and Slovenia enter into tax pact” (4 September 2026): https://www.ird.gov.hk/eng/ppr/archives/26090401.htm
• Inland Revenue Department, overview of Hong Kong’s double taxation agreements: https://www.ird.gov.hk/eng/tax/dta_cdta.htm
• Inland Revenue Department, list of Hong Kong’s double taxation agreements concluded: https://www.ird.gov.hk/eng/tax/dta_inc.htm
• Financial Services and the Treasury Bureau, double taxation agreement policy page: https://www.fstb.gov.hk/en/treasury/general/comprehensive-avoidance-of-double-taxation-agreement.htm
• Legislative Council brief, order under section 49(1A) of the Inland Revenue Ordinance (Cap. 112) giving a double taxation agreement force of law: https://www.legco.gov.hk/yr10-11/english/subleg/brief/126_brf.pdf
• Financial Administration of the Republic of Slovenia (FURS), eDavki relief-at-source (KIDO) procedures: KIDO 1 (dividends), KIDO 2 (interest), KIDO 3 (royalties) and post-payment refund requests KIDO 9/10/11: https://edavki.durs.si
• Council Directive 2011/16/EU of 15 February 2011 on administrative cooperation in the field of taxation (DAC), OJ L 64, 11.3.2011, Article 5 (exchange of information on request): https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A32011L0016

What to watch before you claim the lower rate

The section 49(1A) order is a Hong Kong internal-law step, but it does not by itself activate the treaty rates. Under Article 28, the agreement enters into force on the later written notification that each side has completed its required procedures. Slovenia’s withholding provisions then have effect only for income derived on or after 1 January of the following calendar year, while the Hong Kong tax provisions have effect for years of assessment beginning on or after 1 April of that following calendar year. Until the Slovenian effective date is reached, apply the currently applicable Slovenian domestic treatment.

Disclaimer: The information on RegReportingDesk.com is for educational and informational purposes only. It does not constitute legal, regulatory, tax, or compliance advice. Always consult your compliance officer, legal counsel, or the relevant supervisory authority for guidance specific to your institution.