Slovakia sets 2027 application dates for Montenegro treaty changes

The notice concerns the 2001 Slovakia–Federal Republic of Yugoslavia income and capital tax treaty, published as Notice 269/2002. Its continuation with Montenegro was confirmed by the succession protocol published as Notice 299/2015. This is a notice of modifications under the BEPS Multilateral Instrument, not a newly negotiated bilateral treaty.^[1][2][3][4]

In Slovakia, the modifications apply to withholding-tax events occurring on or after 1 January 2027. For other taxes, they apply to taxable periods beginning on or after 1 March 2027. The latter is a period-start test: a calendar-year period beginning in January 2027 does not meet it.^[1][5]

Anti-abuse and corporate residence

The notice revises the preamble and adds a principal-purpose test: a benefit can be denied where obtaining it was one principal purpose of an arrangement, unless granting it accords with the relevant provisions’ object and purpose. Dual-resident entities move from the original effective-management tie-breaker to competent-authority agreement, considering management, incorporation and other relevant factors; relief without agreement is limited to what the authorities allow.^[1][2][5]

Dividends and property-rich shares

For dividends, the original treaty’s 5% ceiling requires a beneficial-owner company, other than a partnership, directly holding at least 25% of the payer’s capital; otherwise the ceiling is 15%. The notice adds a 365-day ownership condition including the payment day, disregarding specified direct reorganisation-related ownership changes. Property-rich share or comparable-interest gains can be taxed where the property is located if the greater-than-50% value test was met during the preceding 365 days.^[1][2][5]

Permanent establishments and disputes

Permanent-establishment changes cover agents habitually playing the principal role in contracts routinely concluded without material modification, preparatory-or-auxiliary limits on activity exemptions, and anti-fragmentation. The project-splitting rule aggregates the enterprise’s own activity exceeding 30 days in total with connected activities by closely related enterprises, each exceeding 30 days, against the original treaty’s more-than-12-month construction threshold. A 30-day period does not itself become the general construction threshold.^[1][2][5]

The notice also adds corresponding transfer-pricing adjustments and requires mutual-agreement outcomes to operate despite domestic time limits. Groups should therefore review distributions, residence, sales arrangements and project timelines against the modified treaty, rather than applying the original provisions alone. The dates above describe Slovakia’s notified application, not a separately verified Montenegro-side timetable.^[1][2][5]