What is the difference between tax residence for individuals and companies?

Limited liability company

Limited liability company (LLC, in Slovenian d.o.o.) owners have the possibility to keep separated their personal and company tax residency. European citizens can, therefore, have their personal residency in their home country, while deciding to start a business in Slovenia and have their company’s tax residency moved there.

A practical example: a company situated in Slovenia will be required to pay Slovenian taxes according to Slovenian legislation. On the other hand, an Italian citizen owning a business in Slovenia, will be by keeping his/her personal tax residency in Italy required to pay Italian taxes only in case the Slovenian company pays him/her out the profit or in case he/she is receiving a salary in Italy. However, if the company consist of one only associate and presumably has a Slovenian employee taking care of the administration, will still have to present a tax declaration while the ownership of the Slovenian company’s quotas will not be subject to taxation in Italy.

Sole-trader business

The above mentioned example, however, does not apply to the sole-trader business (partnership), where having different personal and business tax residency is not allowed. Foreign entrepreneurs are first required to have a personal residency in Slovenia and only then they are allowed to apply for the tax residency of the company.

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