Double Taxation Avoidance Treaties and Agreements in Sweden
Double Tax Treaties in SwedenUpdated on Monday 27th September 2021
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Double taxation can be defined as the imposition of comparable taxes by two (or more) jurisdictions for the same income or taxable capital.
In the international context, double taxation may arise as a consequence of double residency or as a consequence of taxation in both state of residence and the source state.
Regarding dual tax residence, double taxation may be caused by dual standards. For example, a company may be considered resident for tax purposes in a Member State where it is legally registered and, simultaneously, in another Member State in which the principal activity is held. In this situation, the company may be required to pay tax on worldwide income from both Member States, thus paying tax twice on the same income.
Member States generally taxes non-resident taxpayers’ income from sources within their territories. This withholding tax may overlap global taxation in the State of residence of the taxpayer.
Thus, the conventions for the avoidance of double taxation can be defined as the willingness of states to clarify, standardize and confirm the fiscal situation of taxpayers who are engaged in commercial, industrial, financial or any other activities in other countries, by applying unitary solutions of double taxation for all Member States. We are at your service if you want to start a business in Sweden.
Usually all conventions for the avoidance of double taxation follows the same pattern:
- Description of the purpose of the Convention and the definition of terms used in more than one article of the Convention;
- Establish rules for income tax and capital gains and the methods to eliminate double taxation;
- Special provisions relating to amicable procedure, exchange of information, assistance in collection, members of diplomatic missions and consular posts, territorial expansion;
Under the Double Tax Treaties provisions the capital income taxation can be classified as:
- Income and capital gains may be taxed without any limitations in the source state and the state of residence is not entitled to tax;
- Income and capital gains may be subject to limited taxation in the source state and the residence state must pay a tax reduction;
-Income and capital gains are not taxed in the source state, but are taxed only in the state of residence.
Sweden has signed so far Double Tax Treaties with the following states: Albania, United States, Andorra, Anguilla, Argentina, Aruba, Australia, Bahamas, Bangladesh, Barbados, Belgium, Bermuda, Bolivia, Bosnia and Herzegovina, Botswana, Brazil, British Virgin Islands, Bulgaria, Canada, Cayman Islands, Chile, Cook Islands, Cyprus, Denmark, Egypt, Estonia, Philippines, Finland, France, Faroe Islands, Gambia, Gibraltar, Greece, Greenland, Guernsey, Hong Kong SAR, India, Indonesia, Iraq, Iran, Ireland, Iceland, Isle of Man, Israel, Italy, Jamaica, Japan, Jersey, Kazakhstan, Kenya, People's Republic of China, Korea, Kosovo, Croatia, Kuwait, Latvia, Lebanon, Liechtenstein, Lithuania, Luxembourg, Macedonia, Malaysia, Malta, Morocco, Mauritius, Mexico, Monaco, Montenegro, Namibia, Netherlands, Nigeria (agreement not yet in force), Norway, New Zealand, Oman, Pakistan, Peru (Agreement revoked from 1 January 2007), Poland, Portugal, Romania, Russia, Saint Christopher (Saint Kitts) and Nevis, Saint Vincent and Grenadines, Samoa, San Marino, Switzerland, Serbia, Singapore, Slovakia, Slovenia, Spain, Sri Lanka (Ceylon), United Kingdom, South Africa, South Korea, Taiwan, Tanzania, Thailand, Czech, Trinidad and Tobago, Tunisia, Turkey, Turks and Caicos Islands, Germany, Ukraine, Hungary, Uruguay, Venezuela, Vietnam, Belarus, Zambia, Zimbabwe, Austria.