prop · GM0382 · 1999-01-01 00:00:00 — The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the interest, being a resident of a , on business in the other in which the interest arises, through a permanent situated therein, or performs in that other State independent personal servi- ces from a fixed base situated therein, and the debt-claim in respect of which the interest is paid is effectively connected with such permanent or fixed base. In such case, the provisions of Article 7 (Business profits) or Article 14 (Independent personal services), as the case may be, shall apply. Interest shall be deemed to arise in a when the payer is that State itself, a political subdivision, a local authority or a resident of that State. Where, however, the person paying the interest, whether he is a resident of a or not, has in a a permanent or a fixed base in connection with which the indebtedness on which the interest is paid was incurred, and such interest is borne by such perma- nent or fixed base, then such interest shall be deemed to arise in the State in which the permanent or fixed base is situated. Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the interest, having regard to the debt-claim for which it is paid, exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In such case, the excess part of the payment shall remain taxable according to the laws of each , due regard being had to the other provisions of this Convention. Royalties arising in a Con- tracting State and paid to a resident of the other may be taxed in that other State. However, such royalties may also be taxed in the in which they arise and according to the laws of that State, but if the beneficial owner of the royalties is a resident of the other , the tax so charged shall not exceed 15 per cent of the gross amount of the royalties. The term royalties as used in this Article means payments of any kind received as a con- sideration for the use of, or the right to use, any copyright of literary, artistic or scientific work including cinematograph films and films or tapes for television or radio broadcasting, any patent, trade mark, design or model, plan, secret formula or process, or for information concerning industrial, commercial or scientific experi- ence. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the royalties, being a resident of a , on business in the other in which the royalties arise, through a permanent situated therein, or performs in that other State independent personal servi- ces from a fixed base situated therein, and the right or property in respect of which the royalties are paid is effectively connected with such permanent establish- ment or fixed base. In such case, the provisions of Article 7 (Business profits) or Article 14 (Independent personal services), as the case may be, shall apply. Royalties shall be deemed to arise in a when the payer is that State itself, a political subdivision, a local authority or a resident of that State. Where, however, the person paying the royalties, whether he is a resident of a or not, has in a a permanent or a fixed base in connection with which the obligation to pay the royalties was incurred, and such royalties are borne by such permanent or fixed base, then such royalties shall be deemed to arise in the in which the permanent establish- ment or fixed base is situated. Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the royalties, having regard to the use, right or information for which they are paid, exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In such case, the excess part of the payments shall remain taxable according to the laws of each , due regard being had to the other provisions of this Convention. Gains derived by a resident of a from the alienation of immovable property referred to in Article 6 (Income from immovable property) and situated in the other may be taxed in that other State. Gains from alienation of movable property forming part of the business property of a permanent which an enterprise of a has in the other or of movable property pertaining to a fixed base available to a resident of a in the other for the purpose of performing indepen- dent personal services, including such gains from the alienation of such permanent (alone or with the whole enter- prise) or of such fixed base, may be taxed in that other State. Gains derived by a resident of a from the alienation of ships or aircraft operated in international traffic or gains from the alienation of movable property pertaining to the operation of such ships or aircraft, shall be taxable only in that State. With respect to gains derived by the air transport consortium (), the provisions of this paragraph shall apply only to such portion of the gains as corresponds to the participation held in that consortium by , the Swedish partner of Scandi- navian (). Gains from the alienation of shares of a company, the property of which consists principally of immovable property situated in a , may be taxed in that State. Gains from the alien- ation of an interest in a partnership or a trust, the property of which consists principally of immovable property situated in a , may be taxed in that State. Gains from the alienation of any property other than that referred to in paragraphs 1, 2, 3 and 4 shall be taxable only in the of which the alienator is a resident. Notwithstanding the provi- sions of paragraph 5, gains from the alienation of any property derived by an individual who has been a resident of a and who has become a resident of the other , may be taxed in the first- mentioned State if the alienation of the property occurs at any time during the ten years next following the date on which the individual has ceased to be a resident of the first-mentioned State. Income derived by a resident of a in respect of professional services or other acti- vities of an independent character shall be taxable only in that State. However, such income may be taxed in the other if: (a) he has a fixed base regularly available to him in that other for the purpose of performing his activities, or (b) he is present in that other State for a period or periods aggregating 183 days within any 12 month period, but only so much of the income as is attributable to the fixed base or to activities performed in that other State, respectively. The term professional servi- ces includes especially indepen- dent scientific, literary, artistic, educational or teaching activities as well as the independent activities of physicians, lawyers, engineers, architects, dentists and accountants. Subject to the provisions of Articles 16 (Directors fees), 18 (Pensions and social security pay- ments), 19 (Government service) and 20 (Students and apprentices), salaries, wages and other similar remuneration derived by a resident of a in respect of an employment shall be taxable only in that State unless the employment is exercised in the other . If the employment is so exercised, such remuneration as is derived there- from may be taxed in that other State. Notwithstanding the provi- sions of paragraph 1, remuneration derived by a resident of a Con- tracting State in respect of an employment exercised in the other be taxable only in the first-mentioned State if: (a) the recipient is present in the other State for a period or periods not exceeding in the aggregate 183 days in any twelve month period commencing or ending in the fiscal year concerned, and (b) the remuneration is paid by, or on behalf of, an employer who is not a resident of the other State, and (c) the remuneration is not borne by a permanent or a fixed base which the employer has in the other State. Notwithstanding the preced- ing provisions of this Article, remuneration derived in respect of an employment exercised aboard a ship or aircraft operated in inter- national traffic by an enterprise of a may be taxed in that State. Where a resident of derives remuneration in respect of an employment exer- cised aboard an aircraft operated in international traffic by the air transport consortium (), such remuneration shall be taxable only in . Directors fees and other similar payments derived by a resident of a in his capacity as a member of the board of directors of a company which is a resident of the other may be taxed in that other State. Notwithstanding the provi- sions of Articles 14 (Independent personal services) and 15 (Dependent personal services), income derived by a resident of a as an artiste, such as theatre, motion picture, radio or television artiste, or a musician, or as an athlete, from his personal activities as such exercised in the other , may be taxed in that other State. Where income in respect of personal activities of an artiste or an athlete in his capacity as such accrues not to that artiste or athlete himself but to another person, that income may, notwithstanding the provisions of Articles 7 (Business profits), 14 (Independent personal services) and 15 (Dependent per- sonal services), be taxed in the in which the activities of the artiste or athlete are exercised. The provisions of paragraphs 1 and 2 shall not apply to income derived from activities performed in a by artistes and athletes if the visit to that is substantially supported by public funds of the other , including any political subdivision, local authority or statutory body thereof. Pensions and social security payments Subject to the provisions of paragraph 2 of Article 19 (Govern- ment service), pensions and other similar remuneration paid to a resident of a in consideration of past employment shall be taxable only in that State. Notwithstanding the provi- sions of paragraph 1 of this Article and of paragraph 2 of Article 19 (Government service), payments received by an individual, being a resident of a , under the social security legis- lation of the other be taxable only in that other State. Notwithstanding the provi- sions of paragraph 1 of this Article, neither of the Contracting States shall be deprived of the right to tax its own nationals. (a) Remuneration, other than a pension, paid by a or a political subdivision or a local authority thereof to an indi- vidual in respect of services rendered to that State or subdivision or authority thereof, shall be taxable only in that State. (b) However, such remuneration shall be taxable only in the other if the services are rendered in that State and the individual is a resident of that State who: (i) is a national of that State; or (ii) did not become a resident of that State solely for the purpose of rendering the services. (a) pension paid by, or out of funds created by, a Con- tracting State or a political sub- division or a local authority there- of to an individual in respect of services rendered to that State or subdivision or local authority thereof shall be taxable only in that State. (b) However, such pension shall be taxable only in the other Con- tracting State if the individual is a resident of, and a national of, that State. The provisions of Articles 15 (Dependent personal services), 16 (Directors fees) and 18 (Pensions and social security payments) shall apply to remuneration and pen- sions in respect of services ren- dered in connection with a busi- ness carried on by a or a political subdivision or a local authority thereof. Payments which a student or business apprentice who is or was immediately before visiting a Con- tracting State a resident of the other and who is present in the first-mentioned State solely for the purpose of his education or training receives for the purpose of his maintenance, education or training shall not be taxed in that State, provided that such payments arise from sources outside that State. Items of income of a resident of a , wherever arising, not dealt with in the foregoing Articles of this Con- vention shall be taxable only in that State. The provisions of paragraph 1 shall not apply to income, other than income from immovable property as defined in paragraph 2 of Article 6 (Income from immovable property), if the re- cipient of such income, being a resident of a , on business in the other through a per- manent situated therein, or performs in that other State independent personal servi- ces from a fixed base situated therein, and the right or property in respect of which the income is paid is effectively connected with such permanent or fixed base. In such case the provisions of Article 7 (Business profits) or Article 14 (Independent personal services), as the case may be, shall apply. Notwithstanding the provi- sions of paragraphs 1 and 2, items of income of a resident of a not dealt with in the foregoing Articles of this Convention and arising in the other may be taxed in that other State. Elimination of double taxation In the , in accordance with the provisions and subject to the limitations of the laws of the , as may be amended from time to time without changing the general principles hereof, double taxation shall be avoided in the following : In accordance with the principles of this Convention, taxes paid or accrued under the laws of , whether directly or by deduction, in respect of income from sources within be allowed as a credit against tax subject to the following limi- tations: (i) the amount of credit in respect to the tax paid or accrued to not exceed the same pro- portion of taxes covered by the Convention against which such credit is taken, which the taxpayer s taxable income from sourc- es within bears to his entire taxable income for the same taxable year; and (ii) the total amount of the credit shall not exceed the same proportion of the taxes covered by the Con- vention against which such credit is taken, which the taxpayer s taxable income from sources without the bears to his entire taxable income for the same taxable year. In the case of a corporation owning directly or indirectly more than 50 per cent of the voting stock of a Swedish company from which it receives dividends in any taxable year, the also allow credit for the appropriate amount of taxes paid or accrued to by a Swedish company paying such dividends with respect to such profits out of which such dividends are paid. The deduction shall not, however, exceed that part of the income tax, as computed before the deduction is given, which is appropriate to the income which may be taxed in . In the case of , double taxation shall be avoided as follows: (a) Where a resident of derives income which under the laws of the and in accordance with the provisions of this Convention may be taxed in the , allow subject to the provisions of the laws of concerning credit for foreign tax (as it may be amended from time to time without changing the general prin- ciple hereof) as a deduction from the tax on such income, an amount equal to the tax paid in respect of such income. (b) Where a resident of derives income which, in accord- ance with the provisions of this Convention, shall be taxable only in the , may, when determining the graduated rate of Swedish tax, take into account the income which shall be taxable only in the . (c) Notwithstanding the pro- visions of sub-paragraph (a) of this paragraph, dividends paid by a company which is a resident of the to a company which is a resident of be exempt from Swedish tax accord- ing to the provisions of Swedish law governing the exemption of tax on dividends paid to Swedish companies by subsidiaries abroad. Nationals of a not be subjected in the other to any taxation or any requirement con- nected therewith, which is other or more burdensome than the taxation and connected require- ments to which nationals of that other in the same circumstance are or may be subjected. This provision shall, notwithstanding the provisions of Article 1 (Personal scope), also apply to persons who are not residents of one or both of the Contracting States. The taxation on a permanent which an enterprise of a has in the other not be less favourably levied in that other State than the taxation levied on enterprises of that other State carrying on the same activities. This provision shall not be construed as obliging a Con- tracting State to grant to residents of the other any personal allowances, reliefs or reductions for taxation purposes on account of civil status or family responsibilities which it grants to its own residents. Except where the provisions of paragraph 1 of Article 9 (Asso- ciated enterprises), paragraph 7 of Article 11 (Interest), or paragraph 6 of Article 12 (Royalties), apply, interest, royalties and other dis- bursements paid by an enterprise of a to a resident of the other , shall, for the purpose of deter- mining the taxable profits of such enterprise, be deductible under the same conditions as if they had been paid to a resident of the first- mentioned State. Similarly, any debts of an enterprise of a to a resident of the other , for the purpose of determining the taxable capital of such enterprise, be deductible under the same con- ditions as if they had been contracted to a resident of the first- mentioned State. Enterprises of a , the capital of which is or partly owned or controlled, directly or indirectly, by one or more residents of the other , shall not be subjected in the first-mentioned State to any taxation or any requirement connected therewith which is other or more burden- some than the taxation and connected requirements to which other similar enterprises of the first-mentioned State are or may be subjected. In this Article, the term taxation means taxes which are the subject of this Convention. Where a person considers that the actions of one or both of the Contracting States result or will result for him in taxation not in accordance with the provisions of this Convention, he may, irrespective of the remedies provided by the domestic law of those States, present his case to the competent authority of the of which he is a resident or, if his case comes under paragraph 1 of Article 23 (Non-discrimination), to that of the of which he is a national. The case must be presented within three (3) years from the first notification of the action which gives rise to taxation not in accordance with the pro- visions of the Convention. The competent authority shall endeavour, if the objection appears to it to be justified and if it is not itself able to arrive at a satisfactory solution, to resolve the case by mutual agreement with the com- petent authority of the other , with a view to the avoidance of taxation which is not in accordance with the Con- vention. agreement reached shall be implemented notwith- standing any time limits in the domestic law of the Contracting States. The competent authorities of the Contracting States shall endeavour to resolve by mutual agreement any difficulties or doubts arising as to the interpretation or application of the Convention. They may also con- sult together for the elimination of double taxation in cases not pro- vided for in this Convention. The competent authorities of the Contracting States may com- municate with each other directly for the purpose of reaching an agreement in the sense of the preceding paragraphs. The competent authorities of the Contracting States shall ex- change such information as is necessary for carrying out the provisions of this Convention or of the domestic laws of the Con- tracting States concerning taxes covered by the Convention insofar as the taxation thereunder is not contrary to the Convention. The exchange of information is not restricted by Article 1 (Personal scope). information received by a be treated as secret in the same as information obtained under the domestic laws of that State and shall be disclosed only to persons or authorities (including courts and administrative bodies) involved in the assessment or collection of, the enforcement or prosecution in respect of, or the determination of appeals in relation to, the taxes covered by the Convention. Such persons or authorities shall use the informa- tion only for such purposes. They may disclose the information in public court proceedings or in judicial decisions. In no case shall the provisions of paragraph 1 be construed so as to impose on a the obligation: (a) to carry out administrative measures at variance with the laws and administrative practice of that or of the other Contracting State; (b) to supply information which is not obtainable under the laws or in the normal course of the administration of that or of the other Contracting State; (c) to supply information which would disclose any trade, business, industrial, commercial or pro- fessional secret or trade process, or information, the disclosure of which would be contrary to public policy. Diplomatic agents and consular officers Nothing in this Convention shall affect the fiscal privileges of diplomatic agents or consular officers under the general rules of international law or under the provisions of special agreements. Nothing in this Convention shall be construed as preventing the from taxing its nationals who may be residing in , in accordance with its domestic laws. However, no credit shall be given for taxes paid in pursuance thereto. Notwithstanding any other provisions of this Convention, where (a) a company that is a resident of a derives its income primarily from other States (i) from activities such as banking, , financ- ing or insurance, or (ii) from being the headquar- ters, co-ordination centre or similar entity providing administrative services or other support to a group of companies which carry on business primarily in other States; and (b) except for the application of the method of elimination of double taxation normally applied by that State, such income would bear a significantly lower tax under the laws of that State than income from similar activities carried out within that State or from being the headquarters, co- ordination centre or similar entity providing administrative services or other support to a group of companies which carry on busi- ness in that State, as the case may be, any provisions of this Con- vention conferring an exemption or a reduction of tax shall not apply to the income of such com- pany and to the dividends paid by such company. Each of the Contracting States shall notify the other of the com- pletion of the procedures required by its law for the entry into force of this Convention. The Convention shall enter into force on the thirtieth day after the receipt of the later of these notifications and its provisions shall have effect: (a) in respect of tax withheld at source, on amounts paid to non- residents on or after the first day of January in the calendar year next following that in which the Convention enters into force; (b) in respect of other taxes on income, for taxable years be- ginning on or after the first day of January in the calendar year next following that in which the Con- vention enters into force. The Convention concluded between the Republic of the and the Kingdom of for the avoidance of double taxation and the pre- vention of fiscal evasion with respect to taxes on income, signed at on 7 1987, shall terminate and cease to have effect on the dates on which this Convention shall take effect in accordance with the provisions of paragraph 2. This Convention shall remain in force until terminated by a Con- tracting State.