Corporate Tax 2010 - BMR Advisors

Chapter 44
Sweden
Nils Sköld
Kilpatrick Stockton Advokat KB
David Björne
1 General: Treaties
1.1 How many income tax treaties are currently in force in
Sweden
Sweden has an extensive network of tax treaties, with 86 income tax
treaties currently in force, including one uniform treaty with the
other Nordic countries (Finland, Denmark, Norway and Iceland).
1.2 Do they generally follow the OECD or another model
The Swedish treaties generally follow the OECD model. The credit
method has become the normal method for avoiding double
taxation. In recent treaties, the exemption method occurs less
frequently.
In addition to relief under applicable double taxation treaties, there
are many possibilities of gaining relief from double taxation under
Swedish international law. Thus, where no double taxation treaty
applies (or where the application of the treaty is less generous),
foreign taxes may be credited against Swedish tax to the extent
Swedish tax is attributable to foreign income (overall credit). As an
alternative, the foreign tax may be deducted as a cost.
2 Transaction Taxes
2.1 Are there any documentary taxes in Sweden
A stamp duty is levied upon the registration of new mortgage deeds
in real property.
See further question 2.5 below.
1.3 Do treaties have to be incorporated into domestic law
before they take effect
2.2 Do you have Value Added Tax (or a similar tax) If so, at
what rate or rates
Tax treaties have to be incorporated into Swedish law. The
government has the power to enter into double taxation treaties, but
the treaty has to be approved by the parliament. Following this
approval, a statute is enacted concerning each individual treaty.
1.4 Do they generally incorporate anti-treaty shopping rules (or
“limitation of benefits” articles)
No, the treaties do not generally incorporate anti-treaty shopping
rules.
1.5 Are treaties overridden by any rules of domestic law
(whether existing when the treaty takes effect or
introduced subsequently)
The treaties are valid as Swedish law following the enactment of the
incorporation statute. Their relationship with other domestic laws
is regulated by the incorporation statute. The general principle in
Swedish tax law has been that domestic tax law, whether existing or
subsequent to the incorporation statute, should be construed in
conformity with the treaty. However, the Supreme Administrative
Court has in a much debated judgment in 2008 stated that domestic
legislation may override a treaty according to the “lex posterior”
and “lex specialis” principles without prejudice of any obligations
Sweden may have under international law. It remains to be seen if
this will entail a permanent change of the application of Swedish
tax law in this respect.
ICLG TO: CORPORATE TAX 2010
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Sweden has VAT and its VAT legislation gives effect to the EC VAT
Directive. There are three VAT rates:
25% as a standard rate, which applies to all turnover of goods
and services if not otherwise stated;
12% on e.g. food and letting of rooms in hotel business; and
6% on e.g. books, newspapers, passenger transport, entrance
fees to cultural performances and the granting of transfer
rights to certain copyrighted works.
2.3 Is VAT (or any similar tax) charged on all transactions or
are there any relevant exclusions
The exclusions from VAT are as permitted or required by the EC
VAT Directive. They are, for example, banking and financial
services, letting and sale of real property, insurance services and
medical care. A property owner or a tenant may register for
optional VAT liability regarding permanent letting of business
premises to VAT-liable businesses.
2.4 Is it always fully recoverable by all businesses If not,
what are the relevant restrictions
Input VAT is recoverable only for VAT-liable business and to the
extent that the input VAT is attributable to the VAT-liable business.
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