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India-Sweden Double Taxation Avoidance Agreement (DTAA)

The Double Taxation Avoidance Agreement (DTAA) between the Republic of India and the Kingdom of Sweden aims to prevent double taxation and fiscal evasion with respect to taxes on income and capital. The agreement was initially signed on June 24, 1997, and has been updated through an amending protocol, primarily replacing articles related to the exchange of information. This update facilitates the sharing of banking details and tax-related information between India and Sweden.

Applicability of the DTAA

The DTAA applies to the following taxes in the contracting states:

In India:

  • Income tax, including any surcharge.
  • Tax on capital (wealth tax).

In Sweden:

  • Income tax, including national income tax (den statliga inkomstskatten), tax on employees at sea (sjömansskatten), and withholding tax on dividends (kupongskatten).
  • Income tax on non-residents (den särskilda inkomstskatten för utomlands bosatta).
  • Income tax on non-resident artistes and athletes (den särskilda inkomstskatten för utomlands bosatta artister m.fl.).
  • Municipal income tax (den kommunala inkomstskatten).
  • Tax on means intended for expansion purposes (expansionsmedelsskatt).
  • Net wealth tax.

Key Takeaways

Here are some key takeaways from the India-Sweden DTAA:

  1. Taxation of Income from Immovable Property: Income derived by a resident from immovable property, including income from agriculture or forestry, situated in the other state may be taxed in that other state.
  2. Taxation of Business Profits: Profits of an enterprise are taxable in the state where the business is carried on, unless the enterprise operates through a permanent establishment. In such cases, profits may be taxed in the other state but only to the extent attributable to the permanent establishment.
  3. Taxation of Specific Incomes: The DTAA covers taxation of profits earned through the operation of ships or aircraft in international traffic, dividends, capital gains, interests, and royalties for technical services.
  4. Taxation of Artists and Sports Persons: Artists and sports persons resident in one state, deriving income from the other state, shall be taxable in the other state based on their personal activity as an artist or sportsperson.
  5. Withholding Tax Rates: The DTAA sets a 10% withholding tax rate on dividends, interests, royalties, and fees for technical services. Exceptions are granted for dividends and interests earned by the government and specific institutions. 

Inference and Benefits

The DTAA ensures that the tax laws of each state continue to govern the taxation of income within their respective jurisdictions. However, any provisions contrary to the DTAA will be overridden. The agreement also allows direct communication between the states to reach an agreement in case of disputes related to the provisions of the DTAA.

Overall, the India-Sweden DTAA aligns with internationally accepted standards and, with the amending protocol, allows the use of information for non-tax purposes under the domestic laws of both countries, provided the supplying state’s approval is obtained.

For expert legal advice on matters related to the India-Sweden Double Taxation Avoidance Agreement or any other international tax issues, please reach out to [Your Law Firm Name]. Our legal team specializes in international tax law and is committed to delivering high-quality legal services tailored to your specific needs. We are dedicated to providing comprehensive legal support and ensuring your satisfaction. If you have any questions or require assistance with legal matters, please do not hesitate to contact us. We are here to offer professional and dedicated service.

To know more about DTAA relations between India and Sweden, please download our Guide.

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