New US-Sweden Tax Treaty Set To Take Effect

by Mike Godfrey, Tax-News.com, Washington

09 August 2006

The United States Treasury Department has announced that the protocol amending the income tax treaty between the United States and Sweden will enter into force August 31, 2006.

The protocol amends the existing US/Sweden tax treaty, which was concluded in 1994, and takes into account developments over the last decade. The protocol provides for the elimination of source-country withholding taxes on certain intercompany dividends and certain dividends paid to pension funds. The protocol also reflects a modernization of the anti-treaty shopping rules.

The United States and Sweden signed the protocol at a ceremony at the State Department on September 30, 2005. The United States Senate gave advice and consent to ratification of the protocol on March 31, 2006.

With the entry into force of the protocol on August 31, 2006, the protocol generally will be effective for taxable periods beginning on or after January 1, 2007. The provisions of the protocol relating to withholding taxes will be effective for amounts paid or credited on or after October 1, 2006.

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