DT18059 - DT: Sweden: double taxation agreement, Article 10: Dividends
(1) Dividends derived from a company which is a resident of
Sweden by a resident of the United Kingdom shall be taxable only in
the United Kingdom if the beneficial owner is a resident of the
United Kingdom and is a company which controls directly or
indirectly at least 10 per cent of the voting power in the company
paying the dividends. In all other cases, dividends derived from a
company which is a resident of Sweden by a resident of the United
Kingdom may also be taxed in Sweden according to the laws of Sweden
but, provided that the beneficial owner is a resident of the United
Kingdom, the tax so charged shall not exceed 5 per cent.
(2) Dividends derived from a company which is a resident of
the United Kingdom by a resident of Sweden shall be taxable only in
Sweden if the beneficial owner is a resident of Sweden and is a
company which controls directly or indirectly at least 10 per cent
of the voting power in the company paying the dividends. In all
other cases, dividends derived from a company which is a resident
of the United Kingdom by a resident of Sweden may also be taxed in
the United Kingdom according to the laws of the United Kingdom,
but, provided that the beneficial owner is a resident of Sweden,
the tax so charged shall not exceed 5 per cent.
(3) However, as long as an individual resident in the United
Kingdom is entitled to a tax credit in respect of dividends paid by
a company resident in the United Kingdom the following provisions
of this paragraph shall apply instead of the provisions of
paragraph (2) of this Article:
(a)
(i) Dividends derived from a company which is a resident of the
United Kingdom by a resident of Sweden may be taxed in Sweden.
(ii) Where a resident of Sweden is entitled to a tax credit
in respect of such a dividend under sub-paragraph (b) of this
paragraph tax may also be charged in the United Kingdom, and
according to the laws of the United Kingdom, on the aggregate of
the amount or value of that dividend and the amount of that tax
credit at a rate not exceeding 15 per cent.
(iii) Where a resident of Sweden is entitled to a tax credit
in respect of such a dividend under sub-paragraph (c) of this
paragraph tax may also be charged in the United Kingdom, and
according to the laws of the United Kingdom, on the aggregate of
the amount or value of that dividend and the amount of that tax
credit at a rate not exceeding 5 per cent.
(iv) Except as provided in sub-paragraphs (a) (ii) and (a)
(iii) of this paragraph, dividends derived from a company which is
a resident of the United Kingdom by a resident of Sweden who is the
beneficial owner of those dividends shall be exempt from any tax
which is chargeable in the United Kingdom on dividends.
(b) A resident of Sweden who receives a dividend from a company
which is a resident of the United Kingdom shall, subject to the
provisions of subparagraph (c) of this paragraph and provided he is
the beneficial owner of the dividend, be entitled to the tax credit
in respect thereof to which an individual resident in the United
Kingdom would have been entitled had he received that dividend, and
to the payment of any excess of that tax credit over his liability
to United Kingdom tax.
(c) The provisions of sub-paragraph (b) of this paragraph
shall not apply where the beneficial owner of the dividend is, or
is associated with, a company which either alone or together with
one or more associated companies controls directly or indirectly at
least 10 per cent of the voting power in the company paying the
dividend. In these circumstances a company which is a resident of
Sweden and receives a dividend from a company which is a resident
of the United Kingdom shall, provided it is the beneficial owner of
the dividend, be entitled to a tax credit equal to one-half of the
tax credit to which an individual resident in the United Kingdom
would have been entitled had he received that dividend, and to the
payment of any excess of that tax credit over its liability to
United Kingdom tax. For the purpose of this subparagraph two
companies shall be deemed to be associated if one is controlled
directly or indirectly by the other, or both are controlled
directly or indirectly by a third company; and a company shall be
deemed to be controlled by another company if the latter controls
more than 50 per cent of the voting power in the first-mentioned
company.
(4) The term `dividends` as used in this Article means income
from shares or other rights, not being debt-claims, participating
in profits, as well as income from other corporate rights
assimilated to income from shares by the taxation law of the
Contracting State of which the company making the distribution is a
resident and also includes any other item which under the law of
the Contracting State of which the company paying the dividend is a
resident is treated as a dividend or distribution of a company.
(5) The provisions of paragraphs (1), (2) and (3) of this
Article shall not apply if the beneficial owner of the dividend,
being a resident of a Contracting State, carries on business in the
other Contracting State of which the company paying the dividends
is a resident, through a permanent establishment situated therein
or performs in that other State independent personal services from
a fixed base situated therein, and the holding in respect of which
the dividends are paid is effectively connected with such permanent
establishment or fixed base. In such a case, the provisions of
Article 7 or Article 14, as the case may be, shall apply.
(6) Where the company paying a dividend is a resident of the
United Kingdom and the beneficial owner of the dividend, being a
resident of Sweden, owns 10 per cent or more of the class of shares
in respect of which the dividend is paid, paragraphs (2) and (3) of
this Article shall not apply to the dividend to the extent that it
can have been paid only out of profits which the company paying the
dividend earned or other income which it received in a period
ending twelve months or more before the relevant date. For the
purposes of this paragraph the term `relevant date` means the date
on which the beneficial owner of the dividend became the owner of
10 per cent or more of the class of shares in question. Provided
that this paragraph shall not apply if the shares were acquired for
bona fide commercial reasons and not primarily for the purpose of
securing the benefit of this Article.
(7) Where a company which is a resident of a Contracting
State derives profits or income from the other Contracting State,
that other State may not impose any tax on the dividends paid by
the company, except insofar as such dividends are paid to a
resident of that other State or insofar as the holding in respect
of which the dividends are paid is effectively connected with a
permanent establishment or a fixed base situated in that other
State, nor subject the company's undistributed profits to a tax on
the company's undistributed profits, even if the dividends paid or
the undistributed profits consist wholly or partly of profits or
income arising in such other State.
