CONVENTION

Between the Grand Duchy of Luxembourg and the Kingdom of Sweden

for the avoidance of double taxation and the prevention of fiscal evasion

with respect to taxes on income and on capital

 

The Government of the Grand Duchy of Luxembourg and the Government of the Kingdom of Sweden desiring to conclude a Convention for the Avoidance of Double Taxation and the Prevention of Fiscal tax evasion with respect to taxes on income and on capital

have agreed as follows:

Article 1

PERSONS COVERED

This Convention shall apply to persons who are resident of one or both of the Contracting States.

Article 2

TAXES TARGTED

1. The taxes to which the Convention shall apply are :

 

(a) in the case of Luxembourg: . 

 

(i) the personal income tax

(ii) the tax on the income of communities ;

(iii) the special tax on directors’ fees;

(iv) wealth tax; and

(v) the municipal business tax ;

(hereinafter referred to as “Luxembourg tax”);

 

(b) in the case of Sweden :

 

(i) the State income tax (den statlig a inkomstskatten), including the tax on the wages of seafarers (sjomansskatten) and the tax withheld on dividends (kupongskatten) dividends (kupongskatten);

{ii ) non-resident income tax (den särskild a inkomstskatten for utomlands bosatta);

(iii) income tax on non-resident artists and athletes (den särskilda inkomstskatten for utomland s bosatta artister m. fl.) ;

(iv ) the municipal income tax (den kommunal a inkomstskatten);

(v) the tax on means for expansion purposes (expansionmedelsskatt) and

(vi ) the tax on wealth den statliga förmögenhetsskatten) ; (hereinafter referred to as ‘Swedish tax’).

2 . The Convention shall apply also to any identical or substantially similar taxes which are imposed after the date of signature of the Convention in addition to the taxes referred to in paragraph 2. date of signature of the Convention in addition to or in place of the taxes referred to in paragraph 1. The competent authorities of the Contracting States shall notify each other of

The competent authorities of the Contracting States shall notify each other of any substantial changes in their respective taxation laws.

Article 3

GENERAL DEFINITIONS

1. For the purposes of this Convention, unless the context otherwise requires context requires a different interpretation:

(a) “Luxembourg” means the Grand Duchy of Luxembourg and, when used in a geographical sense, means the territory of the Grand Duchy of Luxembourg

(b) “Sweden” means the Kingdom of Sweden and, when used in a geographical sense, includes the national territory, the territorial waters of Sweden and other maritime areas over which Sweden, in accordance with international law, exercises sovereignty or

(c) the terms “a Contracting State” and “the other Contracting State” mean Luxembourg or Sweden, as the case may be

(d) the term “person” includes natural persons, companies and any other bodies of persons;

(e) the term “company” means any body corporate or any entity which is treated as a body corporate for tax purposes;

(f ) the terms “enterprise of a Contracting State” and “enterprise of the other Contracting State” mean, respectively, an enterprise carried on by a resident of one Contracting State and an enterprise carried on by a resident of the other Contracting State of the other Contracting State;

(g) the term “international traffic” means any transport by a ship or aircraft operated by an enterprise of a Contracting State, except where the ship or aircraft is operated only between points in the territory of the other Contracting State.

(h) the term “national” means :

(i) any individual who is a national of a Contracting State;

(ii) any legal person, partnership or association organized under the laws in force in a Contracting State;

(i) the term “competent authority” means:

(i) in the case of Luxembourg, the Minister of Finance or his authorized representative ;

(ii) in respect of Sweden, the Minister of Finance, his authorized representative or the authority designated as the competent authority under this Convention.

2. For the purposes of the Convention at any time by a Contracting State, any term not defined therein has, unless the context otherwise requires, the meaning given to it under the law of that

the meaning which it has under the law of that State concerning the taxes to which the

meaning given to that term or expression under the tax law of that by the tax law of that State shall prevail over the meaning given to it by other branches of the law of that State.

the meaning given to it by the other branches of the law of that State.

Article 4 

RESIDENT

1. For the purposes of this Convention, the term “resident of a Contracting State” means any person who, under the law of a Contracting State, is of a Contracting State” means any person who, under the laws of that State, is liable to tax in that State by reason of the law of that State, is liable to tax in that State by reason of his domicile, residence

(a) the person who is a resident of a Contracting State and who is subject to tax in that State by reason of his domicile, residence, place of management or any other criterion of a similar nature.

(b) the taxable income of the company shall be taxed in that State by reason of its domicile, residence, place of management or any other criterion of a similar nature.

The term “taxable income” shall mean the amount of taxable income of a person who is a member of a partnership or of an estate or succession. the term is applicable only to the extent that the income received or the assets the income earned or the assets owned by such partnerships or estates are subject to tax. the income derived from or the capital owned by such partnerships or estates is subject to tax in that State as the income or capital of a resident of that State. the income or capital of a resident, either in their own right or in the right of their partners. The term “resident of a Contracting State” does not include any person who is liable to tax in that State in respect only of income from sources in that State or in respect of the income or capital of any other person. income from sources in that State or on capital situated therein.

2. Where by reason of the provisions of paragraph 1 an individual is a resident of both Contracting States, then the individual’s status shall be determined as follows

(a) such person shall be deemed to be a resident of the State in which he has a permanent home available to him; if he has a permanent home available to him in both the State with which his personal and economic relations are closer. and economic ties are closer (center of vital interests)

(b) if the State in which such person has his center of vital interests cannot be determined, or if he has no permanent place of abode in either State, he shall be deemed to be a resident of the State where he has his center of vital interests. the State in which he has his center of vital interests, or if he has no permanent place of abode in either State, he shall be deemed to be a resident of the State in which he has an

(c) if such person is ordinarily present in both States or is not ordinarily present in either State, he shall be deemed to be a resident of the State of which he is a national

(d) if such person is a national of both States or of neither of them, the competent authorities of the Contracting States shall settle the question by mutual agreement.

3. Where by reason of the provisions of paragraph 1 a person other than an individual is a resident of both Contracting States, that person shall be deemed to be a resident of both States. the taxpayer shall be deemed to be a resident of the State in which the taxpayer’s place of effective management is situated.

Article 5

PERMANENT ESTABLISHMENT

1. For the purposes of this Convention, the term “permanent establishment” means a

“Permanent establishment” means a fixed place of business through which the business of an enterprise is wholly or partly carried on. its business.

2. The term “permanent establishment” includes, in particular

(a) a place of management,

(b) a branch office,

(c) an office,

(d) a factory,

(e) a workshop, and

(f ) a mine, oil or gas well, quarry, or other places of extraction of natural resources. other places of extraction of natural resources.

3. A construction or assembly site constitutes a permanent establishment only if its duration exceeds 12 months.
4. Notwithstanding the foregoing provisions of this Article, the term “permanent establishment” shall be deemed not to include :

(a) use is made of facilities solely for the purpose of storage, display or delivery of goods or merchandise belonging to the enterprise

(b) goods belonging to the enterprise are stored solely for the purpose of storage, display or delivery;

(c) goods belonging to the enterprise are stored solely for the purpose of processing by another enterprise;

(d) a fixed place of business is used solely for the purpose of purchasing goods or gathering information for the enterprise;

(e) a fixed place of business is used solely for the purpose of carrying on any other activity of a preparatory or auxiliary character for the enterprise

(f) a fixed place of business is used solely for the purpose of carrying on the activities referred to in subparagraphs (a) to (e), provided that the overall activity of the fixed place of business resulting from such combination is not less than the activity referred to in subparagraph (a) to 

(e), provided that the overall activity of the fixed place of business resulting from such combination is of a preparatory or auxiliary character.

5. Notwithstanding the provisions of paragraphs 1 and 2, where a person – other than an agent with independent status to whom paragraph 6 applies – is to whom paragraph 6 applies – acts on behalf of an enterprise  and has at his disposal in a Contracting State powers which

(a) the person who is the agent of an enterprise and who has and habitually exercises in a Contracting State powers to conclude contracts on behalf of the enterprise the enterprise, that enterprise shall be deemed to have a permanent establishment in that the enterprise shall be deemed to have a permanent establishment in that State in respect of all activities which that person carries on for the enterprise, unless the activities of such person are limited to those mentioned in paragraph 4 referred to in paragraph 4 and which, if carried on through a fixed place of business

(b) the taxpayer’s taxable income shall not be limited to the activities referred to in paragraph 4 which, if carried on through a fixed place of business, would not qualify that place of business as a permanent establishment under the provisions of that paragraph.

6. An enterprise of a Contracting State shall not be deemed to have a permanent establishment in the other Contracting State merely because it has a fixed place of business in that other State merely because it carries on business in that State through a

(a) the goods or services of the enterprise shall be deemed to have a permanent establishment in the other Contracting State merely because the enterprise carries on business in that other State through a broker, general commission agent or any other agent having the status of an agent

(b) the person who is the agent of the other Contracting State shall be deemed to have a permanent establishment in the other Contracting State merely because he carries on business in that other State through a broker, general commission agent or any other agent of independent status, provided that such persons are acting in the ordinary course of their business.

7. The fact that a company which is a resident of a Contracting State controls or is controlled by a company which is a resident of the other Contracting State or which carries on business in that other State (whether or not through a permanent establishment) is not sufficient to make any such company a permanent establishment of the other Contracting State.

Article 6

INCOME FROM REAL PROPERTY

1. Income derived by a resident of a Contracting State from property (including income from agricultural or forestry undertakings) situated in the other Contracting State shall be treated as income from the other Contracting State. (including income from agriculture or forestry) situated in the other Contracting State may be taxed in that other State. may be taxed in that other State.

 

2. The term “immovable property” shall have the meaning which it has under the law of the Contracting State in which the property in question is situated. The term shall in any case include property accessory to immovable property, the livestock of agricultural and forestry holdings, rights to which the provisions of the law of the to which the provisions of private law concerning land ownership The term includes, in any event, the accessories, the dead or live stock of agricultural and forestry holdings, the rights to which the provisions of private law concerning land ownership, buildings, the usufruct of real estate and the rights to variable or fixed payments apply. and rights to variable or fixed payments for the operation or concession of the exploitation or concession of the exploitation of mineral deposits, springs and other natural resources; ships, boats and aircraft are not included, ships and aircraft are not considered as real estate.

 

(3) The provisions of paragraph 1 shall apply to income derived from the direct operation, rental or leasing, and any other form of exploitation of real property.

 

4. The provisions of paragraphs 1 and 3 shall also apply to income from real estate of an enterprise as well as to income from real estate used for the exercise of a self-employed profession.

 

Article 7

COMPANY PROFITS

1. The profits of an enterprise of a Contracting State shall be taxable only in that State unless the enterprise carries on business in the other Contracting State by means of a tax treaty.

its activities in the other Contracting State through a permanent establishment situated therein. If the enterprise carries on business in such a manner, the profits of the enterprise may be taxed in the other Contracting State but only so much of them as is attributable to that permanent establishment.

 

2. Subject to the provisions of paragraph 3, where an enterprise of a Contracting State carries on business in the other Contracting State through a permanent establishment situated therein permanent establishment situated therein, there shall in each Contracting State be attributed to that permanent the profits which it might have realised if it had constituted an enterprise in the other Contracting State shall be attributed to that permanent establishment in each Contracting State. The taxpayer is entitled to the benefit of the taxpayer’s own income and to the benefit of the taxpayer’s own profits the same or similar activities under the same or similar conditions and dealing wholly independently with the enterprise of which it is a permanent establishment.

 

3. In determining the profits of a permanent establishment , the purposes of the permanent establishment, including executive and general administrative expenses.

(a) the cost of the services rendered by the permanent establishment, including the cost of management and general administrative expenses so incurred, whether or not in the State in which the permanent establishment is situated

(b) the cost of the services rendered by the permanent establishment, including the cost of management and general administrative expenses so incurred, whether in the State in which the permanent establishment is situated or elsewhere.

4. No profit shall be attributed to a permanent establishment by reason of its having merely purchased goods or merchandise for the enterprise.

 

5. For the purposes of the preceding paragraphs, the profits to be attributed to the permanent establishment shall be determined each year in accordance with the same method each year, unless there are valid and sufficient grounds for proceeding otherwise.

 

6. Where profits include items of income which are dealt with separately in other Articles of this Convention, the provisions of those Articles shall not be affected by the provisions of this Article.

 

Article 8

MARITIME AND AIR NAVIGATION

1.  Profits from the operation of ships or aircraft in international traffic by an enterprise of a of ships or aircraft by an enterprise of a Contracting State shall be taxable only in that State. 

 

2. With respect to profits derived by the air transport consortium “Scandinavian Airlines System (SAS) the provisions of paragraph 1 shall apply only to that part of its profits which relates to the shareholding held by the provisions of paragraph 1 shall apply only to that part of the profits which relates to the shareholding in the said consortium held by AB Aerotransport (ABA), the Swedish partner of the Scandinavian Airlines System (SAS).

 

3. The provisions of paragraph 1 shall also apply to profits from participation in a pool, a joint operation or an international operating agency.

 

       Article 9

     ASSOCIATED ENTERPRISES

1.Where

(a) an enterprise of a Contracting State participates directly or indirectly in the management, control or capital of an enterprise of the other Contracting State, or

(b) the same persons participate directly or indirectly in the management, control or capital of an enterprise of one Contracting State and an enterprise of the other Contracting State , and that, in either case, the two enterprises are, in their commercial or the two enterprises are, in their commercial or financial relations, bound by conditions agreed upon or imposed, which differ from those which between independent enterprises, the profits that would otherwise have been the profits which, without these conditions, would have been made by one of the enterprises, but which could not in fact be realized because of those conditions, may be included in the profits of that enterprise and taxed accordingly.

 

2. Where a Contracting State includes in the profits of an enterprise of that State – and taxes accordingly – any profits on which an enterprise of the other Contracting State has been and the profits so included are profits that would have been earned by an enterprise of the other Contracting State if that enterprise had been taxed in that other State. 

(b) the profits so included are profits which would have accrued to the enterprise of the first-mentioned State if the conditions agreed upon between the two enterprises had been those which would have been

(a) the taxable profits of the enterprise of the first-mentioned State the other State shall make an appropriate adjustment to the amount of tax payable therein.

(b) the amount of tax which has been charged in that State on such profits. In determining such adjustment

 

In determining such adjustment, due regard shall be given to the other provisions of this Convention and, if necessary, the competent authorities of the Contracting States shall consult each other.

 

            Article 10

          DIVIDENDS

1.Where

(a) an enterprise of a Contracting State participates directly or indirectly in the management, control or capital of an enterprise of the other Contracting State, or Dividends paid by a company that is a resident of a Contracting State to a resident of the other Contracting State shall be taxed in the hands of that resident. 

2. However, such dividends may also be taxed in the Contracting State of which the company paying the dividends is a resident , and according to the laws of that State, but if the person receiving the dividends is the beneficial owner thereof, the tax so charged shall not exceed 15 per cent of the tax so charged shall not exceed 15 percent of the gross amount of the dividends.

 

3. Notwithstanding the provisions of paragraph 2, dividends shall be exempt in the Contracting State of which the company paying the dividends is a resident, if company paying the dividends is a resident, if the beneficial owner is a company (other than a corporation).

 

(a) the company is a resident of the Contracting State of which the company paying the dividends is a resident the date of payment of such dividends at least 10 per cent of the capital of the capital of the corporation paying the dividends. The exemption applies only to – dividends

 

The exemption applies only to dividends in respect of securities that have been continuously owned by the dividend recipient company. The exemption applies only to dividends in respect of securities that have been continuously owned by the dividend recipient company during the said twelve-month period.

 

4. The provisions of paragraphs 2 and 3 shall not affect the taxation of the company in respect of the profits which are used to pay the dividends.

 

5. The term “dividends” used in this article means income from shares or other profit shares, with the exception of claims, as well as income from other shares subject to the same tax regime. The term “dividends” as used in this article means income from shares or other profit shares, with the exception of debt claims, as well as income from other shares subject to the same tax regime as income from shares under the laws of the country in which the company is incorporated the taxpayer shall be entitled to the same tax treatment as income from shares under the laws of the State of which the distributing company is a resident.

 

6. The provisions of paragraphs 1 to 3 shall not apply where the beneficial owner of the dividends, being a resident of a Contracting State of which the company paying the dividends is a resident, carries on business in the other Contracting State.

 

(a) the company paying the dividends is a resident of the other Contracting State, or

 

(b) the taxpayer is a resident of the United States of America and is carrying on is effectively connected with it. In such a case, the provisions of Article 7 or the provisions of Article 7 or Article 14, as the case may be, shall apply,

 

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 to the extent that such dividends are paid to a resident of that other State.

 

(a) the company shall not be liable for any tax on the dividends paid by the company except to the extent that such dividends are paid to a resident of that other State or to the extent that 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

 

(b) the company shall not be liable to any tax on the undistributed profits of the company, even if the dividends paid or the undistributed profits consist wholly or partly of profits or income arising in such other State.

 

Article 11

INTERESTS

1.Where

(a) an enterprise of a Contracting State participates directly or indirectly in the management, control or capital of an enterprise of the other Contracting State, or

(b) Interest arising in a Contracting State and paid to a resident of the other Contracting State shall be taxable only in that State if such resident is the beneficial owner.

2. The term “interest” as used in this article means income from debt-claims of every kind, whether or not secured by mortgage or by a participation in the debtor’s profits, and in particular of the debtor, including income from government securities and from bonds, debentures and other debt obligations bonds, including premiums and prizes attached to these securities.

Penalties for late payment are not considered as interest under the penalties for late payment shall not be considered as interest within the meaning of this Article.

 

3. The provisions of paragraph 1 shall not apply where the beneficial owner of the interest, being a resident of a Contracting State, carries on business in the other State. The provisions of paragraph 1 shall not apply if the beneficial owner of the interest, being a resident of a Contracting State, carries on business in the other Contracting State in which the interest arises, carries on business in the other Contracting State in which the interest arises, through a permanent establishment which is the person who is a resident of a Contracting State carries on business in the other Contracting State in which the interest arises through a permanent establishment situated therein, or carries on independent personal services through a fixed base situated therein by means of a permanent establishment situated therein, or an independent profession by means of a fixed base situated therein, and the interest-bearing claim is effectively connected with it. In such case, the provisions of Article 7 or Article 14, as the case may be, shall apply.

 

4. Where, by reason of a special relationship between the debtor and the beneficial owner, or where between the debtor and the beneficial owner or between both of them and third

with third parties, the amount of the interest, the debtor and the beneficial owner, or both of them have a relationship with third parties, the amount of interest, taking into account the claim for which it is paid, exceeds that which would have been agreed upon by the debtor and the beneficial owner. the amount of interest, taking into account the claim for which it is paid, exceeds the amount that would have been agreed upon by the debtor and the beneficial owner in the absence of such agreements. The provisions of this paragraph shall not apply to any person who is not a party to the agreement. In such a case, the debtor shall be liable for the amount of the payment. In this case, the excess part of the payments remains taxable.

In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, taking into account the other provisions of this Convention.

 

Article 12

Royalties 

 

1. Royalties arising in a Contracting State and beneficially owned by a resident of the other Contracting State shall be taxable only in that other State.

 

2. The term “royalties” used in this Article means remuneration of any kind for the use of, or the right to use, any copyright in a literary, artistic or scientific work, including films. the use of a copyright in a literary, artistic or scientific work, including cinematographic films

films and films or tapes used for radio or television broadcasts. radio or television broadcasts, a patent, a trademark, a design patent, a tion, design or model, plan, formula or secret process, or any of the foregoing. secret formula or process, or for information relating to industrial experience in the industrial, commercial or scientific field.

 

3. The provisions of paragraph 1 shall not apply where the beneficial owner of the royalties, being a resident of a Contracting State, carries on business in the other Contracting State.

(a) the royalties are paid to a person who is a resident of a Contracting State and who carries on business in the other Contracting State in which the royalties arise, carries on business in the other Contracting State through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the right or property in respect of which the royalties are paid is not subject to the provisions of paragraph 1.

The taxpayer shall not be liable for any loss or damage arising from the use of the taxpayer’s services. In this case, the provisions of Article 7 or Article 14, as the case may be, shall apply.

 

4. Where, by reason of a special relationship between the debtor and the beneficial owner or

between the debtor and the beneficial owner or between both of them and with third parties, the amount of the royalties, the performance for which they are paid, taking into account the performance for which they are paid, exceeds the amount that would have been agreed upon by the debtor and the beneficial owner in the absence of a contract. the provisions of this Article shall apply only to the extent that the amount of the royalties the provisions of this article shall apply only to the latter amount. In this case, the excess part of the payments shall remain taxable according to the law of each Contracting State, taking into account the other provisions of this Convention.

 

Article 13

CAPITAL GAINS

 

1. Gains derived by a resident of a Contracting State from the alienation of immovable property referred to in Article 6 and situated in the other Contracting State, or from the alienation of shares in a company, shall be treated as capital gains the other Contracting State, or from the alienation of shares in a company the taxable income of the taxpayer shall be taxed in the other Contracting State, and the taxable income of the taxpayer shall be taxed in that other State.

 

(a) the taxpayer shall be entitled to tax the income of the taxpayer in the other State; or

 

(b) the taxpayer shall be entitled to the benefit of the taxpayer’s own income movable property pertaining to a fixed base available to a resident of a Contracting State has in the other Contracting State for the purpose of performing independent personal services, including such gains from the alienation of such permanent establishments.

 

3. Gains derived by a resident of a Contracting State from the alienation of ships or aircraft operated in international traffic or movable property pertaining to the operation of such ships or aircraft shall not be taxed in that other State. In the case of gains realized by the air transport consortium, the provisions of this paragraph shall not apply to gains realized by the Scandinavian Airlines System (SAS).

 

(a) the taxpayer shall be entitled to the benefit of the taxpayer’s own income and taxable income.

 

(b) the provisions of this paragraph shall apply only to that part of the gains which relates to the shareholding in that consortium held by AB Aerotransport (ABAb), the Swedish partner in the Scandinavian Airlines System (SAS).

 

4. Gains from the alienation of any property other than that referred to in paragraphs 1, 2 and 3 shall be taxable only in the Contracting State of which the transferor is a resident.
5. Notwithstanding the provisions of paragraph 4, any gain that an individual who was a resident of a Contracting State and who has become a resident of and who has become a resident of the other Contracting State from the alienation of any property may be taxed in the first-mentioned State when the alienation the first-mentioned State where the alienation of the property occurs at any time during the five years immediately following the date on which the individual

the individual ceased to be a resident of the first-mentioned State.

 

Article 14

INDEPENDENT PERSONAL SERVICES

 

1. Income derived by an individual who is a resident of a Contracting State from professional services or other activities of an independent nature shall be taxable only in that State at the rate of activities of an independent character shall be taxable only in that State unless the

unless that resident has a fixed base regularly available to him in the other Contracting

the other Contracting State, unless that resident has a fixed base therein for the purpose of performing his activities. If he has such a fixed base, the income may be taxed in the other

the other State but only to the extent that it is attributable to that fixed base.

 

2. The term “professional services” includes, in particular, independent

 

(a) the taxable income of the taxpayer shall be taxed in the other State, but only to the extent that it is attributable to that fixed base,

 

(b) the taxable income of the taxpayer shall be deducted from the taxable income of the taxpayer. of doctors, lawyers, engineers, architects, dentists and accountants,

 

Article 15

Dependent profession

 

1. Subject to the provisions of Articles 16, 18, and 19, salaries, wages and other similar remuneration derived by a President of a Contracting State in respect of employment

of a Contracting State in respect of an employment shall be taxable only in that State, unless the employment is exercised in the course of a business carried on in that State.

shall be taxable only in that State unless the employment is exercised in the other Contracting State. in the other Contracting State. If the employment is so exercised, the remuneration –

If the employment is exercised in that State, remuneration received in respect thereof may be taxed in that other State.

 

2. Notwithstanding the provisions of paragraph 1 remuneration derived by a resident of a Contracting State in respect of an employment exercised in the other Contracting State shall be taxable only in the first-mentioned

 

(a) the beneficiary stays in the other State for a period or periods not exceeding in the aggregate 183 days in any twelve-month period beginning or ending in the tax year concerned, and 

 

(b) the remuneration is paid by or on behalf of an employer

 

c)an employer who is not a resident of the other State, the remuneration is not borne by a permanent establishment or a fixed base which the employer has in the other State.

 

3. Notwithstanding the preceding provisions of this Article, remuneration derived in respect of an employment exercised on board a ship or aircraft operated in international traffic c

by an enterprise of a Contracting State may be taxed in that State. maybe taxed in that State. Where a resident of Sweden receives remuneration in respect of an employment exercised on board an aircraft operated in international traffic by the air transport consortium “Scandinavian Airlines System (SAS)”, such remuneration shall be taxable only in that State the remuneration is taxable only in Sweden.

 

Article 16 

FEES

 

Directors’ fees and other similar payments received by a resident of a Contracting –

a resident of a Contracting State receives in his capacity as a member of the board of directors 

of a company which is a resident of the other Contracting State shall be taxed in that other State. the taxable income of a resident of the other Contracting State shall be taxed in that other State.

 

Article 17

Artists and Athletes

 

1. Notwithstanding the provisions of Articles 14 and 15, income derived by a resident of a Contracting State as an artist such as a theatre, motion picture, radio or television artist, from his personal activities as such in the other Contracting State shall be treated as income for the purposes of this Convention. as an artist such as a theater, motion picture, radio or television artiste, or a musician the taxable income of the taxpayer from his personal activities as an artist such as a theatre, motion picture, radio or television artiste, or musician, or as a sportsman, shall be taxed in that other State.

 

2. Where income from activities which an artist or sportsman personally performs in that capacity is attributed not to the artist or sportsman himself but to another person, such income may be taxed, notwithstanding the provisions of Articles 7, 14 and 15, in the Contracting State in which the activities of the artist or of the artist or sportsman are carried on.

 

Article 1 8

PENSIONS, ANNUITIES AND SIMILAR PAYMENTS

 

1. Pensions and other similar remuneration, payments made under social security legislation and annuities arising in a Contracting State, including pensions paid by a Contracting State or one of its Member States, shall be treated in the same way as other payments the amount of the remuneration paid by a Contracting State or one of its political subdivisions or local authorities, or the amount of the remuneration paid by a Contracting State or one of its

political subdivisions or local authorities, either directly or out of funds or out of funds constituted by them, and paid to a resident of the other Contracting State may be taxed in the first-mentioned State.

 

2. The term “annuity” means a specified sum payable periodically at specified times during a person’s life or for a specified or fixed period of time in fulfillment of an obligation to make payments in return for full and adequate consideration. and full consideration in money or the equivalent of money.

 

Article 1 9

PUBLIC FUNCTIONS

 

(a) Remuneration, other than a pension, paid by a Contracting State or a political subdivision or local authority thereof to an individual in respect of services rendered to that State or political subdivision or local authority shall be deemed to be remuneration of the individual services rendered to that State or subdivision or

 

(b) the amount of the pension, other than a pension, paid by a Contracting State or a political subdivision or local authority thereof to an individual in respect of services rendered to that State or subdivision or authority, shall be taxable only in that State.

 

(b) However, such remuneration shall be taxable only in the other Contracting State if the services are rendered in that State and if the individual is a resident of that State 

who :

(i) is a national of that State, or

(ii) has not become a resident of that State for the sole purpose of rendering the services.

 

2. The provisions of Articles 15 and 10 shall apply to remuneration paid in respect of services rendered in the course of a tax treaty. The provisions of Articles 15 and 10 shall apply to remuneration paid in respect of services rendered in connection with an industrial or commercial activity carried on by the commercial activity carried on by a Contracting State or one of its

State or a political subdivision or local authority thereof.

 

Article 20

STUDENTS

 

Amounts which a student or a trainee who is, or was immediately before going to a Contracting State, a national of a Contracting State, or a national of a Contracting State, may be entitled to receive from a Contracting State. immediately before entering a Contracting State, a resident of the other Contracting State and who is present in the first-mentioned State solely for the purpose of

 

(a) a student or trainee who is, or was immediately before entering a Contracting State, a resident of the other Contracting State and who is present in the first-mentioned State solely for the purpose of furthering his education or training shall not be taxed in that State, except to the extent that they are received for the purpose of maintenance, education or training.

 

(b) the amount of the remuneration is not taxable in that State, provided that the remuneration is derived from sources outside that State.

 

Article 21

Other Income

 

1. Items of income of a resident of a Contracting State, wherever arising, which are not dealt with in the foregoing Articles of this the preceding Articles of this Convention shall be taxable only in that State.

 

2 . The provisions of paragraph 1 shall not apply to income other than income from real property as defined in paragraph 2 of Article 6, where the recipient of such income, being a resident of a Contracting State, carries on business in the other Contracting State, carries on business through a

 

(a) the taxpayer is a resident of a Contracting State and carries on business in the other Contracting State through a permanent establishment situated therein, or

 

(b) the person who has the right or privilege to use or sell the property in the other Contracting State. The taxpayer is entitled to the benefit of the income. In this case, of Article 7 or Article 14, as the case may be, shall be applicable.

 

Article 22

Assets

 

1. Capital consisting of immovable property referred to in paragraph 2 of Article 6 owned by a resident of a Contracting State and situated in the property referred to in paragraph 2 of Article 6 owned by a resident of a Contracting State and situated in the other Contracting State, or by the taxable income of a resident of a Contracting State from real property referred to in paragraph 2 of Article 6 Such property may be taxed in that other State.

 

2. Capital represented by movable property forming part of the business property of a permanent establishment which an enterprise of a Contracting State has in the other Contracting State or by movable property pertaining to a fixed base available to a resident of a Contracting State in the other State may be taxed in that other State. the other Contracting State for the purpose of performing independent

(b) the taxable income of a resident of a Contracting State from a fixed base available to that resident in the other Contracting State for the purpose of performing independent personal services, may be taxed in that other State.

 

3. Capital represented by ships and aircraft operated in international traffic by an enterprise of a

and movable property pertaining to the operation of such ships or the operation of such ships or aircraft shall be taxable only in that State.

that State.

 

4. All other elements of capital of a resident of a Contracting State shall be taxable only in that State.

 

5. Notwithstanding the provisions of paragraph 4, capital owned by an individual who was a resident of a Contracting State and who has become a resident of a Contracting State may be taxed in that State and who has become a resident of the other Contracting State, may be taxed in the other Contracting State, may be taxed in the first-mentioned State at any time during the five years following the date on which the individual ceased to be a resident of the other Contracting State.

(a) the individual is a resident of the first-mentioned State and is not a resident of that State

the capital shall be taxable only in the other Contracting State.

 

6. With regard to the assets owned by the Scandinavian Airlines System (SAS), The provisions of paragraphs 3 and 4 shall apply only to that part of the assets which relates to the shareholding of KAB Aerotransport (ABA), the Swedish partner in the SAS, in the said joint venture.

 

Article 23

ELIMINATION OF DOUBLE TAXATION

 

1. As regards Luxembourg, double taxation shall be avoided as follows

 

(a) Where a resident of Luxembourg receives income or possesses capital which, in accordance with the provisions of this Convention, is not subject to double taxation, the Luxembourg tax authorities may impose double taxation on such income or capital.

 

(b) Where a resident of Luxembourg receives income which , in accordance with the provisions of Article 10, Article 13(5) and Article (5) and Article 18 may be taxed in Sweden, Luxembourg shall allow a deduction from the tax it levies on the income of such resident of that resident an amount equal to the tax paid in Sweden. This deduction may not, however, exceed the fraction of the tax calculated before the deduction. the tax, calculated before deduction, corresponding to these items of income received from Sweden.

 

(c) Where a Luxembourg resident company receives dividends from Swedish sources, Luxembourg shall exempt such dividends from taxation, provided that the Luxembourg resident company has held directly since the beginning of its financial year at least 10 percent of the shares of the company. at the beginning of its fiscal year at least 10 percent of the capital of the company paying the dividends and if this company is subject in Sweden to a tax corresponding to the tax on The shares or units of the company are not taxable in Sweden but are taxable in Sweden. The above-mentioned shares or units of the Swedish company are, under the same conditions exempt from Luxembourg wealth tax under the same conditions.

 

2. With regard to Sweden, double taxation shall be avoided in the following manner:

 

(a) the taxable income of a resident of Sweden may be taxed in Luxembourg. the provisions of Swedish law on the deduction of foreign taxes (and any subsequent changes to that legislation which do not affect the general principle) – on the tax it collects on such income a deduction of an amount equal to the tax paid In the event that a resident of Sweden owns income from a business that is not taxed in Luxembourg, the taxpayer may deduct from the tax paid in Luxembourg an amount equal to the tax paid in Luxembourg on such income.

 

Where a resident of Sweden owns capital which, in accordance with the provisions of this Convention, is taxable in Luxembourg, Sweden shall allow a deduction from the tax it levies on such capital, Sweden shall allow a deduction from the tax it levies in an amount equal to the tax on capital paid in Luxembourg on that capital. This deduction may not, however, exceed the fraction of the Swedish wealth tax, calculated before deduction ,

 

(b) Where a resident of Sweden receives income which, in accordance with the provisions of this Convention, is taxable only in Luxembourg, Sweden may, for the purpose of determining the progressive rate of Swedish tax, take into account the income which is taxable only in Luxembourg. the progressive rate of Swedish tax, take into account income which is taxable only in Luxembourg.

 

(c) Notwithstanding the provisions of subparagraph (a) of this paragraph, dividends paid by a company which is a resident of Luxembourg to a company which is a resident of Sweden shall be exempt from tax. shall be exempt from Swedish tax in accordance with the provisions the provisions of the Swedish law governing exemption from tax. the exemption from tax on dividends paid to Swedish companies by their subsidiaries located abroad.

 

Article 24

NON-DISCRIMINATION

 

1. Nationals of a Contracting State shall not be subject in the other Contracting the other Contracting State to any tax or obligation relating thereto which is which is other or more burdensome than those to which nationals of that other State who are or may be subject to which the nationals of that other State who are in the same situation are or may be subject. The present provision shall also apply to any person who is not a national of the other Contracting State and who is not a national of that other State. This provision shall also apply notwithstanding the provisions of Article 1, to persons who are not of a Contracting State or of both Contracting States.

 

2. The taxation of a permanent establishment which an enterprise of a Contracting State has in the other Contracting State shall not be less favorably levied in that other State than the taxation of enterprises of that other State. the taxation of enterprises of that other State carrying on the same activity. This provision shall not be construed as obliging a Contracting State to grant to residents of the other Contracting State the personal deductions, allowances, and benefits of the other State.

 

(a) the taxpayer shall be entitled to the same deductions, allowances and deductions for personal circumstances and family responsibilities as it grants to its own residents; and

 

(b) the taxpayer is not required to pay the tax on the income of the other State.

 

3. 3. Unless the provisions of paragraph 1 of Article 9, paragraph 4 of Article 8 or paragraph 5 of Article 9 paragraph 4 of article 12 are applicable, interest, royalties and other expenses paid by 

 

1. a) the taxpayer shall be entitled to the benefit of the taxpayer’s taxable income residents of the other Contracting State shall be deductible in determining the taxable profits of that enterprise, under the same conditions as if they had been paid to a resident of the first State. Similarly, debts of an enterprise of a Contracting State to a resident of the other Contracting State shall be deductible for the purpose of determining the taxable income of the enterprise.

 

(b) the taxable income of the enterprise shall be deductible in determining the taxable capital of that enterprise under the same conditions as if the enterprise had been a resident of the first-mentioned State.

 

4. Enterprises of a Contracting State, the capital of which is wholly or partly owned or controlled, directly or indirectly, by one or more residents of the other Contracting State, shall not be subject to the provisions of this Convention.

 

(a) the taxable income of a Contracting State shall not be subject in the first-mentioned State to any tax or duty thereon

 

(b) the taxable income of the other Contracting State shall not be subject in the first-mentioned State to any taxation or any requirement connected therewith which is other or more burdensome than that to which other similar enterprises of the first-mentioned State are or may be subjected.

 

5. The provisions of this Article shall apply , notwithstanding the provisions of Article 2, to taxes of every kind and description.

 

Article 25

Mutual Agreement Procedure

 

1. Where a person believes that the actions of one or both of the Contracting State or by both Contracting States result or will result in taxation not in accordance with the provisions of this Convention. the provisions of this Convention, it may, at its option, request that the measures taken by one or both of domestic law of those States, independently of the remedies provided submit its case to the competent authority of the Contracting State of which he is a resident or, if his case comes under paragraph 1 of Article 24, to the competent authority of the Contracting State of which he is a national. The case must be submitted within three years after the first notification of the measure which results in taxation not in accordance with the provisions of the Convention.

 

2. The competent authority shall endeavour, if the objection appears to it to be well-founded and if it is not itself in a position to resolve the matter, to submit the case to the competent authority.

The competent authority shall endeavor, 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 competent

 

(a) the taxpayer shall be liable to pay the tax on the taxable income of the taxpayer in accordance with the provisions of the Convention

 

The agreement shall be applied irrespective of the time limits provided by the domestic law of the contracting States.

 

3. The competent authorities of the Contracting States shall endeavor, by mutual agreement, to resolve any difficulties or doubts to which may arise in connection with the interpretation or application of the Convention. They may also consult together for the elimination of double taxation in cases not provided for in the Convention.

 

4. The competent authorities of the Contracting States may communicate directly with each other with a view to reaching an agreement as described in the preceding paragraphs.

 

Article 26

Exchange of Information

 

1. The competent authorities of the Contracting States shall exchange such information as may be necessary for the application of the provisions of this Convention or of the laws of the Contracting States. The competent authorities of the Contracting States shall exchange such information as is necessary for carrying out the provisions of this Convention or of the domestic laws of the Contracting States concerning taxes covered by this Convention.

of the Contracting States relating to taxes covered by the Convention to the extent that the taxation thereunder is not con to the extent that the taxation thereunder is not contrary to the Convention. The exchange of information is not restricted by Article 1. Information received by a Contracting State shall be kept – secret in the same manner as information obtained under the domestic laws of that State and shall be disclosed only to the parties to the treaty.

and shall be disclosed only to persons or authorities (including courts and administrative bodies) concerned with the assessment – or collection of the taxes covered by this Agreement.

the assessment or collection of taxes covered by the Convention, in proceedings or prosecutions in respect of such taxes, or the determination of appeals in relation to such taxes. Such persons or authorities shall use such information only for such purposes. They may disclose such information in the course of may disclose such information in public court hearings or in judgments.

 

2. The provisions of paragraph 1 shall in no case be construed to require a Contracting State to

be interpreted as imposing on a Contracting State the obligation

 

(a) to take administrative action at variance with its own or the other Contracting State’s laws and administrative practice

 

(b) to supply information that 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 commercial, industrial, professional or trade secret or any information the disclosure of which would be contrary to public policy.

 

Article 27 

Assistance in collection matters

 

1. The Contracting States undertake to render aid and assistance to each other in the collection of the taxes which are the subject of this Convention and in the collection of interest, costs, fees and expenses incurred in the collection of such taxes.

 

2. The request must be accompanied by the documents required by the laws of the requesting State to establish that the sums to be recovered are definitely due.

 

3. On the basis of these documents, service and collection measures shall take place in the

collection shall take place in the requested State in accordance with the laws

in accordance with the laws applicable to the recovery and collection of its own taxes.

collection of its own taxes. In particular, bills of collection shall be made enforceable in the State addressed.

 

4. Tax claims to be recovered shall not be considered as preferential claims in the State addressed.

 

5. With respect to tax claims which are still subject to appeal, the creditor State may, in order to safeguard its rights, request the other State to take precautionary measures, to which the foregoing provisions shall apply.

 

Article 28

MEMBERS OF DIPLOMATIC MISSIONS AND CONSULAR POSTS

 

The provisions of this Convention shall not affect the fiscal privileges of members of diplomatic missions or consular posts under either the general rules of international law or the provisions of the Convention. general rules of international law or the provisions of special agreements.

 

Article 28

Entry into force

 

1. Each Contracting State shall notify the other State of the completion of the constitutional formalities required for the entry into force of this Convention.

 

2. The Convention shall enter into force thirty days after the date of the last of these

of the last of these notifications and shall apply :

 

(a) in Luxembourg :

(i) in respect of taxes withheld at source, to income attributed on or after the first day of January next following the date on which the Convention enters into force

(ii) in respect of other taxes, to taxable periods ending on or after the first day of January next following the date on which the Convention enters into force

 

(b) in Sweden:

(i) in respect of taxes on income, to income attributed on or after the first day of January next following the date on which the Convention enters into force

(ii) the tax on capital, to the tax which is assessed for the second calendar year following that in which the Convention enters into force and for subsequent years.

 

3. The Convention of 14 July 1983 between the Grand Duchy of Luxembourg and the Kingdom of Sweden for the avoidance of double taxation and the establishment of and to establish procedures for reciprocal administrative assistance in respect of taxes on income and on wealth

The Convention shall cease to have an effect upon the entry into force of this Convention and the Protocol attached thereto. this Convention and the Protocol attached thereto. The provisions of the 1983 Convention shall cease to apply from the date on which the corresponding provisions of this Convention and the Protocol attached thereto become applicable, in accordance with the provisions of paragraph 2 of this Article, for the purposes of the Convention of this Article for the first time.

 

Article 29

Denunciation

 

This Convention shall remain in force until denounced by a Contracting State. denounced by a Contracting State. Each contracting State may denounce the Convention by diplomatic means through the Ministry of Foreign Affairs. Each contracting State may denounce the Convention by diplomatic means in written notice at least six months before the end of each calendar year.

calendar year. In this case, the Convention shall cease to apply to the allocated income and assets. In this case, the Convention shall cease to apply to the income allocated and to the assets owned on or after the first of January of the calendar year following the year in which the Convention was signed.the first of January of the calendar year immediately following the end of the six-month period.

 

IN WITNESS WHEREOF the undersigned, being duly authorized thereto, have signed

this Convention.

 

Done at Stockholm, this 14th day of October 1996, in duplicate in the French language.