Tax Treaty Case Law around the Globe 2017

1. S. 24Introduction

In order to be able to claim the benefits of a treaty, a company must come under the personal scope of the treaty. In Sweden, there has been a lot of discussion and concern expressed about the issue of tax residence under a tax treaty when it comes to collective investment vehicles. In this contribution, a recent case on this point and its possible importance will be discussed.

2. Facts of the Case

In the Swedish case HFD 2016 ref. 25, the issue was whether a Swedish collective investment vehicle, CIV, was covered by articles 1, 3 and 4 of the Sweden-Spain Income and Capital Tax Treaty (1976).

The question arose as to whether distributions from its Spanish holdings could qualify for lower withholding tax under the treaty, which depended on whether the Swedish CIV was subject to the treaty. The National Tax Agency refused to issue a certificate of residence to the CIV. Without such a certificate the Spanish authorities were not willing to apply the treaty benefits.

The reason that the National Tax Agency was not willing to issue a certificate was based on the fact that a CIV does not pay any income tax in Sweden. It considered the CIV as a person under article 3 of the tr...