Tax Treaty Case Law around the Globe 2014

S. 287Chapter 28 Sweden: The Foreign Tax Credit and Disparities

Martin Berglund

28.1. Introduction

The foreign tax credit method aims at mitigating international double taxation. There is broad consensus that the application of tax treaties does not require international double taxation. The predominant view is also that application of the exemption method in tax treaties generally does not require that the other state in fact taxes the income. The question is whether the application of the credit method requires that a certain income is subject to double taxation. Otherwise, there would not seem to be any reason for granting a tax credit. Paragraph 1 of the Commentary on Articles 23 A and 23 B of the OECD Model (2010) states that the articles "deal with the so-called juridical double taxation", which is defined in paragraph 1 of the Introduction to the OECD Model (2010) as "the imposition of comparable taxes in two (or more) States on the same taxpayer in respect of the same subject matter and for identical periods".

This contribution discusses a recent advance tax ruling on this issue given first by the Swedish Board for Advance Tax Rulings (Skatterättsnämnden, SRN) and later by the Suprem...