Tax Treaty Case Law around the Globe 2020

S. 267Chapter 22 Sweden: Payments to and/or from a Certain Pension Considered Either Employment Income or Pension

Martin Berglund

22.1. Introduction

Case HFD 2019 ref. 13 concerns the Swedish taxation of a transfer between two different S pension plans. The case raises two connected issues, namely (i) when income from a US pension plan should be taxable in Sweden; and (ii) how article 19(1) of the Sweden-United States Income Tax Treaty (1994) should be interpreted in such a case. According to Swedish domestic tax law, the determination of when employment income and pension income should be taxable is based, for tax purposes, on when the payment is made. Such income is taxable when it is at the taxpayer’s disposal. Article 19(1) of the treaty reads: “Subject to the provisions of Article 20 (Government service) and of paragraph 2 of this Article, pensions and other similar remuneration in consideration of past employment and annuities derived and beneficially owned by a resident of a Contracting State shall be taxable only in that Contracting State.” The taxing right over pension income and similar income is allocated to the residence state. This article is similar to article 18 of the OECD M...