CONVENTION BETWEEN THE GOVERNMENT OF THE UNITED STATES OF AMERICA
AND THE GOVERNMENT OF SWEDEN FOR THE AVOIDANCE OF DOUBLE TAXATION AND
THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON ESTATES,
INHERITANCES AND GIFTS
[Signed 6/13/83]
The Government of the United States of America and the Government
of Sweden desiring to conclude a Convention for the avoidance of double
taxation and the prevention of fiscal evasion with respect to taxes on
estates, inheritances, and gifts have agreed as follows:
ARTICLE I
SCOPE
1. Except as otherwise provided in this Convention, this Convention
shall apply to:
a) transfers of estates of individuals whose domicile at their
death was in one or both of the Contracting States;
b) transfers of property by gift of individuals whose domicile at
the time of gift was in one or both of the Contracting States; and
c) generation-skipping transfers of deemed transferors whose
domicile at the time of deemed transfer was in one or both of the
Contracting States.
2. The Convention shall not restrict in any manner any exclusion,
exemption, deduction, credit, or other allowance now or hereafter
accorded:
a) by the laws of either Contracting State; or
b) by any other agreement between the Contracting States.
3. Notwithstanding any provision of the Convention except paragraph
4 of this Article, a Contracting State may tax transfers and deemed
transfers of its domiciliaries (as determined in accordance with Article
4), and by reason of citizenship may tax transfers and deemed transfers
of its citizens, as if the Convention had not come into effect. For this
purpose the term "citizen" shall include a former citizen whose
loss of
citizenship had as one of its principal purposes the avoidance of tax
(including, for this purpose, income tax), but only for a period of 10
years beginning such loss.
4. The provisions of paragraph 3 shall not affect:
a) the benefits conferred by a Contracting State under paragraph 7
of Article 8 or under Articles 9, 10, and 11;
b) the benefits conferred by the United States under paragraph 1 of
Article 13 upon individuals who are neither citizens of, nor have
immigrant status in, the United States; and
c) the benefits conferred by Sweden under paragraph 1 of Article 13
upon individuals who are not citizens of Sweden.
ARTICLE 2
TAXES COVERED
1. The existing taxes to which the Convention shall apply are:
a) in the United States; the Federal estate tax, the Federal gift
tax, and the Federal tax on generation-skipping transfers;
b) in Sweden; the inheritance tax and the gift tax.
2. The Convention shall apply also to any identical or
substantially similar taxes which are imposed by a Contracting State
after the date of signature of the Convention in addition to, or in
place of, the existing taxes. The competent authorities of the
Contracting States shall notify each other of any substantial changes
which have been made in their respective taxation laws and shall notify
each other of any official published material of substantial
significance concerning the application of the Convention, including
explanations, regulations, rulings, and judicial decisions.
3. For the purposes of Article 10, the Convention shall apply to
taxes of every kind and description imposed by a Contracting State or
a
political subdivision or local authority thereof. For the purpose of
Article 12, the Convention shall apply to taxes of every kind imposed
by
a Contracting State.
ARTICLE 3
GENERAL DEFINITIONS
1. For the purposes of this Convention, unless the context
otherwise requires:
a) the term " United States" means the United States of America,
but
does not include Puerto Rico, the Virgin Islands, Guam, or any other
United States possession or territory. Such term also includes the
territorial sea thereof and the seabed and subsoil of the submarine
areas adjacent to the coast thereof, but beyond the territorial sea,
over which the United States of America exercises sovereign rights, in
accordance with international law, for the purpose of exploration for
and exploitation of the natural resources of such areas.
b) the term " Sweden" the means the Kingdom of Sweden and includes
any area outside the territorial sea of Sweden within which the laws of
Sweden and in accordance with international law the rights of Sweden
with respect to the exploration for and exploitation of the natural
resources on the seabed or in its subsoil may be exercised;
c) the terms "a Contracting State" and "the other Contracting
State" mean the United States or Sweden, as the context requires:
d) the term "international traffic" means any transport by
a ship
or aircraft, except when such transport is solely between places in the
other Contracting State; and
e) the term "competent authority" means:
i) in the United States, the Secretary of the Treasury or his
delegate and
ii) in Sweden, the Minister of Finance or has authorized
representative.
2. As regards the application of the Convention by a Contracting
State, any term not defined therein shall, unless the context otherwise
requires and subject to the provisions of Article 11, have the meaning
which it has under the laws of that State concerning the taxes to which
the Convention applies.
ARTICLE 4
FISCAL DOMICILE
1. For the purposes of this Convention, an individual has a
domicile:
a) in the United States, if he is a resident or citizen thereof
under United States law;
b) in Sweden, if he is a resident or citizen thereof under Swedish
law.
2. Where by reason of the provisions of paragraph 1 an individual
is domiciled in both Contracting States, then, subject to the provisions
of paragraph 3, his status shall be determined as follows:
a) the individual shall be deemed to be domiciled in the
Contracting State in which he has a permanent home available; if such
individual has a permanent home available in both Contracting States,
he
shall be deemed to be domiciled in the Contracting State with which his
personal and economic relations are closer (center of vital interests);
b) if the Contracting State in which the individual has his center
of vital interests cannot be determined, or if he has no permanent home
available in either Contracting State, he shall be deemed to be
domiciled in the Contracting State in which he has an habitual abode;
c) if the individual has an habitual abode in both Contracting
States or in neither of them, his domicile shall be deemed to be in the
Contracting State of which he is a citizen;
d) if the individual is a citizen of both Contracting States or of
neither of them, the competent authorities of the Contracting States
shall settle the question by mutual agreement.
3. Where an individual is:
a) a citizen of one Contracting State, but not the other
Contracting State,
b) within the meaning of paragraph 1 domiciled in both Contracting
States, and
c) within the meaning of paragraph 1 domiciled in the other
Contracting State in the aggregate less than 5 years (including periods
of temporary absence) during the preceding 7-year period.
then his domicile shall be deemed, notwithstanding the provisions of
paragraph 2, to be in the Contracting State of which he is a citizen.
4. An individual who, at the time of his death or the making of a
gift or deemed transfer, was a resident of a possession of the United
States and who had become a citizen of the United States solely by
reason of (a) being a citizen of a possession, or (b) birth or residence
within a possession, shall be considered as having been neither
domiciled in nor a citizen of the United States at that time for the
purposes of the Convention.
ARTICLE 5
REAL PROPERTY
1. Transfers and deemed transfers by an individual domiciled in a
Contracting State of real property which is situated in the other
Contracting State may be taxed in that other State.
2. The term "real property" shall have the meaning which it
has
under the law of the State in which the property in question is
situated. The term shall in any case include property accessory to real
property, livestock and equipment used in agriculture and forestry,
rights to which the provisions of general law respecting landed property
apply, usufruct of real property, and rights to variable or fixed
payments as consideration for the working of, or the right to work,
mineral deposits, sources, and other natural resources; ships, boats,
and aircraft shall not be regarded as real property.
ARTICLE 6
Business property of a permanent establishment and assets
pertaining to a fixed base used for the performance of independent
personal services
1. Except for real property as defined in paragraph 2 of Article 5,
transfers and deemed transfers by an individual domiciled in a
Contracting State of assets (other than ships and aircraft used in
international traffic and movable property, including containers,
pertaining to the operation of such ship, and aircraft) forming part of
the business property of a permanent establishment situated in the other
Contracting State may be taxed in that other State.
2. For the purposes of this Convention, the term "permanent
establishment" means a fixed place of business through which the
business of an enterprise is wholly or partly carried on.
3. The term "permanent establishment" shall include especially:
a) a place of management;
b) a branch;
c) an office;
d) a factory;
e) a workshop; and
f) a mine, oil or gas well, quarry, or any other place of
extraction of natural resources.
4. A building site or construction or installation project, or an
installation or drilling rig or ship being used for the exploration or
development of natural resources, constitutes a permanent establishment
in a Contracting State only if it has remained in that State more than
12 months.
5. Notwithstanding the preceding provisions of this Article, the
term "permanent establishment" shall be deemed not to include:
a) the use of facilities solely for the purpose of storage,
display, or delivery of goods or merchandise belonging to an enterprise;
b) the maintenance of a stock of goods or merchandise belonging to
an enterprise solely for the purpose of storage, display, or delivery;
c) the maintenance of a stock of goods or merchandise belonging to
an enterprise solely for the purpose of processing by another
enterprise;
d) the maintenance of a fixed place of business solely for the
purpose of purchasing goods or merchandise, or of collection
information, for an enterprise;
e) the maintenance of a fixed place of business solely for the
purpose of carrying on, for an enterprise, any other activity of a
preparatory or auxiliary character;
f) the maintenance of a fixed place of business solely for any
combination of the activities mentioned in subparagraphs a) to e).
6. Except for real property as defined in paragraph 2 of Article 5,
transfers and deemed transfers of assets by an individual domiciled in
a
Contracting State pertaining to a fixed base situated in the other
Contracting State and used for the performance of independent personal
services, may be taxed in that other State.
ARTICLE 7
PROPERTY NOT EXPRESSLY MENTIONED
1. Transfers and deemed transfers by an individual domiciled in a
Contracting State of property other than property referred to in
Articles 5 and 6 shall be taxable only in that State.
2. If the law of a Contracting State treats a property right as
property described in Article 5 or 6, but the law of the other
Contracting State treats that right as an interest in a partnership or
trust governed by paragraph 1, the nature of that right shall be
determined by the law of the Contracting State in which the transferor
or deemed transferor is not domiciled.
ARTICLE 8
DEDUCTIONS AND EXEMPTIONS
1. Debts incurred for the purposes of the acquisition, conversion,
repair, or upkeep of property referred to in Article 5, shall be
deducted from the value of this property.
2. Subject to paragraph 1, debts pertaining to a permanent
establishment referred to in paragraph 1 of Article 6, or to a fixed
base referred to in paragraph 6 of Article 6, shall be deducted from the
value of the permanent establishment or the fixed base as the case may
be.
3. If a debt exceeds the value of the property from which it is
deductible in a Contracting State, according to paragraph 1 or 2, the
excess shall be deducted from the value of any other property taxable
in
that State.
4. Other debts shall be deducted from the value of property to
which paragraph 1 of Article 7 applies.
5. Any excess still remaining in a Contracting State after the
deductions referred to in paragraph 3 or 4 shall be deducted from the
value of the property liable to tax in the other Contracting State.
6. Notwithstanding the provisions of paragraph 2 of Article 1, if
any debt is deducted in accordance with the provisions of this Article,
no deduction shall be allowed for any debt pursuant to a law of the
United States providing for a different allocation.
7. The transfer or deemed transfer of property to or for the use of
a corporation or organization of one Contracting State organized and
operated exclusively for religious, charitable, scientific, or
educational purposes shall be exempt from tax by the other Contracting
State if and to the extent that such transfer:
a) is exempt from tax in the first-mentioned Contracting State; and
b) would be exempt from tax in the other Contracting State if it
were made to a similar corporation or organization of that other State.
8. The tax of the United States with respect to the transfer of
property (other urban community property) which is transferred by an
individual domiciled in Sweden to his or her spouse shall be determined
as follows:
a) such property shall be included in the taxable base only to the
extent that the value of the property exceeds 50 per cent of the value
of all property (after taking into account any applicable deductions)
whose transfer may, under this Convention, be taxed by the United
States; and
b) the tax shall be computed by applying the tax rates applicable
to an individual domiciled in the United States.
9. Where property passes to a spouse from a deceased person who was
domiciled in or a national of the United States and the property rights
of the spouse are not regulated by Swedish general law regarding
matrimonial property, when Swedish tax on such property shall, if the
surviving spouse so requests, be assessed as if the provisions of
Swedish law regulating matrimonial property rights were applicable to
such property.
ARTICLE 9
RELIEF FROM DOUBLE TAXATION
1. Where the United States imposes tax by reason of an individual's
domicile or citizenship, double taxation shall be avoided in the
following manner:
a) where Sweden imposes tax with respect to the transfer or deemed
transfer of property in accordance with Article 5 or 6, the United
States shall allow as a credit against the tax calculated according to
its law with respect to such transfer or deemed transfer an amount equal
to the tax paid to Sweden with respect to such transfer or deemed
transfer;
b) if the individual was a citizen of the United States and was
domiciled in Sweden at the date of his death, gift, or deemed transfer,
then the United States shall allow as a credit against the tax
calculated according to its law with respect to the transfer or deemed
transfer of property (other than property whose transfer or deemed
transfer the United States may tax in accordance with Article 5 or 6)
an
amount equal to the tax paid to Sweden with respect to such transfer or
deemed transfer. This subparagraph shall not apply to a former United
States citizen whose loss of citizenship had as one of its principal
purposes the avoidance of United States tax (including, for this
purpose, income tax).
2. Where Sweden imposes tax by reason of an individual's domicile
or citizenship, double taxation shall be avoided in the following
manner:
a) where the United States imposes tax with respect to the transfer
or deemed transfer of property in accordance with Article 5 or 6, Sweden
shall allow as a credit against the tax calculated according to its law
with respect to such transfer or deemed transfer an amount equal to the
tax paid to the United States with respect to such transfer or deemed
transfer;
b) if the individual was domiciled in the United States at the date
of his death, gift, or deemed transfer, then Sweden shall allow as a
credit against the tax calculated according to its law with respect to
the transfer or deemed transfer of property (other than property which
Sweden may tax in accordance with Article 5 or 6) an amount equal to the
tax paid to the United States with respect to such transfer or deemed
transfer.
3. If a Contracting State imposes tax upon the transfer of an
estate, the credit allowed under paragraph 1 or 2 shall include credit
for any tax imposed by the other Contracting State upon a prior transfer
or deemed transfer of property by the decedent if such property is
included in the estate.
4. The credit allowed by a Contracting State under paragraph 1 or 2
shall not be reduced by any credit allowed by the other Contracting
State for taxes paid upon prior transfers or deemed transfers.
5. The credit allowed by a Contracting State according to
paragraphs 1, 2, 3, and 4 shall include credit for taxes paid to
political subdivisions of the other Contracting State to the extent that
such taxes are allowed as credits by that other State.
6. Any credit allowed under paragraph 1 or 2 shall not exceed the
part of the tax of a Contracting State, as computed before the credit
is
given, which is attributable to the transfer or deemed transfer of
property in respect of which a credit is allowable under such
paragraphs.
7. Any claim for credit or for refund of tax founded on the
provisions of the present Convention shall be made within six years from
the date of the event giving rise to liability to tax or, where later,
within one year from the last date on which tax for which credit is
given is due. The competent authority may, in appropriate circumstances,
extend this time limit where the final determination of the taxes which
are the subject of the claim for credit is delayed.
ARTICLE 10
NON-DISCRIMINATION
1. Citizens of a Contracting State, whereever they are resident,
shall not be subjected in the other Contracting State to any taxation
or
any requirement connected therewith which is other or more burdensome
than the taxation and connected requirements to which citizens of that
other State in the same circumstances are or may be subjected. However:
a) for purposes of United States taxation, United States citizens
who are not residents of the United States are not in the same
circumstances as citizens of Sweden who are not residents of the United
States; and
b) for purposes of Swedish taxation, Swedish citizens who are not
residents of Sweden are not in the same circumstances as citizens of the
United States who are not residents of Sweden.
2. The taxation with respect to a permanent establishment which a
resident of a Contracting State has in the other Contracting State shall
not be less favorably levied in that other State than the taxation
levied with respect to residents of that other State carrying on the
same activities. This provision shall not be construed as obliging a
Contracting State to grant to residents of the other Contracting State
any personal allowances, reliefs, and reductions for taxation purposes
on account of civil status or family responsibilities which it grants
to
its own residents.
3. Entities 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 subjected in the
first-mentioned State to any taxation or any requirement connected
therewith which is other or more burdensome than the taxation and
connected requirements to which other similar entities of the first-
mentioned State are or may be subjected.
4. The provisions of this Article shall apply to taxes of every
kind and description imposed by a Contracting State or a political
subdivision or local authority thereof.
ARTICLE 11
MUTUAL AGREEMENT PROCEDURE
1. Where a person considers that the actions of one or both of the
Contracting States result or will result for him in taxation not in
accordance with the provisions of this Convention, he may, irrespective
of the remedies provided by the domestic laws of those States, present
his case to the competent authority of the Contracting State of which
he
is a resident or citizen. Such presentation must be made within one year
after a claim under the Convention for exemption, credit, or refund has
been finally settled or rejected.
2. The competent authority to which a case is presented 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 authority of the other
Contracting State, with a view to the avoidance of taxation not in
accordance with the Convention. Any agreement reached shall be
implemented notwithstanding any time limits or other procedural
limitation in the domestic law of the Contracting States.
3. The competent authorities or the Contracting States shall
endeavor to resolve by mutual agreement any difficulties or doubts
arising as to the interpretation or application of the Convention.
4. The competent authorities of the Contracting States may
communicate with each other directly for the purpose of reaching
agreement in the sense of the preceding paragraphs.
ARTICLE 12
EXCHANGE OF INFORMATION
1. 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 the taxes covered by the Convention insofar as the
taxation thereunder is not contrary to the Convention. The exchange of
information is not restricted by Article 1. Any information received by
a Contracting State shall be treated as secret in the same manner as
information obtained under the domestic laws of that State and shall be
disclosed only to persons or authorities (including courts and
administrative bodies) involved in the administration, assessment, or
collection of, the enforcement or prosecution in respect of, or the
determination of appeals in relation to, the taxes covered by the
Convention. Such persons or authorities shall use the information only
for such purposes. They may disclose the information in public court
proceedings or in judicial decisions.
2. In no case shall the provisions of paragraph 1 be construed so
as to impose on a Contracting State the obligation:
a) to carry out administrative measures at variance with the laws
and administrative practice of that or of the other Contracting State;
b) to supply information which is not obtainable under the laws or
in the normal course of the administration of that or of the other
Contracting State; or
c) to supply information which would disclose any trade, business,
industrial, commercial, or professional secret or trade process, or
information the disclosure of which would be contrary to public policy.
3. If information is requested by a Contracting State in accordance
with this Article, the other Contracting State shall obtain the
information to which the request relates in the same manner and to the
same extent as if the tax of the first-mentioned State were the tax of
that other State and were being imposed by that other State. If
specifically requested by the competent authority of a Contracting
State, the competent authority of the other Contracting State shall
provide information under this Article in the form of depositions of
witnesses and authenticated copies of unedited original documents
(including books, papers, statements, records, accounts, or writings),
to the same extent such depositions and documents can be obtained under
the laws and administrative practices of such other State with respect
to its own taxes.
4. For the purposes of this Article, the Convention shall apply to
taxes of every kind imposed by a Contracting State.
ARTICLE 13
DIPLOMATIC AGENTS AND CONSULAR OFFICERS
1. Nothing in this Convention shall affect the fiscal privileges of
diplomatic agents or consular officers under the general rules of
international law or under the provisions of special agreements.
2. The Convention shall not apply to officials of international
organizations or members of a diplomatic or consular mission of a third
State, established in a Contracting State and not treated as domiciled
in either Contracting State in respect of taxes on estates,
inheritances, gifts, or generation-skipping transfers as the case may
be.
ARTICLE 14
ENTRY INTO FORCE
1. This Convention shall be subject to ratification in accordance
with the applicable procedures of each Contracting State and instruments
of ratification shall be exchanged at Washington as soon as possible.
2. The Convention shall enter into force upon the exchange of
instruments of ratification <<ENDNOTE [1]>> and its provisions
shall
apply:
a) in the United States in respect of transfers of estates of
individuals dying, gifts made, and generation skipping transfers deemed
made on or after the date of such exchange; and
b) in Sweden, as regards inheritance tax, in respect of persons who
die on or after that date, and, as regards gift tax, in respect of gifts
by reference to which there is a charge to tax which arises on or after
that date.
ARTICLE 15
TERMINATION
This Convention shall remain in force until terminated by a
Contracting State. Either Contracting State may terminate the Convention
at any time after 5 years from the date on which the Convention enters
into force provided that at least 6 months prior notice of termination
has been given through diplomatic channels. In such event, the
Convention shall cease to have effect after the December 31 which either
is or next follows the date of termination specified in the notice of
termination but shall continue to apply in respect of the estate of any
individual dying before the end of that period and in respect of any
event (other than death) occuring before the end of that period and
giving rise to liability to tax under the laws of either Contracting
State.
<<ENDNOTES>>
1/ Sept. 5, 1984.
DONE at Stockholm ____, in duplicate in the English and Swedish
languages, the two texts having equal authenticity, this 13th day of
June 1983.
For the Government of the United States:
____ <<ENDNOTE [1]>>
[SEAL]
For the Government of Sweden:
____ <<ENDNOTE [2]>>
[SEAL]
<<ENDNOTES>>
1/ Franklin S. Forsberg.
2/ Lennart Bodstrom.