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October 3, 2005
JS-2959

United States and Sweden Sign Protocol to Income Tax Treaty

WASHINGTON, DC – Today the Treasury Department announced that Assistant Secretary of State for Economic and Business Affairs E. Anthony Wayne and Swedish Ambassador Gunnar Lund signed a new Protocol to amend the existing bilateral income tax treaty, concluded in 1994, between the two countries.  The Protocol was signed Friday afternoon.

The agreement significantly reduces tax-related barriers to trade and investment flows between the United States and Sweden.  It also modernizes the treaty to take account of changes in the laws and policies of both countries since the current treaty was signed.  The Protocol brings the tax treaty relationship with Sweden into closer conformity with U.S. treaty policy.

The most important aspect of the Protocol deals with the taxation of cross-border dividend payments.  The Protocol is one of a few recent U.S. tax agreements to provide an elimination of the withholding tax on dividends arising from certain direct investments.

The Protocol also strengthens the treaty's provisions preventing so-called treaty shopping, which is the inappropriate use of a tax treaty by third-country residents. 

REPORTS

• US Note
• Protocol
• Swedish Note