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Finland-Denmark-Faroe Isl-Iceland-Norway-Sweden

21 November 2019

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Protocol to Nordic Tax Treaty to Enter into Force for All Signatories

Finland, as the depository, has published Government Decree 1058/2019, which sets 28 November 2019 as the entry into force date for the amending protocol to the 1996 Nordic income and capital tax treaty for all signatories.

The protocol, signed on 29 August 2018, includes the following changes:

  • The preamble is updated in line with OECD BEPS standards;
  • Article 26 (General Taxation Rules) is amended with the insertion of a new paragraph 4, which provides that a benefit under the treaty will not be granted in respect of an item of income or capital if it is reasonable to conclude, having regard to all relevant facts and circumstances, that obtaining that benefit was one of the principal purposes of any arrangement or transaction that resulted directly or indirectly in that benefit, unless it is established that granting that benefit would be in accordance with the object and purpose of the relevant provisions of the treaty;
  • Article 28 (Mutual Agreement Procedure) is updated to provide that a MAP case may be submitted to the competent authority of any one of the Contracting States concerned (originally a resident of a Contracting State may only submit to the competent authority of that State); and
  • The final protocol to the treaty is amended with respect to the right of the Faroe Islands to repeal a provision of Article 25 (Avoidance of Double Taxation) regarding a reduction of tax by the Faroe Islands in respect of the taxation of wages under Article 15 (Dependent Personal Services) and Article 21 (Activity Connected to the Preliminary Study, Exploration or Use of Petroleum Resources).

The protocol applies from 1 January 2020.

The Contracting States to the Nordic tax treaty include Denmark, the Faroe Islands, Finland, Iceland, Norway, and Sweden.

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