On 24 May 2018, officials from Russia and Sweden signed an amending protocol to the 1993 tax treaty between the two countries. The protocol is the first to amend the treaty and includes the following changes:

• A new preamble in line with BEPS standards;
• The amendment of Article 2 (Taxes Covered) in respect of both countries;
• New corresponding adjustment provisions in Article 9 (Adjustment of Income);
• New withholding tax provisions under Article 10 (Dividends), including that a 5% withholding rate applies if the beneficial owner is a company directly holding at least 10% of the paying company's capital and the holding amounts to at least EUR 80,000 or equivalent at the time of actual payment; otherwise, 15%;
• A new provision in Article 13 (Capital Gains) to provide that gains derived by a resident of a Contracting State from the alienation of shares or similar rights directly or indirectly deriving more than 50% of their value from immovable property in the other State may be taxed in that other State;
• The addition of Article 22 (Capital);
• The addition of new provisions with respect to taxes on capital in Article 23 (Elimination of Double Taxation);
• An update to the wording of Article 25 (Mutual Agreement Procedure), including that MAP cases may be submitted to either Contracting State instead of just a taxpayer's State of residence;
• The replacement of Article 26 (Exchange of Information) to bring it in line with the OECD standards for information exchange;
• The addition of Article 27 (Other Provisions), which includes the provision 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 that obtaining the benefit was one of the main purposes of any arrangement or transaction that resulted directly or indirectly in the benefit, unless it is established that granting the benefit would be in accordance with the object and purpose of the relevant provisions of the treaty; and
• The addition of Article 28 (Limitation of Benefits), which includes the provision that an exemption from or reduction of tax provided by the treaty will not apply to the income of companies (and dividends paid by companies) in a Contracting State:
  • That derive income primarily from other states:
    • from banking, shipping, financing, or insurance activities; or
    • by being the headquarters, coordination center or similar entity providing administrative services or other support to a group of companies which carry on business primarily in other states; and
  • The income from such activities bears a significantly lower tax burden under the laws of that State than income from similar activities carried out within that State or from providing services or support to companies carrying on business in the State.

In relation to the new Articles added to the treaty, the subsequent Articles are renumbered accordingly.

The protocol will enter into force 30 days after the ratification instruments are exchanged and will apply from 1 January of the year following its entry into force.