skattmenningar

Skattmenningar, or tax treaties, are agreements between two or more states that determine how taxes on income and wealth from cross-border activities are allocated and collected. Their primary purpose is to prevent double taxation and to reduce opportunities for tax evasion and avoidance, thereby facilitating international trade and investment.

These agreements typically specify which country may tax different categories of income, such as business profits, employment income, dividends, interest, royalties, and capital gains, and they often include rules for when a person or a company has a permanent establishment in another country. They also establish methods to relieve double taxation, usually through the exemption method or the credit method, and may contain tie-breaker rules to determine residency when an individual could be considered a resident of more than one country.

Most skattmenningar include provisions on non-discrimination, exchange of information, and mutual assistance in tax collection. They provide a mechanism for dispute resolution, commonly a mutual agreement procedure, to settle differences in interpretation or application of the treaty. Tax treaties are negotiated bilaterally or multilaterally and are often based on model texts such as the OECD Model Tax Convention or the United Nations Model. They can be updated or extended through instruments like the Multilateral Instrument to address evolving tax challenges and BEPS concerns.

The practical effect is lower withholding taxes on cross-border payments and greater tax certainty for individuals and businesses operating internationally. Limitations include the need for ongoing updates, potential for treaty shopping if safeguards are weak, and the interaction with domestic tax laws and anti-avoidance rules.