Advanced

Skatteflyktslagens förhållande till skatteavtalen - Ett problem med flera dimensioner

Hallin, Josefina LU (2011) JURM01 20111
Department of Law
Abstract
Summary
When tax treaties are being applied in Swedish law, they are being applied after that the taxable income has been determined according to Swedish law. Usually the tax treaties are dividing the right to tax among the parties of the treaty; this means that the taxation right for one state usually is restricted.

Due to treaty abuse, the question arises, how to counter this abuse. The commentary on the OECD Model Tax Convention are giving the states a possibility to enforce domestic anti abuse rules, however, this possibility is not to be abused by the states by having rules that are too general. If the treaty is overridden by a national law that is too general, this constitutes “treaty override”.

The second part of the... (More)
Summary
When tax treaties are being applied in Swedish law, they are being applied after that the taxable income has been determined according to Swedish law. Usually the tax treaties are dividing the right to tax among the parties of the treaty; this means that the taxation right for one state usually is restricted.

Due to treaty abuse, the question arises, how to counter this abuse. The commentary on the OECD Model Tax Convention are giving the states a possibility to enforce domestic anti abuse rules, however, this possibility is not to be abused by the states by having rules that are too general. If the treaty is overridden by a national law that is too general, this constitutes “treaty override”.

The second part of the problem is that Swedish law must allow the anti abuse law to override a treaty. Since that the Act against Tax Avoidance not has been put to trial, we can only analyze its applicability. This analysis is based on the courts’ decisions that tax treaties normally have priority over national law and that the “CFC-laws”, but not the “ten years rule”, are found to be exceptions.

The conclusion I draw from my work is that the Act against Tax Avoidance is too general to be accepted as a domestic anti abuse rule according to the commentary. This due to its uncertainty and its general form, designed to be developed by the courts. Hence my conclusion, the fact is that no Swedish national law exists to prevent “treaty override” why it more or less comes down to “fair play” in the relation to other states. There are different theories regarding the reasons for why the treaty has priority, as its form, the existence of a presumption or its status as “Lex specialis”.

If the commentary may accept a law designed as the Act against Tax Avoidance it must also be defined as one of the exemptions that the Swedish courts recognize. The guidance is poor and what can be said is that both the commentary and the legislative history mention the “CFC-rules” and their compatibility with the convention. Anything similar has not been found regarding neither the Act against Tax Avoidance nor the “ten years rule”. Therefore, I draw the conclusion that the Act against Tax Avoidance is not an exemption where it has been clearly expressed that the tax treaty loses its priority. (Less)
Please use this url to cite or link to this publication:
author
Hallin, Josefina LU
supervisor
organization
alternative title
The Act against Tax Avoidance in relation to Tax Treaties
course
JURM01 20111
year
type
H3 - Professional qualifications (4 Years - )
subject
keywords
Skatterätt Skatteflykt Skatteavtal Tax treaties Skatteflyktslag Decemberdomar Intern rätt Skatteavtalsrätt
language
Swedish
id
1964080
date added to LUP
2011-05-27 12:56:42
date last changed
2011-05-27 12:56:42
@misc{1964080,
  abstract     = {Summary
When tax treaties are being applied in Swedish law, they are being applied after that the taxable income has been determined according to Swedish law. Usually the tax treaties are dividing the right to tax among the parties of the treaty; this means that the taxation right for one state usually is restricted. 

Due to treaty abuse, the question arises, how to counter this abuse. The commentary on the OECD Model Tax Convention are giving the states a possibility to enforce domestic anti abuse rules, however, this possibility is not to be abused by the states by having rules that are too general. If the treaty is overridden by a national law that is too general, this constitutes “treaty override”.  

The second part of the problem is that Swedish law must allow the anti abuse law to override a treaty. Since that the Act against Tax Avoidance not has been put to trial, we can only analyze its applicability. This analysis is based on the courts’ decisions that tax treaties normally have priority over national law and that the “CFC-laws”, but not the “ten years rule”, are found to be exceptions. 

The conclusion I draw from my work is that the Act against Tax Avoidance is too general to be accepted as a domestic anti abuse rule according to the commentary. This due to its uncertainty and its general form, designed to be developed by the courts. Hence my conclusion, the fact is that no Swedish national law exists to prevent “treaty override” why it more or less comes down to “fair play” in the relation to other states. There are different theories regarding the reasons for why the treaty has priority, as its form, the existence of a presumption or its status as “Lex specialis”. 

If the commentary may accept a law designed as the Act against Tax Avoidance it must also be defined as one of the exemptions that the Swedish courts recognize. The guidance is poor and what can be said is that both the commentary and the legislative history mention the “CFC-rules” and their compatibility with the convention. Anything similar has not been found regarding neither the Act against Tax Avoidance nor the “ten years rule”. Therefore, I draw the conclusion that the Act against Tax Avoidance is not an exemption where it has been clearly expressed that the tax treaty loses its priority.},
  author       = {Hallin, Josefina},
  keyword      = {Skatterätt
Skatteflykt
Skatteavtal
Tax treaties
Skatteflyktslag
Decemberdomar
Intern rätt
Skatteavtalsrätt},
  language     = {swe},
  note         = {Student Paper},
  title        = {Skatteflyktslagens förhållande till skatteavtalen - Ett problem med flera dimensioner},
  year         = {2011},
}