New Tax Treaty between Sweden and the Netherlands signed
On 24 June 2026, Sweden and the Netherlands signed a new tax treaty that will replace the current treaty from 1991. The purpose of the treaty is to avoid double taxation, counter tax evasion and modernize the rules in line with the current OECD Model Tax Convention. The treaty has not yet entered into force, and no exact date has been set. However, it introduces several significant changes.
Key changes from a personal taxation perspective
- Taxation of pensions: Unlike the current rules, under which pensions are generally taxed only in the state of residence (with the exception of pensions under the social security system), the state in which the pension rights were earned will now also be allowed to tax the pension. This means, for example, that a person resident in Sweden who receives a Dutch service pension may be taxed in both the Netherlands and Sweden, with a right to credit in Sweden for Dutch tax paid in order to avoid double taxation.
- Extended taxing rights on emigration: The so-called ten-year rule will have a broader effect. Capital gains on shares and similar assets may be taxed during the year of emigration and the ten following calendar years, compared with five years under the current treaty.
- New rules for dividends: The treaty also includes amended rules for dividends between companies. The ownership threshold for avoiding withholding tax on dividends is reduced from 25 percent to 10 percent, provided that certain conditions are met.
- The rules for board members are expanded: The current provisions, under which directors’ fees may be taxed in both the state of residence and the state of the source, are expanded to also cover people in general management positions.
- Certain articles have been removed entirely: Article 14, concerning independent personal services, Article 20, concerning professors and teachers, and Article 23, concerning the taxation of capital, have been removed from the new treaty.
Amendments to the Tax Treaty between Ireland and Sweden
On 26 June 2026, Sweden and Ireland signed a protocol amending the existing tax treaty between the two countries. The protocol does not introduce any major changes to the allocation of taxing rights for, for example, pensions, dividends or capital gains, but it does include several important procedural and anti-abuse related changes.
Key changes
- Introduction of a principal purpose test (PPT): A new Article 28A is proposed, under which a benefit under the tax treaty may be denied if, having regard to all relevant circumstances, it is reasonable to conclude that one of the principal purposes of an arrangement or transaction was to obtain the relevant treaty benefit. However, the benefit may still be granted if it is shown to be consistent with the object and purpose of the relevant treaty provision. The rule is intended to counter tax avoidance and so-called treaty shopping.
- New preamble to the treaty: The treaty’s preamble is updated to clarify that the purpose of the treaty is not only to eliminate double taxation, but also to prevent opportunities for double non-taxation or reduced taxation through tax evasion or tax avoidance arrangements.
- Enhanced mutual agreement procedure (MAP): The provisions on mutual agreement between the competent authorities are modernized. A taxpayer who considers that they have been taxed contrary to the treaty will be able to present the case to the competent authority of either state for review.
- Introduction of arbitration: If the competent authorities are unable to resolve a case within three years, the taxpayer may request that unresolved issues be submitted to binding arbitration. This strengthens legal certainty and reduces the risk of prolonged disputes between the treaty states.
For the protocol to enter into force, it must be approved by the Swedish Parliament.
Amendments to the Tax Treaty between Cyprus and Sweden
On 3 July 2026, Sweden and Cyprus signed a protocol amending the tax treaty between the two countries. The most significant change is the proposed introduction of a principal purpose test (PPT), similar to the one proposed in the protocol amending the tax treaty between Ireland and Sweden. The protocol also includes proposals for a new anti-abuse focused preamble, as well as modernized rules on exchange of information and mutual agreement procedure (MAP).
For the protocol to enter into force, it must be approved by the Swedish Parliament.
Skeppsbron Skatt’s comment
The proposed amendments to the tax treaties between Sweden and the Netherlands, Cyprus and Ireland strengthens the rules against tax treaty abuse and modernizes the treaties. Some of the amendments involve substantive changes that may affect the taxation of, among other things, pensions, capital gains and dividends. For individuals and companies with international connections, it may therefore be advisable to review existing structures and consider the potential impact of the proposed rules when making future arrangements.
