The income and capital tax treaty between Armenia and Sweden was signed on 9 February 2016. The treaty is the first of its kind directly between the two countries, although the 1981 income and capital tax treaty between Sweden and the former Soviet Union had applied in respect of Armenia, but was terminated.
The treaty covers Armenia profit tax, income tax, and property tax. It covers the following Swedish taxes:
If a company is considered resident in both Contracting States, the competent authorities will determine the company's residence for the purpose of the treaty through mutual agreement. If no agreement is reached, the company will not be considered a resident of either State for the purpose of claiming any benefits provided by the treaty, except those provided by Articles 22 (Elimination of Double Taxation), 23 (Non-Discrimination) and 24 (Mutual Agreement Procedure).
The following capital gains derived by a resident of one Contracting State may be taxed by the other State:
Gains from the alienation of other property by a resident of a Contracting State may only be taxed by that State.
Both countries generally apply the credit method for the elimination of double taxation. However, in respect of dividends paid by an Armenian company to a Swedish company, Sweden will apply the exemption method in accordance with the provisions of Swedish law.
Article 26 (Limitation of Benefits) includes that an exemption or reduction of tax provided by the treaty will not apply to the income of companies:
Dividends paid by such companies will also not qualify for an exemption or reduction of tax provided by the treaty.
The protocol to the treaty, signed the same date, includes the provision that if Armenia signs an agreement with a current OECD member state (as of the date of signature of the protocol) that provides for a lower rate or exemption from tax on interest, such lower rate or exemption will automatically apply to interest covered by the Armenia-Sweden treaty.
The treaty 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.
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