SWEDEN Law and Practice Contributed by: Christoffer Dahl, Niclas Söderlund, Michel Weimer and Björn Mårtensson, XR Legal
XR LEGAL ADVOKAT AB Västra Trädgårdsgatan 6A, 111 53 Stockholm Tel: +46738043399 Email: Christoffer.dahl@xrlegal.se Web: Xrlegal.se
1. Sources and Principles 1.1 Domestic Sources of International Tax Law Sweden has a dualist legal system, whereby inter - national law must be ratified in domestic legislation. Constitutional principles prohibit tax without law and retroactive taxation (with rare exceptions). There are several sources within which to find guidance on inter - national tax law: • The Income Tax Act is the primary domestic source for income taxation. Other legislation may be relevant in both domestic and cross-border situa - tions (such as the Withholding Tax Act, the Special Income Tax Act on Employment for Non-Residents (SINK), Swedish tax treaties, etc). • Preparatory works, including the background, discussions and analysis behind a certain piece of legislation, are always published by the govern - ment. They provide a more detailed walk-through of the legislative process and the reasons for and criticisms of the proposed law. • Case law, primarily from the administrative courts, provides guidance on the interpretation of the law. Precedents from the Supreme Administrative Court are binding. • OECD publications, such as the Transfer Pricing Guidelines, provide guidance on the interpretation of domestic law. • Doctrinemay also provide guidance on the interpre - tation of Swedish law. • The Swedish Tax Agency (STA) provides extensive legal guidance based on its opinion on the inter - pretation of law. However, the STA guidance is not legally binding upon either the taxpayer or the STA,
meaning that taxpayers may challenge STA opin - ions by proposing a different interpretation, and also that the STA may change its opinion at any time, with or without developments in tax legisla - tion and/or case law. 1.2 Hierarchy of Sources As mentioned in 1.1 Domestic Sources of Interna- tional Tax Law , international tax legislation must be ratified in order to be legally binding in Sweden. Since Sweden joined the EU, EU law generally has prec - edence over Swedish legislation. With that said, international tax law sources such as OECD guidance and other similar sources may be used as bases for interpretation of the relevant tax legislation. This has, to a certain extent, been con - firmed in case law. In a few cases from the Supreme Administrative Court, the Court has stated that, even though the OECD Transfer Pricing Guidelines are not legally binding for Swedish authorities, they provide such a well-balanced view on the relevant issues that they may be used as a basis for interpretation. The STA agrees with this view of the OECD Transfer Pric - ing Guidelines. Sweden’s tax treaties are incorporated into Swedish law. The tax treaties generally have precedence over other domestic legislation. 1.3 OECD Model/United Nations Influence on Treaty Practice Sweden generally follows the OECD Model Tax Con - vention.
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