Last November 2019, Government Decree 1058/2019 has been published by Finland. In this document, Finland, that acts as depositary, sets November 28th, 2019, as the entry into force date for the amending protocol to the Nordic Tax Treaty on income and capital, dated 1996.
The protocol applies from 1 January 2020. The Contracting States to the Nordic tax treaty include Denmark, the Faroe Islands, Finland, Iceland, Norway, and Sweden and includes the following relevant changes:
On the preamble section, OECD BEPS standards are extensively implemented to align it whit those international trends.
In a similar way, General Taxation Rules under Article 26 are substantially amended with the insertion of Limitation of Benefits (LOB) clause. In this case, new language provides that a benefit under the treaty will not be granted in respect of an item of income or capital if it is reasonable to conclude, having regard to all relevant facts and circumstances, that obtaining that benefit was one of the principal purposes of any arrangement or transaction that resulted directly or indirectly in that benefit, unless it is established that granting that benefit would be in accordance with the object and purpose of the relevant provisions of the treaty.
The Mutual Agreement Procedure (MAP) is also promoted, by facilitating that a MAP case may be submitted to the competent authority of any one of the Contracting States concerned (originally a resident of a Contracting State may only submit to the competent authority of that State).
Finally, in a more local view concerning Faroe Islands, it is amended with respect to their right to repeal a provision of Article 25 (Avoidance of Double Taxation) regarding a reduction of tax by the Faroe Islands in respect of the taxation of wages under Article 15 (Dependent Personal Services) and Article 21 (Activity Connected to the Preliminary Study, Exploration or Use of Petroleum Resources).
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