Sweden–France treaty gains PPT anti-abuse test and wider MAP access

Sweden and France signed a protocol on 22 May 2023Skatteverket amending their 1990 double-tax treatySkatteverket (27 November 1990) to insert the BEPS minimum standardsSkatteverket, and the government proposes that parliament approve the protocolSkatteverket and adopt the matching amendment to Lag (1991:673) om skatteavtal mellan Sverige och FrankrikeSkatteverket so the treaty as amended applies as Swedish law. Both states had signed and ratified the Multilateral Convention (MLI, signed by Sweden 7 June 2017) and listed the 1990 treaty as covered, but Sweden reserved under MLI article 35(7) so that the changes take effect only after Sweden notifies the OECD depositary that domestic implementation is done — a notification not yet given. Rather than wait for the general MLI implementation method, Sweden contacted France bilaterally; the protocol route achieves the same substance while meeting Swedish demands for clarity and foreseeability in statute.

The protocol makes three changes. First, the preamble is replaced: the parties' common intention is now stated as eliminating double taxation on income and capital without creating opportunities for non-taxation or reduced taxation through tax evasion or avoidanceSkatteverket, including treaty shopping for the indirect benefit of third-state residents — language aligned with the OECD Model Convention preamble and MLI article 6.

Second, a new article 28A inserts the Principal Purpose Test (PPT)Skatteverket: a treaty benefit is denied where it is reasonable to conclude, having regard to all relevant facts and circumstances, that obtaining the benefit was one of the principal purposes of an arrangement or transaction that directly or indirectly resulted in it — unless granting the benefit would be in accordance with the object and purpose of the relevant treaty provisionsSkatteverket. Sweden and France chose the PPT alone (MLI article 7 / OECD Model article 29(9)) over a limitation-on-benefits rule. Anyone claiming withholding-rate relief or other benefits under the Sweden–France treaty must now pass this purpose testSkatteverket.

Third, article 25(1) on mutual agreement procedure is widenedSkatteverket: a person who considers that a measure entails or will entail taxation not in accordance with the treaty may present the case to the competent authority of either contracting stateSkatteverket, where previously the request went to the authority of the person's state of residenceSkatteverket — matching OECD Model article 25(1) and MLI article 16.

The protocol enters into force on the thirtieth day after the last of the two states' written notifications that domestic procedures are completeSkatteverket (protocol article IV); the timing therefore cannot yet be fixedSkatteverket. The implementing amendment to Lag (1991:673) enters into force on a date the government setsSkatteverket. Once the protocol is in force, it applies to withholding taxes on amounts paid or credited on or after 1 January of the calendar year following entry into forceSkatteverket, and to other income taxes for tax years beginning on or after 1 January of that following yearSkatteverket. The government expects no public-finance effect and no increased workload for Skatteverket or the administrative courts.

Legal basis: Prop. 2023/24:11 Ändring i skatteavtalet mellan Sverige och Frankrike (protocol signed 22 May 2023; Lag (1991:673)); Multilateral Convention (MLI) minimum standards under BEPS Actions 6 and 14.