Treaty Withholding Tax Rates The following table provides treaty withholding rates for dividends and royalties. Interest payments are not subject to withholding tax under Swedish law. Dividends Royalties (a) Normal Treaty Reduced Normal Treaty Reduced Residence of Rate Rate (b) Rate Rate (c) Recipient % % % % Argentina 30 0 15 0 Australia 15 0 10 0 Austria 10 5 10 0 Bangladesh 15 10 10 0 Barbados 15 5 5 0 Belarus 10 0/5 (e) 10 5 Belgium 15 5 (j) 0 0 Bolivia 15 0 15 0 Botswana 15 - 15 0 Brazil 25 15 15 0 Bulgaria 10 0 5 0 Canada 15 0 10 0 China 10 0 10 7 Cyprus 15 5 0 0 Czechoslovakia(d)10 0 5 0 Denmark 15 0 0 0 Egypt 0 0 0 0 Estonia 15 5 10 5 Faroe Islands 15 0 0 0 Finland 15 0 0 0 France 15 0 0 0 Gambia 15 0/5 (f) 12.5 5 Germany 15 0 0 0 Greece 0 0 5 0 Hungary 15 5 0 0 Iceland 15 0 0 0 India 25 15 20 0 Indonesia 15 10 15 10 Ireland 15 5 0 0 Israel 15 5 30 0 Italy 15 10 (j) 5 0 Jamaica 22.5 10 10 0 Japan 15 10 10 0 Kenya 25 15 20 0 Korea 15 10 15 10 Latvia 15 5 10 5 Lithuania 15 5 10 5 Luxembourg 15 5 (j) 0 0 Malaysia 0 0 0 0 Malta 15 5 10 0 Mauritius 15 5 15 0 Mexico 15 0/5 (g) 10 0 Morocco 0 0 0 0 Namibia 15 0/5 (h) 15 5 Netherlands 15 0 0 0 New Zealand 15 0 10 0 Norway 15 0 0 0 Pakistan 30 15 10 0 Peru 30 0 20 0 Philippines 25 15 25 15 Poland 15 5 10 0 Romania 10 0 10 0 Russian 15 5 0 0 Federation Singapore 15 10 0 0 South Africa 30 0 15 0 Spain 15 10 (j) 10 0 Sri Lanka 15 0 10 0 Switzerland 5 0 0 0 Tanzania 25 15 20 0 Thailand 20 15 15 0 Trinidad and 20 10 20 0 Tobago Tunisia 20 15 15 5 Turkey 20 15 10 0 USSR (d) 15 - 0 0 United Kingdom 5 0 0 0 United States 15 5 0 Venezuela 10 5 10 7 Vietnam 15 5/10 (i) 15 5 Yugoslavia (d) 15 5 0 0 Zambia 15 5 10 - Zimbabwe 20 15 10 0 Non-treaty 30 - - (a) 0 countries
(a) Royalties paid to non-residents are not subject to withholding tax as such but are taxed as Swedish-source income at the normal corporate tax rate of 28%. However, under most income tax treaties, the rate of tax is reduced.
(b) The reduced tax rate applies if a parent owns at least the minimum percentage of the paying company prescribed by the relevant treaty.
(c) Under certain treaties if specific conditions are satisfied, the rate of tax is further reduced. The relevant treaty should be consulted.
(d) Sweden will apply the treaties with Czechoslovakia, the USSR and Yugoslavia to the republics comprising these former countries unless a law is enacted providing otherwise.
(e) The 0% rate applies if the recipient owns 100% of the capital of the payer and the profits out of which the dividends are paid are derived from agriculture, forestry, fishing, industry or tourism. The 5% rate applies if the beneficial owner of the dividend is a company that owns at least 30% of the capital of the payer.
(f) The 0% rate applies if the beneficial owner of the dividends is a company that owns 80% of the capital stock of the payer. The 5% rate applies if the beneficial owner is a company that owns at least 15% of the voting power of the payer.
(g) The 0% rate applies if the recipient is a company that holds at least 25% of the voting power of the payer and if 50% of the voting power of the recipient is held by residents of the recipient's country of residence. The 5% rate applies if the recipient holds at least 10% of the voting power of the payer.
(h) The 0% rate applies if the recipient is a company that owns at least 50% of the payer and if 50% of the recipient is owned by residents of the recipient's country of residence. The 5% rate applies if the recipient is a company that owns at least 10% of the payer.
(i) The 5% rate applies if the beneficial owner of the dividend is a company that owns at least 70% of the capital of the payer or has invested the equivalent of at least US$ 12 million in the payer. The 10% rate applies if the beneficial owner is a company that owns at least 25% of the capital of the payer.
(j) No withholding tax is imposed on dividends paid to a parent company resident in another EU state if the recipient owns at least 25% of the capital of the payer.
The contents of this article are intended as a general guide to the subject matter. Specialist advice should be sought for your specific circumstances.
For further information contact Per Snellman on Tel: +468 613 9000 0r Fax: +468 791 7511; or enter a text search 'Ernst & Young' and 'Business Monitor'.