The double taxation agreement (DTA) signed by the UK and Sweden on 26 March 2015 entered into force on 20 December 2015. The new agreement replaces the previous bilateral DTA between the two countries signed in 1983.

The agreement takes effect in Sweden from 1 January 2016 and in the UK for withholding tax from 1 January 2016; for corporation tax from 1 April 2016; and for income tax and capital gains tax from 6 April 2016. The agreement generally follows the provisions of the OECD Model.

The agreement provides for a 0% withholding tax on dividends if the beneficial owner of the dividends is a company that controls directly or indirectly at least 10% of the voting power in the company paying the dividend. In other cases the agreement provides for a maximum withholding tax of 5% on dividends. The agreement also provides for payments of interest and royalties to be taxed only in the state of residence of the recipient.

The Article providing for a mutual agreement procedure includes a provision for unresolved issues to be submitted to arbitration if the competent authorities are unable to reach agreement to resolve the case within three years from the presentation of the case to the competent authority of the other State.

Article 27 of the agreement provides for a limitation of treaty benefits where a company resident in a Contracting State derives its income primarily from other states from shipping and financial activities or from being a headquarters, a coordination center, or an entity providing administrative services or other support to a group of companies carrying on business mainly in other States; and where the income bears significantly lower tax than income from similar activities performed within that State. Provisions conferring an exemption or reduction of tax do not apply to the income of this type of company.