Law (2016:928) Whether Tax Agreements Between Sweden And Azerbaijan

Original Language Title: Lag (2016:928) om skatteavtal mellan Sverige och Azerbajdzjan

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/Enter into force I:den day Government/

section 1 of the agreement for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income which Sweden and Azerbaijan signed on February 10, 2016 shall, together with the Protocol thereto and forming part of this, apply that law in this country. The agreement and the Protocol is written in Swedish, Azerbaijani and English. The Swedish and the English text shown in the annex to this law.



section 2 of the tax rules of the agreement shall apply only to the extent that these causes restriction of the liability which would otherwise exist in Sweden.



Transitional provisions



2016:928



1. This law shall enter into force on the day on which the Government determines.



2. The law shall apply in the case of



a) withholding taxes, on amounts paid or tillgodoförs on 1 January of the year immediately following the date on which the Act comes into force, or later, and



(b)) other taxes on income, on a tax levied for the fiscal year that begins on 1 January of the year immediately following the date on which the Act comes into force or later.



Annex



Agreement between the Government of the Kingdom of Sweden and the Government of the Republic of Azerbaijan for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income



The Government of the Kingdom of Sweden and the Republic of Azerbaijan's Government, desiring to conclude an agreement for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, have agreed as follows:



Article 1



Persons to whom the agreement applies



This agreement shall apply to persons domiciled in a Contracting State, or in both Contracting States.



Article 2



Taxes covered by the agreement



1. this Agreement shall apply to taxes on income imposed on behalf of a Contracting State, its administrative territorial underavdelningars or local authorities, irrespective of the manner in which taxes are levied.



2. of course, With taxes on income all taxes imposed on income in its entirety or on elements of income, including taxes on gains from the alienation of movable or immovable property, taxes on the total payroll that is paid by enterprises as well as taxes on capital appreciation.



3. The currently outgoing taxes to which this Agreement shall apply are in particular:



a) in Azerbaijan:



1) gains tax for legal entities,



2) the income tax on natural persons;



(referred to below as the "Azerbaijanian treasure") (b)) in Sweden:



1) state income tax,



2) withholding tax,



3) the Special income tax for non-residents,



4) the Special income tax for non-resident artists and others, and



5) the municipal income tax,



(referred to below as "Swedish tax").



4. the agreement also applies to the taxes of the same or substantially similar form, after the signing of the agreement will be charged in addition to or in place of the currently outgoing taxes. The competent authorities of the Contracting States shall notify each other of the essential changes to the respective tax legislation.



Article 3



General definitions



1. Unless the context gives rise to different, for the purposes of this agreement the following expressions the following meaning:



(a)), "Azerbaijan" refers to the Republic of Azerbaijan's territory, including the area of the Caspian Sea belonging to the Republic of Azerbaijan, the Republic of Azerbaijan airspace above the Republic of Azerbaijan within which exercises its sovereign rights and jurisdiction with respect to its base, the bottom of the sea and natural resources, and other areas that have been, or hereafter will be laid down in accordance with Azerbaijani law and the rules of international law;



b) "Sweden" means the Kingdom of Sweden and, when the expression is used in the geographical sense, comprises the territory of Sweden, Sweden's territorial sea and other maritime areas over which Sweden in accordance with the rules of international law falling within the sovereignty or jurisdiction of third countries,



(c)) "a Contracting State" and "the other Contracting State" mean Azerbaijan or Sweden, depending on the context,



d) "person" includes a natural person, company or other association. A partnership or a joint venture "constituted under Azerbaijani law for tax purposes is treated as a taxable entity under Azerbaijani law, be treated as a person for the purposes of this agreement;



e) "company" means any legal person or any other that for tax purposes is treated as a legal person,



f) "company in a Contracting State" and "enterprise of the other Contracting State" mean companies conducted by the resident of a Contracting State, each company operated by a resident of the other Contracting State,



g) "international transport" means transport by ships or aircraft used by an enterprise of a Contracting State, except when the ship or aircraft are used exclusively between places in the other Contracting State,



h) "national" means:



1) natural person which has the nationality of a Contracting State,



2) any legal person, partnership or other Association incorporated under the legislation of a Contracting State,



in) "competent authority" means:



1) in Azerbaijan, skattedepartementet and the Ministry of finance,



2) in Sweden, Finance Minister's ambitions, his authorised representative or the authority which has been assigned to be a competent authority for the purposes of this agreement.



2. Where a Contracting State applies the contract at any time is deemed, unless the context otherwise raises, each expression that is not defined in the agreement have the same meaning as the expression has at that time under the State's laws regarding such taxes to which the agreement applies, and the importance that the term has under the applicable tax laws of that State prevail over the significance of the expression given in the other laws of this State.



Article 4



Resident



1. for the purposes of this agreement, the term "resident of a Contracting State" person under the legislation of that State, is liable to tax there on the basis of domicile, residence, place of management, place of incorporation or any other similar circumstance, and also includes that State, its public-sector bodies or institutions, administrative subdivisions or local authorities. This expression


However, it does not include a person who is liable to tax in that State, only of income from sources in that State.



2. where by reason of the provisions of paragraph 1 an individual is a resident of both Contracting States, his residence is determined as follows:



(a)) he is considered to be resident only of the State in which he has a permanent home available to him. If he has such a property in both States, he shall be deemed to be a resident only of the State with which his personal and economic relations are the strongest (Centre of life interests),



(b)) if it cannot be settled in the State he has Center for their living interests or if he's not in either State has a permanent home available to him, he is considered to be a resident only of the State where he usually resides,



(c)) if he usually resides in both States, or if he does not reside permanently in any of them, he shall be deemed to be a resident only of the State in which he is a national,



d) if he is a national of both States, or if he is not a national of any of them, the competent authorities of the Contracting States to settle the question by mutual agreement.



3. where by reason of the provisions of paragraph 1 a person other than an individual is a resident of both Contracting States, the competent authorities shall seek settle the question by mutual agreement.



Article 5 permanent establishment



1. for the purposes of this agreement, the term "permanent establishment" a fixed place of business, from which a business is wholly or partly carried on.



2. The term "permanent establishment" includes especially:



a) place of business management,



b) branch,



c) offices,



d) factory,



e) workshop, f) installation or construction for the exploration of natural resources, and



g) mine, an oil or gas well, a quarry or any other place of extraction of natural resources.



3. Place for building, construction, Assembly or installation activity or the activity of monitoring in connection therewith constitutes a permanent establishment only if such activities are going on longer than twelve months.



4. The provision of services, including consultancy services, of a Contracting State by an enterprise through employees or other personnel engaged by the enterprise for such purpose, constitutes a permanent establishment only if such activities are taking place (in respect of the same or contiguous project) within that State for more than six months in any 12-month period.



5. Notwithstanding the preceding provisions of this article the expression "permanent establishment" shall not include:



(a)) the use of facilities solely for storage, exhibition, or the disclosure of the company belonging to goods, but only to the extent that such use of devices does not include the sale of goods,



(b) holding of a company belonging to) stock in trade solely for storage, exhibition or distribution, but only to the extent that such an investment does not involve the sale of goods,



(c) holding of a company belonging to) stock exclusively for working or processing by other company,



d) holding of fixed place of business exclusively for the purchase of goods or obtaining information for the company,



e) holding of fixed place of business solely for the company engage in other activities of a preparatory or auxiliary nature,



f) holding of fixed place of business solely for any combination of activities mentioned in subparagraphs (a) to (e) above)), provided that all the activities of the permanent place of business resulting from this combination is of a preparatory or auxiliary character.



6. If a person who is not the independent representative on which paragraph 7 applies – is operating in a Contracting State by an enterprise of the other Contracting State and has, in the first State and which regularly uses full power to conclude contracts in the name, it is considered that – notwithstanding the provisions of paragraphs 1 and 2 to have a permanent establishment in the first-mentioned State in respect of each activity for which that person carries on for the company. However, this does not apply, if the activities of such person are limited to the conduct referred to in paragraph 5 and that, if it were carried out from a fixed place of business, would not make this fixed place of business a permanent establishment under the provisions of that paragraph.



7. Enterprises of a Contracting State are not considered to have a permanent establishment in the other Contracting State merely because it carries on business in that other State through a broker, Commissioner, or other independent agent, provided that such person thus engaged in their normal business activities. If such an agent's activities are exercised exclusively or almost exclusively for the company he is considered not to be an independent representative, referred to in this paragraph.



8. the fact that a company resident in a Contracting State controls or is controlled by a company resident in the other Contracting State or a company which carries on business in that other State (whether from a permanent establishment or otherwise), shall not of itself constitute either company to be a permanent establishment of the other.



Article 6



Income from immovable property



1. income, as a person resident in one Contracting State acquires immovable property (including income from agriculture or forestry) situated in the other Contracting State, may be taxed in that other State.



2. The term "immovable property" has the meaning the term has under the law of the Contracting State in which the property is situated. The term includes, however, always accessory to immovable property, the living and the dead furniture in agriculture and forestry, rights to which the provisions of civil law relating to immovable property apply, buildings, tenancies of immovable property, as well as the right of changing or fixed remuneration for the use of, or the right to use mineral occurrence, source or another natural resource.

Ships, boats and aircraft is not considered to be real property.



3. the provisions of paragraph 1 shall apply to income that is acquired through the use immediately, through rental or other use of the immovable property.



4. the provisions of paragraphs 1 and 3 shall also apply


income from immovable property belonging to the company and on income from immovable property used for the independent professional practice.



Article 7



Income from operating



1. the Income of an enterprise of a Contracting State to acquire, be taxable only in that State unless the enterprise carries on business in the other Contracting State through permanent establishment situated there. If the enterprise carries on business has just given way, the company's income is taxed in the other State but only so much thereof as is attributable to that permanent establishment.



2. enterprises of a Contracting State carries on business in the other Contracting State through permanent establishment situated there are entered, unless the provisions of paragraph 3 shall give rise to another, in either Contracting State to the permanent establishment the income that it can be assumed that the establishment would have acquired, it was an independent company that operated out of the same or a similar nature under the same or similar conditions and independently completed the business with the undertaking to which the establishment belongs.



3. In determining permanent establishment income shall be allowed a deduction for expenses incurred for the activities of the permanent establishment, including included expenses for management and public administration, whether the expenditure incurred in the State in which the permanent establishment is situated or elsewhere.



4. in so far as a Contracting State used determine the income attributable to a permanent establishment on the basis of a distribution of the company's entire income on the different parts of the company, do not prevent the provisions of paragraph 2 in such Contracting State taxable income is determined by such a procedure. The allocation method used should, however, be such that the result is consistent with the principles set out in this article.



5. income not attributable to a permanent establishment by reason only of the fact that the goods purchasing by the permanent establishment to the efforts for the company.



6. for the purposes of the preceding paragraphs shall be determined income as is attributable to that permanent establishment by the same procedure from year to year, unless good and sufficient reasons causing the other.



7. Included in income by operating income being treated especially in other articles of this agreement, the provisions of those articles shall not be affected by the provisions of this article.



Article 8



Sea and air transport



1. income acquired by the enterprises of a Contracting State through the use of ships or aircraft in international traffic shall be taxable only in that State.



2. For the purposes of this article includes income from the use of ships or aircraft in international traffic:



a) income acquired by lease of unmanned ships or aircraft in international traffic, and



b) income is acquired by use, maintenance or rental of containers in international traffic (including trailers and other equipment for the transport of containers) used for the transport of goods or merchandise,



where such rental or such use, maintenance or rental is incidental to the operation of ships or aircraft in international traffic.



3. the provisions of paragraph 1 shall also apply to income that is acquired through participation in a pool, a joint business or an international operating agency.



Article 9



Companies with associated enterprises



1. In cases where:



a) an enterprise of a Contracting State participates directly or indirectly in the management or control of an enterprise of the other Contracting State or own part in this undertaking, or



(b)) the same person participates directly or indirectly in the management or control of an enterprise of a Contracting State as an enterprise of the other Contracting State, or owns part of both of these corporate capital, observed the following.



If between businesses in terms of trade or financial relations be agreed or prescribed conditions, which differ from those which would have been agreed between independent companies, receives all the income, that without such conditions would have been one company but because of the conditions in question did not come about this company, be included in that company's income and taxed accordingly.



2. In cases where one Contracting State in the income of an enterprise of that State – and been accordingly – income taxes, for which an enterprise of the other Contracting State subject to tax in that other State and the income so included is such as would have been the first State on the terms agreed between the enterprises had been those which would have been agreed between independent enterprises that other State shall implement proper adjustment of the amount of tax charged on income there. When such adjustments are observed with the other provisions of this agreement and the competent authorities of the Contracting States in talks with each other when necessary.



Article 10



Dividend



1. Dividends paid by a company resident in a Contracting State to a resident of the other Contracting State may be taxed in that other State.



2. Dividends may be taxed in the Contracting State of which the company paying the dividends is a resident, according to the laws of that State, but if the beneficial owner of the dividends is resident in the other Contracting State, the tax shall not exceed:



a) 5 per cent of the gross amount of the dividends if the beneficial owner of the dividends is a company (other than a partnership) which holds directly at least 20 percent of the paying company's capital and has invested more than EUR 200 000 or the equivalent in the contract closing national currencies, b) 15 per cent of the gross amount of the dividends in all other cases.



3. The term "dividends" is understood in this article income from shares or other rights, not being debt-claims, with the right to share in profits, as well as income from other rights in companies under the law of the State in which the distributing company is resident for tax purposes shall be treated in the same way as income from shares.



4. the provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the dividends is resident in a Contracting State, carries on business in the other Contracting State, of which the company paying the dividends is a resident, from where the permanent establishment situated or exercising independent professional activities in the other State from where located


permanent device, and the proportion due to which the dividend is paid owns truly connected with the permanent establishment or the permanent devices. In such cases, apply the provisions of article 7 or article 14.



5. If the company resident in a Contracting State receives income from the other Contracting State, that other State may not tax the dividend that the company pays, except to the extent that the dividend is paid to a resident of that other State or insofar as the proportion due to which the dividend is paid owns truly connected with a permanent establishment or a permanent device in the other State nor on the company's undistributed profits to a tax based on the company's undistributed profits, even if the dividends or undistributed profit consists wholly or partly of income arising in that other State.



Article 11



Interest rate



1. interest, stemming from a Contracting State and paid to a resident of the other Contracting State, may be taxed in that other State.



2. interest may also be taxed in the Contracting State from which it is derived, under the legislation of that State, but if the beneficial owner of the interest is resident in the other Contracting State, shall not exceed 8 per cent of the gross amount of the interest.



3. Notwithstanding the provisions of paragraph 2, interest referred to in paragraph 1, shall be taxable only in the Contracting State in which the beneficial owner of the interest is a resident of one of the following conditions is true:



a) payer or the recipient of the interest, or loan for which the interest is paid is guaranteed by, a Contracting State, its bodies governed by public law, administrative territorial subdivision or local authority or central bank of a Contracting State,



b) the interest is paid on account of a loan which has been approved by the Government of the Contracting State where the payer of the interest is a resident,



c) the interest is paid on account of a loan granted or guaranteed by the Swedish International Development Cooperation Agency (SIDA), the Swedish Export Credit Corporation (SEK), Swedfund International AB, the Swedish Export Credits Guarantee Board, Republic of Azerbaijan's State Oil Fund, or by another institution of public character whose purpose is to promote exports or development.



4. The term "interest" shall be understood in this article income of each kind of claim, whether secured by mortgage on immovable property or not, and whether it involves the right to share in the debtor's profits or not. The term refers to the particular income from securities issued by State and bonds or debentures, including premiums and benefits pertaining to such securities, bonds or debentures; Penalty for late payment is not considered as interest for the purpose of this article.



5. the provisions of paragraphs 1, 2 and 3 shall not apply if the beneficial owner of the interest is resident in a Contracting State, carries on business in the other Contracting State, from which the interest arises, from where the permanent establishment situated or exercising independent professional activities in the other State from where located permanent device, as well as the claim in respect of which the interest is paid owns truly connected with the permanent establishment or the permanent devices. In such cases, apply the provisions of article 7 or article 14.



6. interest shall be deemed to arise from a Contracting State where the payer is a resident of that State. If, however, the person paying the interest, whether he is domiciled in a Contracting State or not, has in a Contracting State a permanent establishment or a permanent arrangement in connection with which the liability arose on which the interest is paid, and the interest rate borne by the permanent establishment or the permanent devices , interest rate is considered to come from the State in which the permanent establishment or the permanent devices are available.



7. where by reason of a special relationship between the payer and the beneficial owner of the interest or between both of them and any other person the amount of the interest, having regard to the debt claim in respect of which the interest is paid, exceeds the amount which would have been agreed between the payer and the beneficial owner of the interest if such links do not exist, the provisions of this article shall apply only to the last-mentioned amount. In such case, the excess amount is taxable according to the laws of each Contracting State in accordance with the other provisions of this agreement.



Article 12



Royalty



1. Royalty, as derived from a Contracting State and paid to a resident of the other Contracting State, may be taxed in that other State.



2. However, Royalties may also be taxed in the Contracting State from which it is derived, under the legislation of that State, but if the recipient is entitled to the royalty may not exceed:



a) 5 per cent of the gross amount of the royaltyns if the royalty relating to payment for the use or right to use any patent, trade mark, design or model, plan, secret formula or secret manufacturing process, or for information concerning industrial, commercial or scientific experience.



b) 10 per cent of the gross amount of the royaltyns in other cases.



3. The term "royalties" in this article, of course, every kind of payment that is received as compensation for the use of, or the right to use any copyright of literary, artistic or scientific work, including cinematograph films and films or tapes for radio or television broadcasting, any patent, trade mark, design or model, plan, secret formula or secret manufacturing process or for information concerning industrial, commercial or scientific experience.



4. the provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of royalties is domiciled in a Contracting State, carries on business in the other Contracting State, from which the royalty arises, from where the permanent establishment situated or exercising independent professional activities in the other State from where located permanent device, and the right or property in respect of which the royalties are paid owns truly connected with the permanent establishment or the permanent devices. In such cases, apply the provisions of article 7 or article 14.



5. Royalties shall be deemed to arise from a Contracting State where the payer is a resident of that State. If, however, the person paying the royalties, whether he is


resident in a Contracting State or not, has in a Contracting State a permanent establishment or a permanent arrangement in connection with which the obligation to pay the royalty arises, and the royalty charged to the permanent establishment or the permanent device, are considered royalty come from the State in which the permanent establishment or the permanent devices are available.



6. where by reason of a special relationship between the payer and the beneficial owner of royalties or between both of them and any other person the amount of the royalties, having regard to the use, right or information for which the royalty is paid, exceeds the amount which would have been agreed between the payer and the beneficial owner of royalties if such links do not exist, the provisions of this article shall apply only to the last-mentioned amount. In such case, the excess amount is taxable according to the laws of each Contracting State in accordance with the other provisions of this agreement.



Article 13



Capital gain



1. Profit, as a person resident in one Contracting State acquires from the alienation of such immovable property referred to in article 6 and situated in the other Contracting State, or because of the disposal of shares in a company whose assets consists mainly of such property, may be taxed in that other State.



2. Gains from the alienation of movable property forming part of the business assets of a permanent establishment which an enterprise of a Contracting State has in the other Contracting State, or by movable property pertaining to a permanent arrangement for the exercise of independent professional activity, as the resident of a Contracting State has in the other Contracting State, may be taxed in that other State.

The same applies to gains from the alienation of such a permanent establishment (alone or with the whole enterprise) or of such a permanent device.



3. Profit as a resident of a Contracting State acquires from the alienation of ships or aircraft in international traffic, or movable property which are attributable to the use of such ships or aircraft, shall be taxable only in that State.



4. Gains from the alienation of any property other than that referred to in paragraphs 1, 2 and 3 shall be taxable only in the Contracting State of which the alienator is a resident.



5. Gains from the alienation of assets, which are acquired by a natural person who has been domiciled in a Contracting State and a resident of the other Contracting State, may, notwithstanding the provisions of paragraph 4 to be taxable in the first State of the transfer of the assets occurs at any time during the five years immediately after the date on which the person ceased to be resident in that State.



Article 14



Independent professional activities



1. income, as a natural person resident in one Contracting State acquires through the exercise of profession or other independent activity, shall be taxable only in that State. Such income shall, however, also be taxed in the other Contracting State if:



a) the natural person's stay in the other Contracting State lasts for a period or periods of time as a total exceeding 183 days in any twelve-month period, but only so much of them as is attributable to the activities exercised in the other State, or



b) the natural person has a permanent device in the other Contracting State, who are regularly available to him in order to exercise its activity, but only so much of them as is attributable to that permanent device.



2. The expression "liberal profession" includes especially independent scientific, literary, artistic, educational or teaching activities as well as such independent operations, such as doctors, lawyers, engineers, architects, dentists and accountants.



Article 15



Single service



1. the provisions of articles 16, 18 and 19 shall give rise to another, be taxed wages and other similar remuneration, as a resident of a Contracting State carries on account of employment, only in that State unless the work is performed in the other Contracting State. If the work is performed in that other State, receives compensation received for work are taxed there.



2. Notwithstanding the provisions of paragraph 1 shall be taxable compensation, as a person resident in one Contracting State receives for work in the other Contracting State, only in the first-mentioned State, if:



a) recipient residing in the other State during the time period or periods not exceeding a total of 183 days during a 12-month period commencing or ending in the tax year in question,



b) the remuneration is paid by employers who are not resident in the other State or on his behalf, and



c) compensation does not affect the permanent establishment or permanent device which the employer has in the other State.



3. Notwithstanding the preceding provisions of this article, remuneration for work carried out on board ships or aircraft in international traffic by an enterprise of a Contracting State, be taxed in that State.



Article 16



Directors ' fees



Directors ' fees and other similar remuneration, as a resident of a Contracting State receives as a member of the Board or other similar bodies in a company resident in the other Contracting State, may be taxed in that other State.



Article 17



Artists and athletes



1. Notwithstanding the provisions of articles 14 and 15, income, that person resident in one Contracting State acquires by their personal business in the other Contracting State in the capacity as artist, such as a theatre or movie actor, radio or television artiste, or a musician, or as athletes, be taxed in that other State.



2. In cases where the income through personal business, as an artist or sportsmen and women engaged as such, do not become the property of the artist or sportutövaren yourself without another person, that income may, notwithstanding the provisions of articles 7, 14 and 15, be taxed in the Contracting State in which the artist or sportutövaren conducts business.



3. the provisions of paragraphs 1 and 2 of this article shall not apply to income derived from activities such as artist or athletes engaged in a Contracting State where the visit to that State is mainly financed by the public funds of the other Contracting State or of its administrative territorial subdivision or local


authorities. In such a case the income shall be taxable only in the State in which the artist or sportutövaren.



Article 18



Pensions, annuities and similar payments



1. Pensions and other similar remuneration, payment under the social security legislation and annuities arising from a Contracting State and paid to a resident of the other Contracting State, may be taxed in the first-mentioned Contracting State.



2. The term "annuity" means a prescribed amount, which shall be paid periodically at specified times during a person's lifetime or during a specified or ascertainable period of time, and that is because of the obligation to effect such payments as compensation for the defendant, however, full consideration in money or money value.



Article 19



Public service



1. a) Wages and other similar remuneration, other than a pension, paid by a Contracting State, one of its administrative subdivisions or local authorities, to the natural person on the basis of the work carried out in that State, or governmental service of subdepartment, be taxable only in that State.



b) Such salary and other similar remuneration shall be taxable only in the other Contracting State if the work is performed in that other State and the person concerned is domiciled in this State and:



1) is a national of that State, or



2) were not allowed to live in this State solely to perform the work.



2. the provisions of articles 15, 16 and 17 apply to compensation paid on the basis of work carried out in connection with business carried on by a Contracting State, one of its administrative subdivisions or local authorities.



Article 20



Students



A student or business trainee who is, or immediately before visiting a Contracting State resident in the other Contracting State and who is staying in it exclusively for their education or training, is not taxed in that State, for the amount that he receives for his livelihood, tutored or practice, if amounts derived from sources outside that State.



Article 21



Other income



1. income as a resident of a Contracting State to acquire and which are not dealt with in the foregoing articles of this Agreement shall be taxable only in that State, regardless of where the income is derived.



2. the provisions of paragraph 1 shall not apply to income, other than income from immovable property referred to in paragraph 2 of article 6, if the recipient of the income is resident in a Contracting State, carries on business in the other Contracting State from where located permanent establishment or exercise of independent professional activities in the other State from where located permanent device, and the right or property in respect of which the income is paid owns truly connected with the permanent establishment or the Permanent

the device. In such cases, apply the provisions of article 7 or article 14.



Article 22



The Elimination of double taxation



1. in the case of Azerbaijan, double taxation shall be avoided as follows:



If a resident of Azerbaijan receives income in Sweden which, in accordance with the provisions of this agreement are taxable in Sweden, the tax on income paid by that person in Sweden will be deducted from the tax levied on the income of Azerbaijan. Settlement amount shall not, however, exceed the tax in Azerbaijan relating to income calculated in accordance with its legislation and tax regulations.



2. in the case of Sweden, double taxation shall be avoided as follows:



a) where a resident of Sweden receives income that under Azerbaijani legislation and in accordance with the provisions of this agreement, may be taxed in Sweden Azerbaijan, – having regard to the provisions of Swedish legislation relating to the deduction of foreign taxes (even in the version in the future can get through to change without the general principle as stated this change) – from the Swedish tax on income set off an amount equal to the tax paid on the income of Azerbaijan.



b) where a resident of Sweden receives income, which in accordance with the provisions of this Agreement shall be taxable only in Azerbaijan, Sweden may, when determining the tax rate for the Swedish progressive tax consider the income to be taxed only in Azerbaijan.



c) Notwithstanding the provisions of subparagraph (a)) of this paragraph, dividends paid by a company resident in Azerbaijan to companies established in Sweden exempt from Swedish tax according to the provisions in the Swedish legislation on the taxation of dividends paid to Swedish companies by companies abroad.



Article 23



Prohibition of discrimination



1. nationals of a Contracting State shall not in the other Contracting State shall be subject to taxation or related requirements which are of a different kind or more burdensome than the taxation and related requirements as nationals of that other State under the same conditions, in particular with respect to residence, are or may be subject to.

Notwithstanding the provisions of article 1 shall apply this provision also on the person who is not domiciled in a Contracting State, or in both Contracting States.



2. the taxation on a permanent establishment which businesses of a Contracting State has in the other Contracting State, that other State shall not be less advantageous than the taxation of undertakings in the other State, that carries out activities of the same kind.



3. the provisions of this article does not entail the obligation of a Contracting State to grant to residents of the other Contracting State such personal deduction for tax purposes, such exemption or reduction on account of civil status or dependent, which allowed residents in their own State.



4. Except where the provisions of article 9, paragraph 1, article 11 paragraph 7 or paragraph 6 of article 12 apply, interest, royalties and other payments from the company in a Contracting State to a resident of the other Contracting State are deductible in determining the taxable income of such company on the same terms as payment to a resident of the first State.



5. Enterprises of a Contracting State, the capital of which is wholly or partly owned or controlled, directly or indirectly, by one or more residents of the other Contracting State, shall not be subjected in the first State for


taxation or related requirements which are of a different kind or more burdensome than the taxation and related requirements to which other similar enterprises of the first State are or may be subjected.



6. Notwithstanding the provisions of article 2 shall apply the provisions of this article on the taxes of every kind and nature.



Article 24



The procedure for the mutual agreement



1. If a person believes that a Contracting State either or both of the Contracting States took measures to him causes or will result in taxation contrary to the provisions of this agreement, he may, without prejudice to his right to make use of the remedies in the domestic legal system of those States, present the matter to the competent authority of the Contracting State in which he is domiciled, or If the question is whether the application of article 23, paragraph 1, of the Contracting State of which he is a national.

The thing to be presented within three years from the time the person in question had knowledge of the action giving rise to taxation contrary to the provisions of the agreement.



2. If the competent authority finds the complaint justified but are unable to achieve a satisfactory solution, the authority shall seek resolve the matter by mutual agreement with the competent authority of the other Contracting State for the purpose of avoiding taxation contrary to the agreement. Agreement is carried out without prejudice to the time limits in the domestic law of the Contracting States.



3. the competent authorities of the Contracting States shall by mutual agreement determine search difficulties or doubts arising concerning the interpretation or application of the agreement. They can also consult with a view to eliminating double taxation in cases not covered by the agreement.



4. the competent authorities of the Contracting States may enter into direct relations with each other in order to reach agreement in the cases specified in the preceding paragraphs.

Article 25



Exchange of information



1. the competent authorities of the Contracting States shall exchange such information as may be assumed to be relevant to the application of the provisions of this agreement or to the administration or enforcement of internal legislation concerning taxes of every kind and nature for the Contracting States, or of their administrative subdivisions or local authorities, on the taxation thereunder is not contrary to the agreement. Exchange of information is not restricted by articles 1 and 2.



2. information that a Contracting State received pursuant to paragraph 1 shall be treated as secret in the same manner as information obtained under the internal law of that State and shall be disclosed only to persons or authorities (including courts and administrative bodies) which defines, collects or collect the taxes referred to in paragraph 1 or dealing with prosecution or appeal in respect of those taxes or who supervises those activities. Such persons or authorities shall use the information only for such purposes. They may disclose the information in public court proceedings or in judicial decisions. Notwithstanding the above, indications of which one Contracting State received may be used for other purposes when such information may be used for such other purposes under the laws of both Contracting States, the competent authority of the Contracting State that made the disclosures allowed such use.



3. the provisions of paragraphs 1 and 2 do not involve obligation of a Contracting State that:



a) take administrative measures derogating from the legislation and administrative practices in force in that Contracting State, or of the other Contracting State,



b) provide information that is not available under customary law or administrative practices in force in that Contracting State, or of the other Contracting State,

c) supply information which would disclose any commercial, industrial, commercial or professional secret or trade process, or information used, whose surrender would be contrary to the General considerations of public policy.



4. Where a Contracting State requires information under this article, the other Contracting State shall use the funds that the State has to obtain the requested information, even though that other State may not need the information for its own tax purposes.

The obligation in the previous sentence is limited by the provisions of paragraph 3, but this does not confer a right of a Contracting State to refuse to supply information solely because it has no private interest of such information.



5. the provisions of paragraph 3 are not right for a Contracting State to decline to supply information solely because the information is held by a bank, other financial institution, agent, representative or fiduciary capacity or because the information concerning the ownership of a person.



Article 26



Limitation of benefits



Notwithstanding other provisions of this agreement, if



a) company resident in one Contracting State mainly acquires its income from other States



1) from activities such as banking, maritime, financial or insurance activities, or



2) by head office, the coordination centre or similar entity providing administrative or other services to a group of companies that conduct business primarily in other States, and



b) such income, unless the application is made by the method of prevention of double taxation normally applied by that State is taxed at a significantly lower under the law of this State other than income from related activities carried out within this State, or by being the head office, the coordination centre or similar entity providing administrative or other services to a group of companies, which carries on business in that State ,



to the provisions of this agreement which permits the exemption or reduction of tax does not apply to income that such a company acquires nor on the dividends paid by the company.



Article 27



Members of the diplomatic mission and consular posts



The provisions of this Agreement shall not affect the privileges in taxation which, according to the General rules of international law or provisions of specific agreements apply to members of diplomatic missions and consular posts.




Article 28



Date of entry into force



1. the Contracting States shall notify each other through diplomatic channels on when the measures taken under the respective State's internal legislation is required in order for this agreement to enter into force.



2. the agreement shall enter into force on the thirtieth day after the last of these notifications have been received and shall then be applied



(a)) in respect of withholding taxes, on amounts paid or tillgodoförs on 1 January of the year immediately following the date on which the agreement enters into force or later,



(b)) in respect of other taxes on income, to taxes levied for the fiscal year that begins on 1 January of the year immediately following the date on which the agreement enters into force or later.



Article 29



Termination



This agreement will remain in force until terminated by a Contracting State. Each Contracting State may by diplomatic means in writing terminate the contract by notice to that effect at least six months before the end of any calendar year. In the event of such termination, the agreement ceases to be valid



(a)) in respect of withholding taxes, on amounts paid or tillgodoförs on 1 January of the year immediately following the expiry of the six-month period or later,



(b)) in respect of other taxes on income, to taxes levied for the fiscal year that begins on 1 January of the year immediately following the expiry of the six-month period or later.



In witness whereof the undersigned, being duly authorised, have signed this agreement.



That took place in Baku on February 10, 2016, in duplicate in Swedish, Azerbaijani and English languages, all three texts are equally authentic. In the event of discrepancies between the texts, the English text shall prevail.



For the Government of the Kingdom of Sweden



Margot Wallström



For the Government of the Republic of Azerbaijan



Elmar Mammadyarov



Protocol



At the signing of the agreement between the Government of the Kingdom of Sweden and the Government of the Republic of Azerbaijan for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, the undersigned have agreed that the following shall constitute an integral part of the agreement:



With reference to article 1



As regards the Swedish tax income that is acquired by, or by a person whose income under Swedish law are subject to shareholder taxation, is considered to be acquired by a resident of one of the Contracting States to the extent that income, according to the tax laws of that State, be treated as income of a resident of the State in question.



With reference to article 2



The fees or taxes paid under Swedish social-försäkringslagstiftning and in accordance with the provisions of the Act (1994:1920) on the payroll tax, the law (1990:659) if payroll tax on certain earned income and the Act (1991:687) if payroll tax on pension costs or similar charges or taxes imposed after the date of signature of the Convention, are not covered by the Convention.



With reference to article 5



For the purposes of paragraph 2 (f)), the words ' installation or design "every kind of fixed place of business used for the exploration of natural resources, although such fixed place is a ship or a boat.



With reference to article 8



The provisions of paragraph 1 shall apply to income that is acquired by the air transport Consortium Scandinavian Airlines System (SAS) but only in respect of that part of the income corresponding to the share of the Consortium held by SAS Sweden AB, the Swedish partner of SAS.



With reference to article 13



The provisions of paragraph 3 shall apply in the case of profits acquired by the air transport Consortium Scandinavian Airlines System (SAS), but only in respect of the part of the profits as corresponds to the participation in the Consortium held by SAS Sweden AB, the Swedish partner of SAS.



With reference to article 15



If resident of Sweden claiming compensation for work performed on board an aircraft used in international traffic by the air transport Consortium Scandinavian Airlines System (SAS), such compensation is taxed only in Sweden.



In witness whereof the undersigned, being duly authorised, have signed this Protocol.



That took place in Baku on February 10, 2016, in duplicate in Swedish, Azerbaijani and English languages, all three texts are equally authentic. In the event of discrepancies between the texts, the English text shall prevail.



For the Government of the Kingdom of Sweden



Margot Wallström



For the Government of the Republic of Azerbaijan



Elmar Mammadyarov



Convention between the Government of the Kingdom of Sweden and the Government of the Republic of Azerbaijan for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income



The Government of the Kingdom of Sweden and the Government of the Republic of Azerbaijan, desiring to conclude a Convention for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, have agreed as follows:



Article 1



Personal scope



This Convention shall apply to persons who are residents of one or both of the Contracting States.



Article 2



Taxes covered



1. This Convention shall apply to taxes on income imposed on behalf of a Contracting State or of its administrative territorial subdivisions or local authorities, irrespective of the manner in which they are levied.



2. There shall be regarded as taxes on income all taxes imposed on total income, or on elements of income, including taxes on gains from the alienation of movable or immovable property, taxes on the total amounts of wages or salaries paid by enterprises, as well as taxes on capital appreciation.



3. The existing taxes to which this Convention shall apply are in particular:



(a) in Azerbaijan:



(i) the tax on profits of legal persons; and



(ii) the income tax on physical persons



(hereinafter referred to as "Azerbaijani tax");



(b) in Sweden: (i) the national income tax (State income tax);



(ii) the withholding tax on dividends (withholding tax);



(iii) the income tax on non-residents (the Special income tax for non-residents);



(iv) the income tax on non-resident artistes and athletes (the Special income tax for non-resident artists, etc.); and



(v) the municipal income tax (municipal tax) (hereinafter referred to as "Swedish tax").



4. The Convention shall apply also to any identical or


substantially similar taxes which are imposed after the date of signature of the Convention in addition to, or in place of, the existing taxes. The competent authorities of the Contracting States shall notify each other of any substantial changes which have been made in their respective taxation laws.



Article 3



General definition



1. For the purposes of this Convention, unless the context otherwise requires:



(a) the term "Azerbaijan" means the territory of the Republic of Azerbaijan, including the Caspian Sea (Lake) sector belonging to the Republic of Azerbaijan, the air space above the Republic of Azerbaijan, within which the sovereign rights and jurisdiction of the Republic of Azerbaijan is implemented in respect to the sea bed and subsoil, natural resources, and any other area which has been or may hereinafter be determined in accordance with the legislation of the Republic of Azerbaijan and international law;



(b) the term "Sweden" means the Kingdom of Sweden and, when used in a geographical sense, includes the national territory, the territorial sea of Canada as well as other maritime areas over which Sweden in accordance with international law, exercises sovereign rights or jurisdiction;



(c) the terms "a Contracting State" and "the other Contracting State" mean Azerbaijan or Sweden, as the context requires;



(d) the term "person" includes an individual, a company and any other body of persons. A partnership or a joint venture deriving its status from Azerbaijan law which is treated as a taxable unit under the law of Azerbaijan shall be treated as a person for the purposes of this Convention;



(e) the term "company" means any body corporate or any entity that is treated as a body corporate for tax purposes;



(f) the terms "enterprise of a Contracting State" and "enterprise of the other Contracting State" mean respectively an enterprise carried on by a resident of a Contracting State and an enterprise carried on by a resident of the other Contracting State;



(g) the term "international traffic" means any transport by a ship or aircraft operated by an enterprise of a Contracting State, except when the ship or aircraft is operated solely between places in the other Contracting State;



(h) the term "national" means:



(i) any individual possessing the nationality of a Contracting State;



(ii) any legal person, partnership or association deriving its status as such from the laws in force in a Contracting State;



(i) the term "competent authority" means:



(i) in Azerbaijan, the Ministry of Taxes and the Ministry of Finance;



(ii) in Sweden, the Minister of Finance, his authorized representative or the authority which is designated as a competent authority for the purposes of this Convention.



2. As regards the application of the Convention at any time by a Contracting State, any term not defined therein shall, unless the context otherwise requires, have the meaning that it has at that time under the law of that State for the purposes of the taxes to which the Convention applies, any meaning under the applicable tax laws of that State prevailing over a meaning given to the term under other laws of that State.



Article 4



Resident



1. For the purposes of this Convention, the term "resident of a Contracting State" means any person who, under the laws of that State, is liable to tax therein by reason of his domicile, residence, place of management, place of incorporation or any other criterion of a similar nature, and also includes that State, any governmental body or agency, administrative territorial subdivision or local authority thereof. This term, however, does not include any person who is liable to tax in that State in respect only of income from sources in that State.



2. Where by reason of the provisions of paragraph 1 an individual is a resident of both Contracting States, then his status shall be determined as follows:



(a) he shall be deemed to be a resident only of the State in which he has a permanent home available to him; If he has a permanent home available to him in both States, he shall be deemed to be a resident only of the State with which his personal and economic relations are closer (centre of vital interests);



(b) if the State in which he has his centre of vital interests cannot be determined, or if he has not a permanent home available to him in either State, he shall be deemed to be a resident only of the State in which he has an habitual abode;



(c) if he has an habitual abode in both States or in neither of them, he shall be deemed to be a resident only of the State of which he is a national;



(d) if he is a national of both States or of neither of them, the competent authorities of the Contracting States shall settle the question by mutual agreement.



3. Where by reason of the provisions of paragraph 1 a person other than an individual is a resident of both Contracting States, the competent authorities of the Contracting States shall endeavour to settle the question by mutual agreement.



Article 5



Permanent establishment



1. For the purposes of this Convention, the term "permanent establishment" means a fixed place of business through which the business of an enterprise is wholly or partly carried on.



2. The term "permanent establishment" includes especially:



(a) a place of management;



(b) a branch;



(c) an office;



(d) a factory;



(e) a workshop;



(f) an installation or structure for the exploration of natural resources; and



(g) a mine, an oil or gas well, a quarry or any other place of extraction of natural resources.



3. A building site or a construction, assembly or installation project or supervisory activities in connection therewith constitutes a permanent establishment only if such site, project or activities last for a period of more than twelve months.



4. The furnishing of services, including consultancy services, in a Contracting State by an enterprise through its employees or other personnel engaged by the enterprise for such purpose, constitutes a permanent establishment only if such activities continue (for the same or connected project) within that State for more than six months within any twelve month period.



5. Notwithstanding the preceding provisions of this Article, the term "permanent establishment" shall be deemed not to include:



(a) the use of facilities solely for the purpose of storage, display or delivery of goods or merchandise belonging to the enterprise, but only to the extent that such use of facilities does not include the sale of goods or merchandise;



(b) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of


storage, display or delivery but only to the extent that such maintenance does not include the sale of goods or merchandise;



(c) the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise;



(d) the maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise or of collecting information, for the enterprise;



(e) the maintenance of a fixed place of business solely for the purpose of carrying on, for the enterprise, any other activity of a preparatory or auxiliary character;



(f) the maintenance of a fixed place of business solely for any combination of activities mentioned in sub paragraphs (a) to (e), provided that the overall activity of the fixed place of business resulting from this combination is of a preparatory or auxiliary character.



6. Notwithstanding the provisions of paragraphs 1 and 2, where a person – other than an agent of an independent status to whom paragraph 7 applies-is acting in a Contracting State on behalf of an enterprise of the other Contracting State, that enterprise shall be deemed to have a permanent establishment in the first-mentioned Contracting State in respect of any activities which that person undertakes for the enterprise , if such a person has and habitually exercises in that State an authority to conclude contracts in the name of the enterprise, unless the activities of such person are limited to those mentioned in paragraph 5 which, if exercised through a fixed place of business, would not make this fixed place of business a permanent establishment under the provisions of that paragraph.



7. An enterprise of a Contracting State shall not be deemed to have a permanent establishment in the other Contracting State merely because it carries on business in that other State through a broker, general commission agent or any other agent of an independent status, provided that such persons are acting in the ordinary course of their business. However, if the activities of the agent are carried out wholly or almost wholly for the enterprise, he shall not be considered to be an agent of an independent status for the purposes of this paragraph.



8. The fact that a company which is a resident of a Contracting State controls or is controlled by a company which is a resident of the other Contracting State, or which carries on business in that other State (whether through a permanent establishment or otherwise) shall not of itself constitute either company a permanent establishment of the other.



Article 6



Income from immovable property



1. Income derived by a resident of a Contracting State from immovable property (including income from agriculture or forestry) situated in the other Contracting State may be taxed in that other State.



2. The term "immovable property" shall have the meaning which it has under the law of the Contracting State in which the property in question is situated. The term shall in any case include property accessory to immovable property, livestock and equipment used in agriculture and forestry, rights to which the provisions of general law respecting landed property apply, buildings, usufruct of immovable property and rights to variable or fixed payments as consideration for the working of, or the right to work, mineral deposits, sources and other natural resources; ships, boats and aircraft shall not be regarded as immovable property.



3. The provisions of paragraph 1 shall apply to income derived from the direct use, letting, or use in any other form of immovable property.



4. The provisions of paragraphs 1 and 3 shall also apply to the income from immovable property of an enterprise and to income from immovable property used for the performance of independent personal services.



Article 7



Business profits



1. The profits of an enterprise of a Contracting State shall be taxable only in that State unless the enterprise carries on business in the other Contracting State through a permanent establishment situated therein. If the enterprise carries on business as aforesaid, the profits of the enterprise may be taxed in the other State but only so much of them as is attributable to that permanent establishment.



2. Subject to the provisions of paragraph 3, where an enterprise of a Contracting State carries on business in the other Contracting State through a permanent establishment situated therein, there shall in each Contracting State be attributed to that permanent establishment the profits which it might be expected to make if it were a distinct and separate enterprise engaged in the same or similar activities under the same or similar conditions and dealing wholly independently with the enterprise of which It is a permanent establishment.



3. In determining the profits of a permanent establishment, there shall be allowed as deductions expenses which are incurred such deductible for the purposes of the business of the permanent establishment, including executive and general administrative expenses so incurred, whether in the State in which the permanent establishment is situated or elsewhere.



4. Insofar as it has been customary in a Contracting State to determine the profits to be attributed to a permanent establishment on the basis of an apportionment of the total profits of the enterprise to its various parts, nothing in paragraph 2 shall preclude that Contracting State from determining the profits to be taxed by such an apportionment as may be customary; the method of apportionment adopted shall, however, be such that the result shall be in accordance with the principles contained in this Article.



5. No profits shall be attributed to a permanent establishment by reason of the mere purchase by that permanent establishment of goods or merchandise for the enterprise.



6. For the purposes of the preceding paragraphs, the profits to be attributed to the permanent establishment shall be determined by the same method year by year unless there is good and sufficient reason to the contrary.



7. Where profits include items of income which are dealt with separately in other Articles of this Convention, then the provisions of those Articles shall not be affected by the provisions of this Article.



Article 8



Shipping and air transport



1. Profits of an enterprise of a Contracting State from the operation of ships or aircraft in international traffic shall be taxable only in that State.



2. For the purposes of this Article, profits from the operation of ships or aircraft in international traffic include:



(a) profits from the rental on a bareboat basis of ships or aircraft in international traffic; and




(b) profits from the use, maintenance or rental of containers in international traffic (including trailers and related equipment for the transport of containers) used for the transport of goods or merchandise;



where such rental or such use, maintenance or rental, as the case may be, is incidental to the operation of ships or aircraft in international traffic.



3. The provisions of paragraph 1 shall also apply to profits from the participation in a pool, a joint business or an international operating agency.



Article 9



Associated enterprises



1. Where:



(a) an enterprise of a Contracting State participates directly or indirectly in the management, control or capital of an enterprise of the other Contracting State, or



(b) the same persons participate directly or indirectly in the management, control or capital of an enterprise of a Contracting State and an enterprise of the other Contracting State,



and in either case conditions are made or imposed between the two enterprises in their commercial or financial relations which differ from those which would be made between independent enterprises, then any profits which would, but for those conditions, have accrued to one of the enterprises, but, by reason of those conditions, have not so accrued, may be included in the profits of that enterprise and taxed accordingly.



2. Where a Contracting State includes in the profits of an enterprise of that State – and taxes accordingly – profits on which an enterprise of the other Contracting State has been charged to tax in that other State and the profits so included are profits which would have accrued to the enterprise of the first-mentioned State if the conditions made between the two enterprises had been those which would have been made between independent enterprises , then that other State shall make an appropriate adjustment to the amount of the tax charged therein on those profits. In determining such adjustment, due regard shall be had to the other provisions of this Convention and the competent authorities of the Contracting States shall if necessary consult each other.



Article 10



Dividends



1. Dividends paid by a company which is a resident of a Contracting State to a resident of the other Contracting State may be taxed in that other State.



2. However, such dividends may also be taxed in the Contracting State of which the company paying the dividends is a resident and according to the laws of that State, but if the beneficial owner of the dividends is a resident of the other Contracting State, the tax so charged shall not exceed:



(a) 5 per cent of the gross amount of the dividends if the beneficial owner is a company (other than a partnership) which holds directly at least 20 per cent of the capital of the company paying the dividends and the participation in that company exceeds 200 000 Euros or its equivalent in the national currencies of the Contracting States;



(b) 15 per cent of the gross amount of the dividends in all other cases.



3. The term "dividends" as used in this Article means income from shares or other rights, not being debt-claims, participating in profits, as well as income from other corporate rights which is subjected to the same taxation treatment as income from shares by the laws of the State of which the company making the distribution is a resident.



4. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the dividends, being a resident of a Contracting State, carries on business in the other Contracting State of which the company paying the dividends is a resident, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein , and the holding in respect of which the dividends are paid is effectively connected with such permanent establishment or fixed base. In such case the provisions of Article 7 or Article 14, as the case may be, shall apply.



5. Where a company which is a resident of a Contracting State derives profits or income from the other Contracting State, that other State may not impose any tax on the dividends paid by the company, except insofar as such dividends are paid to a resident of that other State or insofar as the holding in respect of which the dividends are paid is effectively connected with a permanent establishment or a fixed base situated in that other State , nor subject the company's undistributed profits to a tax on the company's undistributed profits, even if the dividends paid or the undistributed profits consist wholly or partly of profits or income arising in such other State.



Article 11



Interest



1. Interest arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.



2. However, such interest may also be taxed in the Contracting State in which it arises and according to the laws of that State, but if the beneficial owner of the interest is a resident of the other Contracting State, the tax so charged shall not exceed 8 per cent of the gross amount of the interest.



3. Notwithstanding the provisions of paragraph 2 interest, mentioned in paragraph 1, shall be taxable only in the Contracting State where the beneficial owner of the interest is a resident if one of the following requirements is ugly file led;



(a) the payer or the recipient of the interest is, or the loan in respect of which the interest is paid is guaranteed by, the Contracting State itself, a statutory body, an administrative territorial subdivision or a local authority thereof or the Central Bank of a Contracting State;



(b) the interest is paid in respect of a loan which has been approved by the Government in the Contracting State where the payer of the interest is a resident;



(c) the interest is paid in respect of a loan granted or guaranteed by the Swedish International Development Cooperation Agency (SIDA), The Swedish Export Credit Corporation (SEK), Swedfund International AB, The Swedish Export Credits Guarantee Board (exportkreditnämnden), the State Oil Fund of the Republic of Azerbaijan or any other institution of a public character with the objective to promote exports or development.



4. The term "interest" as used in this Article means income from debt-claims of every kind, whether or not secured by mortgage and whether or not carrying a right to participate in the debtor's profits, and in particular, income from government securities and income from bonds or debentures, including premiums and prizes attaching to such securities, bonds or debentures. Penalty charges for late payment shall not be regarded as interest for the purpose of this Article.




5. The provisions of paragraphs 1, 2 and 3 shall not apply if the beneficial owner of the interest, being a resident of a Contracting State, carries on business in the other Contracting State in which the interest arises, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the debt-claim in respect of which the interest is paid is effectively connected with such permanent establishment or fixed base. In such case the provisions of Article 7 or Article 14, as the case may be, shall apply.



6. Interest shall be deemed to arise in a Contracting State when the payer is a resident of that State. Where, however, the person paying the interest, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment or a fixed base in connection with which the indebtedness on which the interest is paid was incurred, and such interest is borne by such permanent establishment or fixed base, then such interest shall be deemed to arise in the State in which the permanent establishment or fixed base is situated.



7. Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the interest, having regard to the debt-claim for which it is paid, exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship the provisions of this Article shall apply only to the last-mentioned amount. In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Convention.



Article 12



Royalties



1. Royalties arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.



2. However, such royalties may also be taxed in the Contracting State in which they arise and according to the laws of that State, but if the recipient is the beneficial owner of the royalties the tax so charged shall not exceed:



(a) 5 per cent of the gross amount of the royalties paid for the use of, or the right to use, any patent, trade mark, design or model, plan, secret formula or process, or for information concerning industrial, commercial or scientific experience;



(b) 10 per cent of the gross amount of the royalties in all other cases.



3. The term "royalties" as used in this Article means payments of any kind received as a consideration for the use of, or the right to use, any copyright of literary, artistic or scientific work including cinematograph films and films or tapes for radio or television broadcasting, any patent, trade mark, design or model, plan, secret formula or process, or for information concerning industrial , commercial or scientific experience.



4. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the royalties, being a resident of a Contracting State, carries on business in the other Contracting State in which the royalties arise, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the right or property in respect of which the royalties are paid is effectively connected with such permanent establishment or fixed base. In such case the provisions of Article 7 or Article 14, as the case may be, shall apply.



5. Royalties shall be deemed to arise in a Contracting State when the payer is a resident of that State. Where, however, the person paying the royalties, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment or a fixed base in connection with which the liability to pay the royalties was incurred, and such royalties are borne by such permanent establishment or fixed base, then such royalties shall be deemed to arise in the State in which the permanent establishment or fixed base is situated.



6. Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the royalties, having regard to the use, right or information for which they are paid, exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship the provisions of this Article shall apply only to the last-mentioned amount. In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Convention.



Article 13



Capital gains



1. Gains derived by a resident of a Contracting State from the alienation of immovable property referred to in Article 6 and situated in the other Contracting State, or from the alienation of shares in a company the assets of which consist principally of such property, may be taxed in that other State.



2. Gains from alienation of movable property forming part of the business property of a permanent establishment which an enterprise of a Contracting State has in the other Contracting State or of movable property pertaining to a fixed base available to a resident of a Contracting State in the other Contracting State for the purpose of performing independent personal services, including such gains from the alienation of such a permanent establishment (alone or with the whole enterprise) or of such fixed base, may be taxed in that other State.



3. Gains derived by a resident of a Contracting State from the alienation of ships or aircraft operated in international traffic or movable property pertaining to the operation of such ships or aircraft, shall be taxable only in that State.

4. Gains from the alienation of any property other than that referred to in paragraphs 1, 2 and 3, shall be taxable only in the Contracting State of which the alienator is a resident.



5. Notwithstanding the provisions of paragraph 4, gains from the alienation of any property derived by an individual who has been a resident of a Contracting State and who has become a resident of the other Contracting State, may be taxed in the first-mentioned State if the alienation of the property occurs at any time during the five years next following the date on which the individual has ceased to be a resident of the first-mentioned State.



Article 14



Independent personal services



1. Income derived by an individual who is a resident of a Contracting State in respect of professional services or other activities of an independent character shall be taxable only in that State. However, such income may also be taxed in


the other Contracting State if:



(a) the individual is present in the other State for a period or periods exceeding in the aggregate 183 days in any twelve month period, but only so much thereof as is attributable to services performed in that other State; or



(b) the individual has a fixed base regularly available to him in the other Contracting State for the purpose of performing his activities, but only so much thereof as is attributable to that fixed base.



2. The term "professional services" includes especially independent scientific, literary, artistic, educational or teaching activities as well as the independent activities of physicians, lawyers, engineers, architects, dentists and accountants.



Article 15



Dependent personal services



1. Subject to the provisions of Articles 16, 18 and 19, salaries, wages and other similar remuneration derived by a resident of a Contracting State in respect of an employment shall be taxable only in that State unless the employment is exercised in the other Contracting State. If the employment is so exercised, such remuneration as is derived therefrom may be taxed in that other State.



2. Notwithstanding the provisions of paragraph 1, remuneration derived by a resident of a Contracting State in respect of an employment exercised in the other Contracting State shall be taxable only in the first-mentioned State if:

(a) the recipient is present in the other State for a period or periods not exceeding in the aggregate 183 days in any twelve month period commencing or ending in the fiscal year concerned; and



(b) the remuneration is paid by, or on behalf of, an employer who is not a resident of the other State; and



(c) the remuneration is not borne by a permanent establishment or a fixed base which the employer has in the other State.



3. Notwithstanding the preceding provisions of this Article, remuneration derived in respect of an employment exercised aboard a ship or aircraft operated in international traffic by an enterprise of a Contracting State may be taxed in that State.



Article 16



Directors ' fees



Directors ' fees and other similar payments derived by a resident of a Contracting State in his capacity as a member of the board of directors of a company which is a resident of the other Contracting State may be taxed in that other State.



Article 17



Artistes and sportsmen



1. Notwithstanding the provisions of Articles 14 and 15, income derived by a resident of a Contracting State as an artiste, such as a theatre, motion picture, radio or television artiste, or a musician, or as a sportsman, from his personal activities as such exercised in the other Contracting State, may be taxed in that other State.



2. Where income in respect of personal activities exercised by an artiste or a sportsman in his capacity as such accrues not to the artiste or sportsman himself but to another person, that income may, notwithstanding the provisions of Articles 7, 14 and 15, be taxed in the Contracting State in which the activities of the artiste or sportsman are exercised.



3. The provisions of paragraphs 1 and 2 of this Article shall not apply to income derived from activities performed in a Contracting State by artistes or sportsmen if the visit to that State is substantially supported by public funds of the other Contracting State or an administrative territorial subdivision or local authority thereof. In such a case the income shall be taxable only in the State of which the artiste or sportsman is a resident.



Article 18



Pensions, annuities and similar payments



1. Pensions and other similar remuneration, disbursements under the Social Security legislation and annuities arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in the first-mentioned Contracting State.



2. The term "annuity" means a stated sum payable periodically at stated times during life or during a specified or ascertainable period of time under an obligation to make the payments in return for adequate and full consideration in money or money's worth.



Article 19



Government service



1. (a) Salaries, wages and other similar remuneration, other than a pension, paid by a Contracting State or an administrative territorial subdivision or a local authority thereof to an individual in respect of services rendered to that State or subdivision or authority shall be taxable only in that State.



(b) However, such salaries, wages and other similar remuneration shall be taxable only in the other Contracting State if the services are rendered in that other State and the individual is a resident of that State who:



(i) is a national of that State; or



(ii) did not become a resident of that State solely for the purpose of rendering the services.



2. The provisions of Articles 15, 16 and 17 shall apply to remuneration in respect of services rendered in connection with a business carried on by a Contracting State or an administrative territorial subdivision or a local authority thereof.



Article 20



The student's



Payments which a student or business apprentice who is or was immediately before visiting a Contracting State a resident of the other Contracting State and who is present in the first-mentioned State solely for the purpose of his education or training receives for the purpose of his maintenance, education or training shall not be taxed in that State, provided that such payments arise from sources outside that State.



Article 21



Other income



1. Items of income of a resident of a Contracting State, wherever arising, not dealt with in the foregoing Articles of this Convention shall be taxable only in that State.



2. The provisions of paragraph 1 shall not apply to income, other than income from immovable property as defined in paragraph 2 of Article 6, if the recipient of such income, being a resident of a Contracting State, carries on business in the other Contracting State through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein , and the right or property in respect of which the income is paid is effectively connected with such permanent establishment or fixed base. In such case the provisions of Article 7 or Article 14, as the case may be, shall apply.



Article 22



Elimination of double taxation



1. In the case of Azerbaijan, double taxation shall be avoided as follows:



If a resident of Azerbaijan derives income in Sweden which in accordance with the provisions of this Convention are taxable in Sweden the amount of paid tax on income in Sweden will be deducted out of tax levied from that person in respect of


such income in Azerbaijan. Such deduction, however, shall not exceed the amount of the tax on income calculated in accordance Azerbaijan with its law and tax regulation.



2. In the case of Sweden, double taxation shall be avoided as follows:



(a) Where a resident of Sweden derives income which under the laws of Azerbaijan and in accordance with the provisions of this Convention may be taxed in Azerbaijan, Sweden shall allow-subject to the provisions of the laws of Sweden concerning credit for foreign tax (as it may be amended from time to time without changing the general principle hereof)-as a deduction from the tax on such income , an amount equal to the tax paid in respect of Azerbaijani such income.



(b) Where a resident of Sweden derives income which, in accordance with the provisions of this Convention, shall be taxable only in Azerbaijan, Sweden may, when determining the graduated rate of Swedish tax, take into account the income which shall be taxable only in Azerbaijan.



(c) Notwithstanding the provisions of sub-paragraph (a) of this paragraph, dividends paid by a company which is a resident of Azerbaijan to a company which is a resident of Sweden shall be exempt from Swedish tax according to the provisions of Swedish law governing the exemption of tax on dividends paid to Swedish companies by companies abroad.



Article 23



Non-discrimination



1. Nationals of a Contracting State shall not be subjected in the other Contracting State to any taxation or any requirement connected therewith, which is other or more burdensome than the taxation and connected requirements to which nationals of that other State in the same circumstances, in particular with respect to residence, are or may be subjected. This provision shall, notwithstanding the provisions of Article 1, also apply to persons who are not residents of one or both of the Contracting States.



2. The taxation on a permanent establishment which an enterprise of a Contracting State has in the other Contracting State shall not be less favourably levied in that other State than the taxation levied on enterprises of that other State carrying on the same activities.



3. Nothing in this Article shall be construed as obliging a Contracting State to grant to residents of the other Contracting State any personal allowances, reliefs or reductions for taxation purposes on account of civil status or family responsibilities which it grants to its own residents.



4. Except where the provisions of paragraph 1 of Article 9, paragraph 7 of Article 11, or paragraph 6 of Article 12, apply, interest, royalties and other disbursements paid by an enterprise of a Contracting State to a resident of the other Contracting State shall, for the purpose of determining the taxable profits of such enterprise, be deductible under the same conditions as if they had been paid to a resident of the first-mentioned State.



5. Enterprises of a Contracting State, the capital of which is wholly or partly owned or controlled, directly or indirectly, by one or more residents of the other Contracting State, shall not be subject in the first-mentioned State to any taxation or any requirement connected therewith which is other or more burdensome than the taxation and connected requirements to which other similar enterprises of the first-mentioned State are or may be subjected.



6. The provisions of this Article shall, notwithstanding the provisions of Article 2, apply to taxes of every kind and description.



Article 24



Mutual agreement procedure



1. Where a person considers that the actions of one or both of the Contracting States result or will result for him in taxation not in accordance with the provisions of this Convention, he may, irrespective of the remedies provided by the domestic law of those States, present his case to the competent authority of the Contracting State of which he is a resident or , if his case comes under paragraph 1 of Article 23, to that of the Contracting State of which he is a national. The case must be presented within three years from the first notification of the action resulting in taxation not in accordance with the provisions of the Convention.



2. The competent authority shall endeavour, if the objection appears to it to be justified and if it is not itself able to arrive at a satisfactory solution, to resolve the case by mutual agreement with the competent authority of the other Contracting State, with a view to the avoidance of taxation which is not in accordance with the Convention. Any agreement reached shall be implemented notwithstanding any time limits in the domestic law of the Contracting States.



3. The competent authorities of the Contracting States shall endeavour to resolve by mutual agreement any difficulties or doubts arising as to the interpretation or application of the Convention. They may also consult together for the elimination of double taxation in cases not provided for in the Convention.



4. The competent authorities of the Contracting States may communicate with each other directly for the purpose of reaching an agreement in the sense of the preceding paragraphs.



Article 25



Exchange of information



1. The competent authorities of the Contracting States shall exchange such information as is foreseeably relevant for carrying out the provisions of this Convention or to the administration or enforcement of the domestic laws concerning taxes of every kind and description imposed on behalf of the Contracting States, or of their administrative territorial subdivisions or local authorities, insofar as the taxation thereunder is not contrary to the Convention. The exchange of information is not restricted by Articles 1 and 2.



2. Any information received under paragraph 1 by a Contracting State shall be treated as secret in the same manner as information obtained under the domestic laws of that State and shall be disclosed only to persons or authorities (including courts and administrative bodies) concerned with the assessment or collection of, the enforcement or prosecution in respect of, or the determination of appeals in relation to the taxes referred to in paragraph 1 , or the oversight of the above. Such persons or authorities shall use the information only for such purposes. They may disclose the information in public court proceedings or in judicial decisions. Notwithstanding the foregoing, information received by a Contracting State may be used for other purposes when such information may be used for such other purposes under the laws of both States and the competent authority of the supplying State authorises such use.



3. In no case shall the provisions of paragraphs 1 and 2 be construed so as to impose on a Contracting State the


bond:



(a) to carry out administrative measures at variance with the laws and administrative practice of that or of the other Contracting State;



(b) to supply information which is not obtainable under the laws or in the normal course of the administration of that or of the other Contracting State;



(c) to supply information which would disclose any trade, business, industrial, commercial or professional secret or trade process, or information, the disclosure of which would be contrary to public policy (ordre public).



4. If information is requested by a Contracting State in accordance with this Article, the other Contracting State shall use its information gathering measures to obtain the requested information, even though that other State may not need such information for its own tax purposes. The obligation contained in the preceding sentence is subject to the limitations of paragraph 3 but in no case shall such limitations be construed to permit a Contracting State to decline to supply information solely because it has no domestic interest in such information.



5. In no case shall the provisions of paragraph 3 be construed to permit a Contracting State to decline to supply information solely because the information is held by a bank, other financial institution, nominee or person acting in an agency or a fiduciary capacity or because it relates to ownership interests in a person.



Article 26



Limitations of benefits



Notwithstanding any other provisions of this Convention, where



(a) a company that is a resident of a Contracting State derives its income primarily from other States



(i) from activities such as banking, shipping, financing or insurance or



(ii) from being the headquarters, co-ordination centre or similar entity providing administrative services or other support to a group of companies which carry on business primarily in other States; and



(b) except for the application of the method of elimination of double taxation normally applied by that State, such income would bear a significantly lower tax under the laws of that State than income from similar activities carried out within that State or from being the headquarters, co-ordination centre or similar entity providing administrative services or other support to a group of companies which carry on business in that State , as the case may be,



any provisions of this Convention conferring an exemption or a reduction of duty shall not apply to the income of such company and to the dividends paid by such company.



Article 27



Members of diplomatic missions and consular posts



Nothing in this Convention shall affect the fiscal privileges of members of diplomatic missions and consular posts under the general rules of international law or under the provisions of special agreements.



Article 28



Entry into force



1. The Contracting States shall notify each other in writing, through diplomatic channels, that the procedures required by their domestic laws for the entry into force of this Convention have been complied with.



2. The Convention shall enter into force on the thirtieth day after the receipt of the later of these notifications and shall thereupon have effect: (a) in respect of taxes withheld at source, for amounts paid or credited on or after the first day of January of the year next following the date on which the Convention enters into force;



(b) in respect of other taxes on income, on taxes chargeable for any tax year beginning on or after the first day of January of the year next following the date on which the Convention enters into force.



Article 29



Termination



This Convention shall remain in force until terminated by a Contracting State. Either Contracting State may terminate the Convention, through diplomatic channels, by giving written notice of termination at least six months before the end of any calendar year. In such case, the Convention shall cease to have effect: (a) in respect of taxes withheld at source, for amounts paid or credited on or after the first day of January of the year next following the end of the six month period;



(b) in respect of other taxes on income, on taxes chargeable for any tax year beginning on or after the first day of January of the year next following the end of the six month period.



In witness whereof the undersigned being duly authorized thereto have signed this Convention.



Done at Baku, this 10th day of February 2016, in duplicate in the Swedish, Azerbaijani and English languages, all three texts being equally authentic. In case of divergence in interpretation between the texts the English text shall prevail.



For the Government of the Kingdom of Sweden



Margot Wallström



For the Government of the Republic of Azerbaijan



Elmar Mammadyarov



Protocol



At the signing of the Convention between the Government of the Kingdom of Sweden and the Government of the Republic of Azerbaijan for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income, the undersigned have agreed that the following shall form an integral part of the Convention:



With reference to Article 1



For the purposes of Swedish tax, in the case of an item of income derived by or through a person that is fiscally transparent under Swedish law, such item shall be considered to be derived by a resident of a Contracting State to the extent that the item is treated for the purposes of the taxation law of such State as the income of a resident.



With reference to Article 2



The fees or taxes paid under the Swedish Social Security Legislation and according to the provisions of the Act (1994:1920) on General salary fees, the Act (1990:659) on Special salary tax on earned income and the Act (1991:687) on Special salary tax on pension costs or any similar fee or tax which is imposed after the date of signature of the Convention , are not covered by the Convention.



With reference to Article 5



For the application of subparagraph (f) of paragraph 2, it is understood that the words "installation or structure" mean any kind of fixed place of business used for the exploration of natural resources even if such fixed place is a ship or a boat.



With reference to Article 8



With respect to profits derived by the air transport consortium Scandinavian Airlines System (SAS) the provisions of paragraph 1 shall apply only to such part of the profits as corresponds to the participation held in that consortium by SAS Sweden AB, the Swedish partner of SAS.



With reference to Article 13



With respect to gains derived by the air transport consortium Scandinavian Airlines System (SAS), the provisions of paragraph 3 shall apply only to such part of the gains as


corresponds to the participation held in that consortium by SAS Sweden AB, the Swedish partner of SAS.



With reference to Article 15



Where a resident of Sweden derives remuneration in respect of an employment exercised aboard an aircraft operated in international traffic by the air transport consortium Scandinavian Airlines System (SAS), such remuneration shall be taxable only in Malaysia.



In witness whereof the undersigned being duly authorized thereto have signed this Protocol.



Done at Baku, this 10th day of February 2016, in duplicate in the Swedish, Azerbaijani and English languages, all three texts being equally authentic. In case of divergence in interpretation between the texts the English text shall prevail.



For the Government of the Kingdom of Sweden



Margot Wallström



For the Government of the Republic of Azerbaijan



Elmar Mammadyarov

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