Amendment to the tax treaty between Sweden and Germany
Translated from Swedish by AI; the translation may contain errors. The Swedish text is the original.
Summary AI, written in advance
The debate concerns the amendment to the tax treaty between Sweden and Germany. S calls for approval of the agreement to avoid double taxation and combat tax evasion 1. S argues that the government does not prioritize the fight against tax evasion 1 2 and that tax loopholes threaten social cohesion 3. SD calls for approval of the proposal and argues that they have pushed for proposals to close loopholes for tax evasion 4 5 as well as that the tax treaties are now being prioritized 4 6. M calls for approval of the committee's proposal 7 and argues that the agreement needs to be updated 7. M believes that the abolition of inheritance and gift tax strengthened entrepreneurship 7 and that the changes were needed so that Swedish companies can compete on the German market 7.
Written by AI in advance and may contain errors. The numbers lead to the speech a statement builds on; check against the text below.
Mathias Tegnér (S)
Madam Speaker! In a time of shootings, war and climate crisis, I realize that the tax treaty between Sweden and Germany may not be "top of mind" for most, whether here in the chamber or in Sweden. In that sense, this debate on an updated tax treaty is no bombshell. I know that. At the same time, I think the issue is not insignificant.
It is pleasing that a unanimous committee has supported the government's proposal for a protocol on the amendment of the agreement between Sweden and Germany to avoid double taxation regarding taxes on income and wealth. This is a task that began under the previous S-led government and is now being completed under the SD-led government. Fundamentally, it is about updating current rules. The unity also means that the Committee on Taxation has supported the government's proposal to adopt a law on the amendment of the Act on Double Taxation Agreements between Sweden and Germany.
What is new and important in this update is the work against international tax evasion. In this tax agreement, frameworks for new international minimum standards in the area of tax agreements are introduced, which have been developed within the framework of the so-called BEPS project. For those who are not familiar with BEPS, it is the OECD's work against, among other things, tax evasion and advanced tax planning.
Therefore, it becomes increasingly clear in this update that the agreement does not aim to create conditions for non-taxation or reduced tax through tax evasion or tax avoidance. It is not an insignificant issue. The OECD assesses that somewhere between 5 and 10 percent of global tax revenues are lost in advanced tax planning.
In the annual report from Skatteverket, it was stated in 2021 that the total tax error is estimated - and these are clearly estimates - to be up to 30, 40 or 50 billion Swedish kronor. These are gigantic sums. That corresponds, for example, to the entire Polismyndigheten, just to say something about how large the tax evasion is.
We Social Democrats prioritize the fight against tax evasion. Unfortunately, we perceive that the government does not always do so. Among other things, the requirement that the Swedish Tax Agency should report annually on how large the tax error actually is has just been removed.
In light of this, I believe everyone understands that these tax treaties are signed to prevent citizens from having to pay tax in two countries. But they are also signed to prevent precisely tax evasion. That perspective becomes very important now when we talk about the tax treaty between Sweden and Germany.
We Social Democrats believe that we can see a pattern. We can see that the government and the government base say that it is important to prioritize the fight against tax evasion, but in practice, they have, for example, scrapped the investigation into the so-called exit tax. They did that in all silence in January this year. They have, as I just mentioned, removed the requirement for the Swedish Tax Agency to report the tax error every year. Finally, the resources to the Swedish Tax Agency are decreasing, or in any case, they are not increasing to a reasonable extent to be able to combat tax evasion.
What does this have to do with the agreement between Sweden and Germany, someone might say. Well, in several debates here in the Swedish Riksdag, the Minister for Finance has expressed that the government and the government base want to close the gap that exists in Swedish tax legislation, which is often called exit tax. That is what they want to do precisely with tax treaties.
Then a question naturally arises. Now we are in the process of updating the tax treaty between Sweden and Germany. Soon there will be an update of the tax treaty between Sweden and France. But the question is: When will the other tax treaties come, those that are central to being able to close the tax loopholes? It concerns a tax treaty with Malta or an updated treaty with Cyprus. In that regard, we have heard nothing.
Mr. Speaker! Therefore, on behalf of the Social Democrats, I move to approve the committee's proposal in the Committee on Taxation's Report 3, as we support the tax agreement between Sweden and Germany.
I also want to send a question to the upcoming debaters. How does the government and the government base truly intend to combat tax evasion? It is the tax evasion that exists and which, according to the Minister for Finance, can be combated in upcoming tax agreements, of which we have seen nothing so far.
David Lång (SD)
Mr. Speaker! I would like to begin by expressing my support for the committee's proposal in report SkU3.
Changes to Sweden's bilateral tax treaties are something that continuously pass through the Riksdag. But it is rarely the case that there is any debate in these matters. The agreements need to be updated successively, and formally, every update must pass through the Committee on Taxation.
The last time there was a debate in the chamber regarding tax treaties was in June 2021, when Sweden terminated its tax treaties with Portugal and Greece. But even then, there was no difference in the substantive issue between the different parties in the Riksdag.
Considering SkU3, it is noted that our tax agreement with Germany shall no longer cover inheritance and gift tax, which may seem appropriate since Sweden abolished inheritance and gift tax 19 years ago. Something we laughed a little at in the committee was when, in 2019, we abolished a double taxation agreement with the Soviet Union, a state that had not existed for 28 years. It indicated somewhat that the updating of Sweden's bilateral tax agreements could be regarded as somewhat overdue.
It is also something that the Swedish National Audit Office has noted in a report from 2010. The Sweden Democrats have pointed this out in the Riksdag on several occasions. The Swedish National Audit Office noted the rapidly declining trend in the work of keeping the Swedish tax treaties updated in relation to our most important competitor countries. The Swedish National Audit Office argued that Sweden has fallen behind in this important work, which in the long run could risk Swedish companies losing competitiveness regarding international operations as well as affect investments and localization of important operations both in Sweden and abroad due to poorer tax conditions.
Svenskt Näringsliv, which also conducted an analysis of the Swedish stock of bilateral tax treaties both in 2010 and in a follow-up in 2014, noted the same trend. It was regarded as very serious because it was seen that the trend had been ongoing since 1998. At that time, Sweden had a leading role in the world in the work of keeping the tax treaties at a high and for our industry good level. Since then, the development has regressed. It has been pointed out many times that this must be corrected.
Svenskt Näringsliv stated in an assessment that the direct loss for Sweden as a nation in the form of reduced tax payments could amount to several billion kronor per year due to the relatively poorer conditions that Sweden then received compared to our most important competitor countries. It was simply because we did not maintain a sufficiently high pace in the work of upgrading old agreements and signing new tax agreements with countries where Swedish industry has or plans to have operations. The dismantled efforts to update and develop our network of tax agreements were thus found to be somewhat quite substantial.
That we are now updating our tax agreement with Germany is positive because Germany last year was our second largest export country and our largest import country. In the bill, the government proposes that the Riksdag approves a protocol on amendment to the agreements between Sweden and Germany to avoid double taxation regarding taxes on income and wealth and on inheritance and gift, as I mentioned earlier, and to provide mutual assistance in taxation.
It is clarified that the intention is to avoid double taxation regarding taxes on income and on wealth without simultaneously creating conditions for non-taxation or reduced tax through tax evasion or tax avoidance. It also appears that the parties wish to further develop their economic ties and expand their cooperation in tax matters. All of this corresponds in all material respects with the OECD model convention.
The proposition also concerns income from business and public service. All provisions regarding the taxation of remaining estate, inheritance, and gifts are repealed, as this was abolished in Sweden in 2005, and provisions on the exchange of information and assistance in the collection of taxes etc. are introduced.
Mr. Speaker! As I said initially, I move for approval of the committee's proposal in the report.
Mathias Tegnér (S)
Mr. Speaker! Thank you, Member Lång, for a good contribution and a good exposé on the importance of the tax treaties!
Member of the Board Lång notes that there are usually no debates about tax treaties. At the same time, these are new times, a new government, a new parliamentary basis, and a new parliamentary composition. It feels like it is a good time to change things.
Member Lång was clear about why updates to the bilateral tax treaties are important. On that point, we are in complete agreement. However, I did not hear a single word in response to the question I asked Member Lång regarding the exit tax.
It is clear that one can argue that this is a tax agreement that solely concerns Sweden's and Germany's relations. At the same time, we are in a parliamentary situation where we have an SD-led government where we can ask questions to the ministers in the government. But it is difficult to get a picture of what perhaps the most important party, SD, thinks in certain issues.
It has been very unclear how SD views the exit tax. In fact, in today's Sweden, one can avoid capital taxation on surpluses in smaller companies when moving, and the Finance Minister has expressed that it is precisely with this type of tax agreement that one should access that loophole in Swedish legislation. It would therefore be pleasant if we could hear how the Sweden Democrats view the fact that there is a tax loophole in Sweden that makes it so that certain people do not have to pay tax like everyone else.
I believe that we Social Democrats risk eroding what is the basis for cohesion in society - that which we so damn well need right now, in this situation.
David Lång (SD)
Mr. Speaker! During the time that the Sweden Democrats have sat in the Riksdag, we have presented a long series of proposals regarding ensuring that people cannot escape paying tax and regarding closing all loopholes for tax evasion and tax avoidance. It is a task that is also ongoing in the government and which is stated in the tax agreement.
The updating of tax treaties has started to some extent after having been delayed for many years. The treaties will, of course, continue to be updated; work is ongoing both within the OECD and in the government regarding the updating of the tax treaties.
When it comes to the Social Democrats' high-handedness in this specific debate on tax evasion and such, there is nothing about it in the Social Democrats' own budget. You could perhaps present some of your own proposals if you consider the proposals being put forward to be insufficient.
Mathias Tegnér (S)
Mr. Speaker! Thank you, Member Lång, for the answer! If we are now to talk about the Social Democrats' view on tax evasion, I can say that we have worked hard against this for many years. When we sat in government, there was a concrete plan for how tax evasion should be combated. When we sat in government, the Swedish Tax Agency had a requirement to report the tax error annually. The SD-led government has just removed that in the latest regulatory letter.
The S-led government investigated a new exit tax because there was a loophole in Swedish legislation. Like a thief in the night, the current government chose in January this year to quietly scrap this investigation.
We are fighting tax evasion. Tax evasion is a threat to the cohesion in Sweden. Tax treaties are a way to get there. But if the Sweden Democrats truly want to fight the problems with Sweden lacking an exit tax, you need to come over to the side that thinks it is important to fight tax evasion. And then a new exit tax investigation is needed, because it is completely impossible to get tax treaties with Cyprus and Malta that close this loophole.
I hope I am wrong. The coming years will prove it. But there is much that indicates that the government's plan will not work.
David Lång (SD)
Mr. Speaker! The Sweden Democrats, just like the Social Democrats, have welfare ambitions. We have ambitions to ensure that taxes that are to be paid are collected. We have always pushed for this very strongly.
It was during a previous Social Democratic government in the 90s that the updating of the tax treaties unfortunately was postponed. But it is very pleasing that the entire committee agrees that this is a task that is prioritized. Of course, tax evasion and tax fraud shall be combated with all force.
Boriana Åberg (M)
Mr. Speaker! The primary purpose of tax treaties between two countries is to promote the exchange of goods and services, the mobility of labor, and capital movements by removing or mitigating the effects of international taxation.
Sweden is an export-dependent country; almost half of Sweden's GDP comes from the export of goods and services. Therefore, it is important that Sweden safeguards its network of tax treaties and ensures that already existing tax treaties are renegotiated as well as that new tax treaties are signed. The tax treaties must encourage investments and create as good competitive conditions as possible for Swedish industry. The tax treaties are important because they create predictability, not least for companies' investments.
Another important purpose of the tax treaties is to prevent international tax evasion. This is achieved by the treaties opening up possibilities for the exchange of information between competent authorities in the contracting states. Undesirable tax planning through improper use of the tax treaties can be prevented through specific anti-avoidance rules in the tax treaties.
Today we are debating the Committee on Taxation's report on the Amendment to the tax treaty between Sweden and Germany. I thought first to say that "debating" might not be the right word, but since it became a somewhat heated debate during previous statements, one can no longer say so. Despite the exchange of remarks just now, all parties have stood behind the government's proposal for a protocol on the amendment to the agreement between Sweden and Germany to avoid double taxation.
A historical review shows that the tax agreement between Sweden and Germany was signed 31 years ago, in July 1992. It was incorporated into Swedish law through the Act 1992:1193 on Double Taxation Agreements between Sweden and Germany.
A lot has happened during the 31 years that have passed since the agreement was signed, and therefore an update was needed. Among other things, the inheritance and gift tax was abolished by a unanimous Riksdag in 2004. The abolition of the inheritance and gift tax was a fortunate measure that strengthened business and made entrepreneurs and investment capital stay in Sweden. The inheritance and gift tax was an extremely harmful tax that hindered generational shifts in family businesses, which caused Sweden to lose both companies and jobs and thus tax revenues.
I want to emphasize that the proposal to abolish the inheritance and gift tax was submitted by a Social Democratic government, led by Göran Persson. He was a pragmatist, Göran Persson. One becomes nostalgic when thinking about him and listening to what is taking place in the chamber today.
Mr. Speaker! One of the changes in the tax treaty between Sweden and Germany means that the agreement no longer covers inheritance and gift tax.
Since the tax agreement was signed in 1992, new minimum standards in the area of tax agreements have been introduced as a result of the so-called BEPS project, which was led by the OECD and the G20 countries, a project whose purpose was to counter the erosion of the tax base and the shifting of profits. Therefore, the agreement's preamble is deleted and replaced by a new one, where it is clarified that the agreement does not aim to create conditions for non-taxation or reduced tax through tax evasion or tax avoidance. Furthermore, the contracting parties express in the preamble that they wish to develop their economic ties and develop cooperation in tax matters.
Amendment to the tax treaty between Sweden and Germany
In the protocol on amendment, a number of the other provisions of the tax agreement are also updated, concerning among other things the exchange of information, assistance with tax collection, income from business, public service, prohibition of discrimination based on citizenship, application of the agreement in certain cases as well as transitional provisions, this in order to give Swedish companies the opportunity to compete on the German market and vice versa as well as to facilitate the internationalization that benefits all economies.
Mr. Speaker! I vote in favor of the committee's proposal.
The deliberation was hereby concluded.
Source: The Swedish Parliament. The speeches come from the open data of the Riksdag, translated into English by AI, which may contain errors.