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- In the case of Sweden, double taxation shall be avoided as follows:
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a) Where a resident of Sweden derives income which under the laws of the United Kingdom and in accordance with the provisions of this Convention may be taxed in the United Kingdom, Sweden shall allow subject to the provisions of the laws of Sweden concerning credit for foreign tax (as they 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 United Kingdom tax paid in respect of such income.
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b) Where a resident of Sweden derives income which, in accordance with the provisions of this Convention, shall be taxable only in the United Kingdom, Sweden may, when determining the graduated rate of Swedish tax, take into account the income which shall be taxable only in the United Kingdom.
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c) Notwithstanding the provisions of subparagraph a) of this paragraph, dividends paid by a company which is a resident of the United Kingdom 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.
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2. Subject to the provisions of the law of the United Kingdom regarding the allowance as a credit against United Kingdom tax of tax payable in a territory outside the United Kingdom or, as the case may be, regarding the exemption from United Kingdom tax of a dividend arising in a territory outside the United Kingdom or of the profits of a permanent establishment situated in a territory outside the United Kingdom (which shall not affect the general principle hereof):
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a) Swedish tax payable under the laws of Sweden and in accordance with this Convention, whether directly or by deduction, on profits, income or chargeable gains from sources within Sweden (excluding in the case of a dividend tax payable in respect of the profits out of which the dividend is paid) shall be allowed as a credit against any United Kingdom tax computed by reference to the same profits, income or chargeable gains by reference to which the Swedish tax is computed;
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b) a dividend which is paid by a company which is a resident of Sweden to a company which is a resident of the United Kingdom shall be exempted from United Kingdom tax when the exemption is applicable and the conditions for exemption under the law of the United Kingdom are met;
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c) the profits of a permanent establishment in Sweden of a company which is a resident of the United Kingdom shall be exempted from United Kingdom tax when the exemption is applicable and the conditions for exemption under the law of the United Kingdom are met;
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d) in the case of a dividend not exempted from tax under subparagraph b) above which is paid by a company which is a resident of Sweden to a company which is a resident of the United Kingdom and which controls directly or indirectly at least 10 per cent of the voting power in the company paying the dividend, the credit mentioned in subparagraph a) above shall also take into account the Swedish tax payable by the company in respect of its profits out of which such dividend is paid.
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3. For the purposes of paragraphs 1 and 2, profits, income and gains owned by a resident of a Contracting State which may be taxed in the other Contracting State in accordance with this Convention shall be deemed to arise from sources in that other State.
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4. here a resident of a Contracting State derives gains which may be taxed in the other Contracting State under the provisions of paragraph 6 of Article 13, and those gains are in respect of:
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a) shares or comparable interests referred to in paragraph 2 of Article 13, and the immovable property in question is situated in the first-mentioned Contracting State, or
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b) shares referred to in paragraph 7 of Article 26, and the rights in question are to assets to be produced by the exploration or exploitation of the sea-bed and subsoil and their natural resources situated in the first-mentioned Contracting State that other Contracting State shall allow, under the provisions of paragraphs 1 or 2, as the case may be, a deduction of, or a credit for, the tax paid on that gain in the first-mentioned Contracting State.