New Tax Treaty signed

A new tax treaty between Norway and the United Kingdom was signed in HM Treasury 14 March 2013 by Ambassador Kim Traavik and Exchequer Secretary to the Treasury David Gauke MP on behalf of their respective Governments.

The agreement  is expected to enter into force in 2013 and take effect from the tax year 2014. The agreement will supersedes the current treaty from 2001. Since then, the OECD model treaty has changed on several key points that are now taken up in the new treaty. These include:

• The UK does not have wealth tax or capital tax. Since capital thus will not be subject to double taxation, the new agreement does not cover wealth taxes. A consequence of this amendment is that people who, without having emigrated from Norway, establish a connection to the UK that is sufficiently strong for them to be residents there according to tax treaty rules, will still be liable to wealth tax in Norway.

• The OECD model’s Article 7 on income distribution to permanent establishments was changed in 2010. Because headquarters and establishments belong to one single entity, dispositions between a company's headquarters and other holdings have to a limited extent been recognized when determining the establishment's income. The new Article 7 provides that consideration shall be given to such transactions in the same way as transactions between the entity and independent firms.

• The new agreement provides that pensions may be taxed both by the state that pays the pension and by the state in which the pension recipient is a resident. Double taxation is avoided by settling the amount of tax in the providing state against that of the state of residence.

• The article on dispute resolution is complemented by a new provision on arbitration. This provision entails that if the competent authorities have not resolved a dispute within two years or have only solved part of it, the taxpayer may request that the unresolved issues be settled by arbitration.


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