New double taxation treaty between Sweden and the Netherlands

Key Changes

The new treaty introduces a number of changes, including but not limited to; 

1. Lower threshold for tax exemption for dividend income 
2. Extended taxation period in exited state, from five to ten years for capital gains
3. The pension article is fundamentally changed 

1. Dividends — Lower threshold for the exemption rule (Article 10)
Under the 1992 treaty, dividends paid between companies were exempt from source-state withholding tax where the beneficial owner held directly at least 25 per cent of the paying company's capital. Under the new treaty, this threshold is reduced to 10 per cent of the capital or voting power of the paying company, provided the beneficial owner is a company resident in the other country. The beneficial owner must have held the qualifying interest throughout a 365-day period that includes the day of payment of the dividend, a condition that must be monitored carefully around dividend payment dates. The standard 15 per cent withholding rate is otherwise retained.

2. Capital gains and exit taxation (Article 13)
Under the 1992 treaty, both countries may tax gains on shares by an individual who had been resident there at any point during the five years before the sale. The new treaty extends this period. The country of departure may tax such gains if the sale occurs during the calendar year in which the individual left, or during any of the ten calendar years following that year.

The new treaty also introduces an explicit exit tax provision. When an individual moves from one country to the other, the country of departure may tax the increase in value of assets that accrued while the individual lived there, even if no actual sale has taken place. This applies to assets such as shares and similar holdings, but not to immovable property or business assets of a permanent establishment. For individuals moving between Sweden and the Netherlands, unrealized gains on shares and similar assets may accordingly be subject to tax at the point of departure even absent an actual disposal, in case such tax is due under domestic legislation.

3. Pensions, annuities and social security payments (Article 17)
Under the 1992 treaty, pensions were taxable only in the recipient's country of residence. The new treaty fundamentally changes this. Pensions, annuities and similar payments arising in one country may now also be taxed in the country where the pension entitlement was built up — the source state. A pension is considered to arise in a country to the extent that contributions or payments associated with it qualify for tax relief there. In practice, this means that a Swedish resident receiving a Dutch occupational pension may face withholding tax in the Netherlands in addition to taxation in Sweden. Relief from double taxation is available under the new treaty's elimination provisions. The same applies in reverse for Dutch residents receiving Swedish pension income.

Other changes 

Beyond the changes highlighted above, the new treaty contains additional updates but retains the standard framework for employment income. Salaries and wages are taxed in the country where the employee lives, unless the work is performed in the other country. The 183-day exemption continues to apply. One structural change to note is that the 1992 treaty's separate article on dependent personal services has been removed. Employment income is now governed entirely by Article 14, but in practice the rules remain the same. Income from work on board ships or aircraft in international traffic is taxable only in the employee's country of residence.

Entry into Force

The new treaty was signed on 24 June 2026. It will enter into force once both Sweden and the Netherlands have completed their domestic approval procedures. In Sweden, the treaty will be submitted to the Parliament for approval. Once in force, the new treaty will apply to income and tax years starting from 1 January of the year following entry into force. It remains to be seen whether this will be as early as 1 January 2027.

Deloitte's comments

The new treaty is the most significant update to the Sweden–Netherlands tax relationship in over thirty years and aligns the bilateral framework with current OECD standards. From an individual taxation perspective, changes on right to tax pension are important to consider. The shift from exclusive residence-state taxation to shared source-state taxation means that individuals who have built up pension rights in one country while living in the other may face taxation in both states, with double taxation to be relieved under the treaty. Individuals with cross border pension entitlements should review their position well before the treaty enters into force.

The changes to the capital gains article are also noteworthy. The extension of the look back period from five to ten calendar years significantly lengthens the time during which the departure state can tax gains on shares and similar assets. In addition, the new exit charge provision allows the departure state to tax unrealized gains at the time of emigration, but only to the extent that such taxation is provided for under its domestic law. In practice, this means that:

• the Netherlands, which operates an exit levy on substantial shareholdings and certain pension rights, may crystallize a Dutch tax liability at the point of departure, regardless of when any actual sale occurs; while
• Sweden does not impose a general exit tax on unrealized gains, but already taxes certain post departure disposals of shares under its ten year rule. 

For individuals moving between Sweden and the Netherlands, particularly those holding equity-based compensation or substantial shareholdings, the timing of departure and any subsequent disposals will therefore become more important. The combined effect of domestic exit/post exit rules and the extended treaty look back period can materially affect the overall tax cost of a move.

Deloitte will continue to monitor the ratification process in both countries and will provide further updates as the situation develops. Please do not hesitate to contact us if you have questions about how the new treaty may affect your organization, employees or individual tax position.

Authors: Alexander Strandberg, Jessica Ebbesson & Matilda Lundberg