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Residence according to the Nordic Tax Treaty

If you work or stay in another Nordic country for a certain period of time, you will be considered as resident for tax purposes and fully liable to tax in that country according to that country’s national legislation. However, you may be resident for tax purposes and fully liable to tax also in the country where you still live or have moved from. If you are fully liable to tax in two countries, you may be liable to tax in both countries on the same income and capital. In such cases it is important to clarify in which country you are considered as resident according to the Nordic tax treaty.

When determining in which country you may be taxed on income and capital it is important to know in which country you are resident according to the tax treaty. You will be fully liable to tax in the country where you are resident according to the tax treaty. The other country may only tax certain types of income. The tax treaty has explicit provisions on which income that may be taxed in the source country/the country where the work is performed. When an income may be taxed in both the source country and the residence country, the residence country must give relief so as to avoid the double taxation.

According to the provisions in the tax treaty you shall be considered as resident in the country where you have a permanent home available. It is of no significance whether you are the owner of this home or whether it is rented. If you have a permanent home available you in both countries, you shall be considered as resident in the country where your personal and economic relations are closer (centre of vital interests). Personal and economic relations mean i.e family (spouse and children up to 18 years), social relations, place of work and other economic interests. If this does not give a clear answer you shall be considered as resident in the country in which you have a habitual abode.

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