The Nordic withholding agreement is an agreement between the Nordic countries on the payment of withholding tax and the transfer of the tax paid. The agreement includes the taxation of income from work, pensions and social security as well as the transfer of corporation tax. The Nordic Agreement on Tax Collection and Transfer is based on Article 20 of the Nordic Convention on Mutual Tax Assistance (Treaty 37/1991). The agreement is also referred to as “TREKK” in the Danish word “trkke” (“restraint”). The current TREKK Treaty (Treaty 97/1997) came into force on 1 January 1998. The treaty is applicable in Iceland, Norway, Sweden, Finland, Denmark and the Faroe Islands (Denmark`s Autonomous Region). Greenland is not a contracting party to the agreement. Income tax paid on the income or income of a natural person`s activity may be transferred under the TREKK contract. The agreement also applies to corporation tax and withholding tax on labour compensation.

Nordic Agreement on Tax Collection and Transfer (NT1) The Norwegian tax authority is the competent authority in Norway and can provide more detailed information on the withholding agreement. BulgariaThe Bulgarian tax treaty and international agreements Like many other international agreements, the Nordic Agreement on Income Tax contains provisions relating to a mutual agreement procedure (POP). The tax treaty gives taxpayers the right to challenge the double taxation of their income by the competent authorities of the countries concerned. The map procedure is usually the last way to eliminate double taxation after the appeal procedure has initially been exhausted. For example, the TREKK contract applies to situations where a Nordic employer pays wages for work done in another Nordic country. The aim is to prevent taxpayers from having to make instalments to more than one Nordic country. The agreement also aims to ensure that these wages are not completely exempt from advances, but that advances are always recovered either in the worker`s country of origin or in the country where he works. “country of origin” refers to the country of residence of a subject under the Nordic Income Tax Convention. A worker`s country of residence and the country in which he works can use both his national tax laws and the Nordic tax treaty to have the right to tax the worker`s wages.

In this case, the TREKK treaty determines which of the two Nordic countries has the right to request advances. If the tax authorities of a country which, according to the provisions of TREKK, must renounce the advances, refuse a decision of the tax authorities of another Nordic country, the dispute is settled by mutual agreement between the competent authorities. These tax transfer provisions, contained in Finnish domestic tax legislation and the TREKK contract, make the tax paid in another Nordic country partly comparable to that paid in Finland. Tax payers can receive a tax transfer credit from another Nordic country when they are subject to taxes in Finland. For this reason, the agreement does not allow the country receiving a tax transfer to collect interest on the amount transferred. This will prevent taxpayers from paying interest on tax arrears originally made in another Nordic country. Similarly, the Nordic country, which pays taxpayers` money to a receiving Nordic country, does not expect credit interest rates at the amounts. As a general rule, the Nordic Income Tax Agreement gives the country in which the company is domiciled the right to tax business income if the company does not have a stable head office in another Nordic country where it operates.