In Sweden, a contribution made by an employer to an occupational pension insurance for an employee is normally not taxable for the employee. Disbursements under the occupational pension insurance constitute pension for the employee and are taxed in the income from employment category. A tax convention applies between Sweden and Italy. If a person who resides in Sweden derives income which, according to the provisions of the tax convention, may be taxed in Italy, then double taxation shall be avoided by deducting an equal amount from the income tax paid in Sweden. In an advance taxation ruling case, the Supreme Administrative Court examined whether tax which, according to the facts presented in the application, is paid in Italy on contributions to an occupational pension insurance for the benefit of the employee in that country, gives rise to a deduction for the employee’s Swedish income tax in conjunction with the employee later, after moving to Sweden, receiving and being taxed on disbursements under the insurance. The Supreme Administrative Court found that there is a clear connection between the funds transferred through the contributions to the insurance and the disbursements which are subsequently made under the insurance. Thus, the same income is involved. It is not apparent from the tax convention that the income must be taxed in accordance with the same article in the Contracting States in order for a deduction to be relevant. Since Italy, according to the facts presented, may tax the contributions, the applicant is entitled to a deduction for the tax previously paid in Italy when the disbursements are taxed.
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