Why tax?

The purpose of taxes is to pay for the collective benefits that society provides. Taxes affect many aspects of our daily lives – e.g. shopping for food, filling up the petrol tank or receiving child benefit.

Taxes are used to finance collective services like healthcare, education, defence and social security.

States also levy taxes for other purposes. One such purpose is socio-economic efficiency – e.g. taxes on tobacco and alcohol, which are used to compensate for their impact on health.

Similarly, heavier taxes are levied on goods whose manufacture generates environmentally harmful emissions. Taxes are also used to create economic balance between various social groups.

Taxation allows economic resources to be transferred to groups who need extra financial support, e.g. via child benefit and sick pay.

In other words, taxation is not only a source of income for public-sector spending, but is also one of the most important instruments for shaping national policies.

Nordic co-operation on taxation

Nordic co-operation on tax has two main starting points.

One is to facilitate activities for Nordic citizens and companies and improve the Region as a joint market. Examples of this kind of co-operation include the double-taxation agreement, which ensures that the same income or assets are not taxed twice.

Information services

Another example of Nordic co-operation on taxation is the virtual tax portal, Nordic eTax, for people who live in one Nordic country and have income or assets in another. Nordic eTax is the result of collaboration between the Nordic Council of Ministers and the tax administrations of Sweden, Denmark, Finland, Norway and Iceland, who are also jointly responsible for its content.

The information service Hello Norden is also worth mentioning in this context. This is the Nordic Council of Ministers’ information service for private individuals and small enterprises that require information and guidance about moving across Nordic borders.

Øresund Direkt, which is partly funded by the Nordic Council of Ministers, plays a similar role in the Øresund Region.

As integration has deepened in areas such as Øresund, Dalsland and Tornedalen, regional co-operation on tax has become increasingly important, and affects more and more people.

International tax questions

Another important starting point for co-operation is to co-ordinate the Nordic approach to tax issues and maximise international impact. One example of this kind of co-operation is the negotiation work with offshore tax centres.

Joint Nordic co-operation in this area began in 2006, with the aim of co-ordinating the Nordic countries’ approach to negotiations regarding information-exchange agreements with so-called offshore tax centres. The countries co-ordinate their negotiation strategy via the Nordic Council of Ministers.

This strengthens the individual Nordic countries’ negotiating positions and helps to keep costs down. The project has resulted in bilateral information exchange agreements with several different countries.