Nordic Council seeks to accelerate work on joint tax agreement

During the Session of the Nordic Council in Stockholm, the committee once again stressed the need to modernise the Nordic tax agreement. Despite repeated calls from the Nordic Council, the response from the finance ministers has so far been lukewarm, and the committee is now calling for a clearer political will to move the matter forwards.

The Nordic tax agreement is based on the OECD’s model convention for double taxation agreements, which is currently under review. The finance ministers have stated that revisions will not take place until the OECD review is completed – something the Nordic Council believes is slowing down progress.

“The OECD process must not become an excuse for postponing the issue. It’s important work, but it can only contribute a small part of the solution for us in the Nordic Region. There are also many other issues that lie entirely outside the OECD which the finance ministers must address in order to simplify the Nordic tax agreement,” says Ottosson.

While awaiting political dialogue with the Nordic finance ministers, the committee invited Fredrik Lundgren, tax expert at KPMG, to provide deeper insight into the Nordic tax agreement and the bilateral arrangements between the countries. 

Lundgren co-authored the report Working across the Nordic countries (2023), funded by the Nordic Council’s Freedom of Movement Group and Freedom of Movement Council. The report forms the basis for the Nordic Council’s recommendation to the Nordic finance ministers to simplify the Nordic tax agreement.

“Labour market stakeholders are currently navigating rules that are more than 60 years old, which fail to account for today’s reality of remote working and cross-border working. The administrative burden has become so complex and heavy that it’s difficult to get it right, and it often discourages employers from hiring from elsewhere in the Nordic Region,” says Fredrik Lundgren.

He argues that an update of the Nordic tax agreement and the bilateral agreements is necessary if the vision for the Nordic Region to be the most sustainable and integrated region in the world by 2030 is to include the labour market as well.

During the question time with the Ministers for Nordic co-operation, chair of the committee Kjell-Arne Ottosson asked the Danish Minister for Nordic Co-operation Morten Dahlin, about plans to follow up on the issue during Denmark’s and the Faroe Islands’ upcoming presidency of the Nordic Council of Ministers. In his response, Dahlin cited having to wait for the OECD’s conclusions, but pointed out last year’s update of the Öresund Agreement as a positive example and a milestone in Danish-Swedish co-operation.

However, Ottosson doesn’t believe that bilateral agreements are the right way forwards.

“I don’t share Dahlin’s enthusiasm for the update of the Öresund Agreement which, in my view, was primarily cosmetic. It remains unclear whether the update actually brought any real benefit for commuters. For me, this is about creating fair and clear rules for all citizens and businesses that live and operate across our Nordic borders,” says Ottosson.

Today, there are four bilateral tax agreements between the Nordic countries, but none that cover the entire region. The Nordic Council argues that this creates differences in rights and opportunities for citizens, businesses and authorities alike.

The Nordic Council wants simpler and more harmonised tax rules that make it easier to work, run businesses and co-operate across borders. The right to clear tax rules is one of the seven fundamental rights for citizens and businesses included in the strategy “Freedom of Movement in the Nordic Region 2026–2030”, which was adopted by the Nordic Council during the Session.

The OECD’s work on the model convention is expected to be completed at the turn of the year, which would pave the way for the Nordic revision process to begin. The committee expects the process to be clarified during the planned political dialogue with the finance ministers in February 2026.