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Mail address: Box 7850
SE-103 99 Stockholm Sweden
Street address: Hamngatan 26 Stockholm Sweden
Principal Tax Contact
Katrin Norell
+46 (8) 520-590-00
+46 (8) 520-598-07
Mobile: +46 (70) 318-98-07
Email: katrin.norell@se.ey.com
International Tax and Transaction Services – International Corporate Tax Advisory
Einar Stigård
Erik Hultman
Jessica Kjellsson
Per Holstad
+46 (8) 520-582-61
Mobile: +46 (70) 200-89-91
Email: einar.stigard@se.ey.com
+46 (8) 520-594-68
Mobile: +46 (70) 318-94-68
Email: erik.hultman@se.ey.com
+46 (8) 520-593-33
Mobile: +46 (76) 107-93-33
Email: jessica.kjellsson@se.ey.com
+46 (8) 520-597-40
Mobile: +46 (72) 206-46-99
Email: per.holstad@se.ey.com
International Tax and Transaction Services – International Capital Markets
Erik Hultman
+46 (8) 520-594-68
Mobile: +46 (70) 318-94-68
Email: erik.hultman@se.ey.com
International Tax and Transaction Services – Transfer Pricing and Operating Model Effectiveness
Mikael Hall
Olov Persson
Business Tax Advisory
Helena Norén,
Financial Services Organization
Global Compliance and Reporting
Daniel King
+46 (8) 520-592-35
Mobile: +46 (70) 318-92-35
Email: mikael.hall@se.ey.com
+46 (8) 520-594-48
Mobile: +46 (70) 318-94-48
Email: olov.persson@se.ey.com
+46 (8) 520-596-87
Mobile: +46 (70) 312-96-87
Email: helena.noren@se.ey.com
+46 (8) 520-591-30
Mobile: +46 (73) 040-43-72
Email: daniel.king@se.ey.com
In general, capital gains on shares held for business purposes are exempt from tax (for details regarding shares held for business purposes, see Dividends). The exemption is also applicable for interests in partnerships as well as shares held by partnerships. Corresponding losses on interests in partnerships are nondeductible. However, capital gains on interests in partnerships domiciled outside the European Economic Area (EEA) are not covered by the participation exemption.
Taxable capital gains are aggregated with other corporate business income. Capital gains are subject to tax when transactions are closed, regardless of the holding period or when payment is received.
Administration. A company may choose its financial year and is required to file its corporate income tax return by the corresponding due date for the return. A company can submit its return electronically through the Tax Agency’s e-service or via regular mail. The following table provides the dates for filing the corporate income tax return for all financial years.
Financial year
Filing of tax return
Paper filing and E-filing
1 February–31 January, 1 March–28 February, 1 April–31 March or 1 May–30 April 1 December
1 June–31 May or 1 July–30 June 15 January
1 August–31 July or 1 September–31 August 1 April
1 October–30 September, 1 November–31 October, 1 December–30 November or 1 January–31 December 1 August
If any of the dates above fall on a Saturday or Sunday, the filing date is moved to the following Monday.
A financial year may be extended for up to 18 months in certain circumstances, such as for a company’s first or last financial year or if a company changes its financial year.
Advance tax payments are made in monthly installments during the year to which they relate. The final tax assessment must be issued by the Swedish Tax Agency before the 15th day of the 12th month after the end of the assigned income year. Any balance of tax due must be paid within 90 days after the final tax assessment.
Dividends. In general, dividends received from Swedish companies on shares held for business purposes are exempt from tax. Dividend distributions on other shares are fully taxable. Shares are deemed to be held for business purposes if they are not held as current assets and if any of the following conditions is satisfied:
• The shares are unlisted.
• The shares are listed and the recipient of the dividends owns at least 10% of the voting power of the payer for more than one year.
D. Other significant taxes
The following table describes other significant taxes.
Nature
Value-added tax (VAT), on goods (including imported goods but excluding exported goods) and services, unless specifically exempt by law; based on sales price excluding VAT
Nature of tax
Rate on hotel services, food served in restaurants, foodstuffs (not including alcoholic beverages) and the repair of bicycles, shoes, leather goods, clothing and linen (a legislative proposal to reduce the VAT rate on such repairs to 6% may be approved during 2022)
Rate on books and newspapers, music notes and maps, entry to theaters, cultural and sports events, entry to and demonstrations of zoos and demonstrations of certain areas of nature, passenger transportation and certain copyrights
25
12
6 (A new VAT law was implemented in Sweden on 1 July 2023, with the intention to correspond with the EU VAT directive to a greater extent. The changes should not have a direct impact on companies’ VAT management, as no extensive material changes are intended.)
Social security contributions, on salaries, wages and the assessed value of benefits in kind;
E. Miscellaneous matters
Controlled foreign companies. A Swedish company that holds or controls, directly or indirectly, at least 25% of the capital or voting rights of a foreign low-taxed entity (controlled foreign company, or CFC) is subject to current taxation in Sweden on its share of the foreign entity’s worldwide profits if the ownership or control exists at the end of the Swedish company’s fiscal year. Foreign entities are considered to be low-taxed if their net income is taxed at a rate of less than 11.33% (55% of the effective corporate income tax rate) on a base computed according to Swedish accounting and tax rules. However, the CFC rules do not apply to foreign entities that are resident and subject to corporate income tax in jurisdictions on the so-called “approved list.” If Sweden has entered into a tax treaty with a jurisdiction on the approved list, an additional requirement for the exemption is that the foreign entity and its income must be eligible for treaty benefits.
Hybrid mismatches. Sweden introduced substantial additions to the Swedish provisions to counter hybrid mismatches as of 1 January 2020, applicable to affiliated companies or arrangements resulting in a tax benefit.
Hybrid entities and instruments. A company is not allowed to deduct expenses paid to a company in another state if the corresponding income is not subject to tax in that state and if this is due to differences in the classification of an entity (opaque/ transparent) or a financial instrument (debt/equity) for tax purposes.
Imported mismatches. Deduction of a payment to an entity in a state outside of the EU is disallowed if the corresponding income from that payment is set off, directly or indirectly, against an expense that is giving rise to a deduction without inclusion or a double deduction.
Hybrid permanent establishments. A company is not allowed to deduct an expense paid to another company if the corresponding income is not subject to tax and this difference is due to the one of the following:
• The recognition of a permanent establishment
• The allocation of income to a permanent establishment
• A deemed payment disregarded under the laws of the payee jurisdiction
Double deduction. A company is not allowed to deduct an expense if a deduction is also allowed against the income of a company in another state and if one of the following circumstances exists.
• The expense was attributed to a permanent establishment.
• The expense was paid by a Swedish company.
• This is due to a tax residency mismatch.
The application of the first and third circumstances described above is not restricted to affiliated companies or arrangements resulting in a tax benefit.
Limited foreign tax credit on hybrid-transfers. Deduction of foreign tax, attributable to income on a financial instrument, is disallowed to the extent the taxpayer receives a tax credit on dividend or interest income resulting from the terms of a transfer agreement of the financial instrument. The limitation applies only to the extent that another entity is granted a foreign tax credit for the same income and the dividend or interest income is part of a structured arrangement that generally entails a tax credit for the taxpayer and the taxpayer reasonably should have been expected to know about the arrangement.
Reverse hybrid mismatches. Sweden introduced further provisions to counter hybrid mismatches on 1 July 2021. The provisions extend tax liability on income from Swedish transparent entities to associated foreign entities if the income is not subject to tax in the state where the receiving entity is deemed to be a resident for tax purposes, as a result of the classification of the Swedish transparent entity in that state.
Mandatory disclosure regime. The EU directive on mandatory disclosure rules (DAC 6) requires intermediaries and taxpayers to disclose to the relevant tax authorities certain cross-border
arrangements that contain one or more prescribed hallmarks. Some of the hallmarks trigger reporting requirements only if they also fulfill the main benefit test. From 1 January 2021, reporting is required within 30 days of certain trigger events.
F. Treaty withholding tax rates
Interest payments are not subject to withholding tax under Swedish internal law. Consequently, the table below provides treaty withholding tax rates for dividends and royalties only. However, under Swedish domestic law, no dividend withholding tax is levied on dividends paid by a Swedish company to a “foreign company,” as defined under Swedish tax law, if it is equivalent to a Swedish limited liability company and certain holding requirements are met. Also, no withholding tax is levied if the EU ParentSubsidiary Directive applies. In addition, a foreign legal entity qualifies as a “foreign company” if it is resident and liable to income tax in a jurisdiction with which Sweden has entered into a comprehensive tax treaty and if it is eligible for the treaty benefits.
Swedish domestic law on withholding tax contains an antiavoidance rule. Under this rule, a person or entity that holds shares to provide an illegitimate tax advantage or reduction of withholding tax for someone else is subject to withholding tax. The anti-avoidance rule may also potentially apply to situations for which an exception from withholding tax would otherwise be available.
There is a proposal for a new Swedish withholding tax act, which had previously been put on hold awaiting the EU FASTER directive. There is currently no set date when the new act is expected to be applicable. Overall, the proposed withholding tax act is not intended to result in major changes in the application of withholding taxes in Sweden, but it will contain new anti-abuse provisions and extend the scope to cover additional persons with limited tax liability in Sweden. The new anti-abuse provisions will also result in the general anti-avoidance act being applicable to situations and arrangements relating to withholding tax.
Dividends
Dividends
s w EDE n 1773
(t) The 5% rate applies to royalties for the use of, or the right to use, patents, trademarks, designs or models, plans, secret formulas or processes, or for information concerning industrial, commercial or scientific experience. The 10% rate applies to all other royalties.
(u) The rate may be reduced by virtue of a most-favored-nation clause.
(v) The 5% rate applies to royalties for the use of, or the right to use, industrial, commercial or scientific equipment. The 7% rate applies to all other royalties.
(w) The lower rate applies to copyright royalties, excluding royalties for films and certain other items.
(x) The reduced rate applies if the payer of the dividends is engaged in an industrial undertaking.
(y) The higher rate of 15% applies on dividends paid by investment vehicles if the income is derived directly or indirectly from immovable property.