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Investments / Investeringar

Sweden and taxes - investment activities

While Sweden has a strong and by no means unfounded reputation for being a high-tax country the fact is that this is mainly the case in relation to income tax. Work is hence highly taxed, and you should not expect moving to Sweden and getting unparalleled richness from ordinary salary (but perhaps to balance this fact out by way of getting free childcare, free education, and extensive public health care).

However, as regards where to set up an investment vehicle the tax situation should be viewed differently. Be it your private holding company with holdings in companies you started or angel investments, or on a bigger scale as a venture capital firm or an investment company, Sweden may actually not be that bad a jurisdiction.

Below is a general orientation as regards tax matters of relevance for investment activities.

To start with, as regards capital gains there are several comparatively attractive regulations that should be taken into account.


  • No tax on gifts and no inheritance tax - at all. This is contrary to many other jurisdictions where succession and gifts will be subject to substantial taxes. This fact may therefore prove beneficial when holding assets and/or receiving dividend or other forms of yield from assets. 


  • No tax on dividend, sails profits and liquidation proceed on any shares you hold in private companies (or traded companies in some cases) in cases where you hold such shares through a company. 

This is the so called “participation exemption rule”. Many jurisdictions will provide such rules in some form but please be advised to look into the material details for any jurisdiction as the rules will diverge (an example being that some jurisdictions have a time qualification requirement before any tax is not charged from proceeds from shares held in a private company). 

The Swedish regulation has no qualification as regards a minimum time period that you needing to have held the equity before you get the benefit of no tax through the participation exemption rule.

 

This no-tax rule is hence (as an outset) provided if;

  1. The owner is a limited liability company

  2. The shares held are in a private company (i.e. not publicly traded), or;

  3. The shares held are in a publicly traded company but you have had the shares for at least 1 year and you own at least 10 % of the publicly listed company

 

  • Now then; where do you actually pay taxes if you invest globally?

 

Also remember that if you set up an investment company/venture capital firm in Sweden and invest in private companies in other jurisdictions you, as an outset, tax in Sweden. The caveat being that in some cases there so called “stamp duty” meaning that a transfer of shares is subject to a specific tax that must be paid in the jurisdiction where the portfolio company is situated regardless of where the owner is situated.

 

  • The international investment activities may however become subject to so called withholding taxes. This may be the case if the portfolio country jurisdiction does not have a double tax treaty with Sweden.  

 

For completeness, withholding tax may hence be imposed on a Swedish investment entity just as it would any other foreign entity investing into a jurisdiction from abroad unless double tax treaty between the countries addresses the matter. This is a tax on dividend that should be reclaimed and repaid but the fact that it is withheld may still prove cumbersome. 

  • Lastly in this summary over taxes affecting investment activities; How about the corporate tax rate? 


The corporate tax in Sweden is 20,6 % currently. Also in this regard it is noteworthy that the tax levels are much lower than the income tax.

 

 All in all Sweden may not be an all to bad country for investment activities.


All of the above should only be seen as general orientation and not be used as tax advice in any specific situations, you should then seek tax counsel for your individual situation. 


Stockholm, 31 May 2023

Author: Katarina Strandberg

To start with, as regards capital gains there are several comparatively attractive regulations that should be taken into account.


  • No tax on gifts and no inheritance tax - at all. This is contrary to many other jurisdictions where succession and gifts will be subject to substantial taxes. This fact may therefore prove beneficial when holding assets and/or receiving dividend or other forms of yield from assets. 


  • No tax on dividend, sails profits and liquidation proceed on any shares you hold in private companies (or traded companies in some cases) in cases where you hold such shares through a company. 

This is the so called “participation exemption rule”. Many jurisdictions will provide such rules in some form but please be advised to look into the material details for any jurisdiction as the rules will diverge (an example being that some jurisdictions have a time qualification requirement before any tax is not charged from proceeds from shares held in a private company). 

The Swedish regulation has no qualification as regards a minimum time period that you needing to have held the equity before you get the benefit of no tax through the participation exemption rule.

 

This no-tax rule is hence (as an outset) provided if;

  1. The owner is a limited liability company

  2. The shares held are in a private company (i.e. not publicly traded), or;

  3. The shares held are in a publicly traded company but you have had the shares for at least 1 year and you own at least 10 % of the publicly listed company

 

  • Now then; where do you actually pay taxes if you invest globally?

 

Also remember that if you set up an investment company/venture capital firm in Sweden and invest in private companies in other jurisdictions you, as an outset, tax in Sweden. The caveat being that in some cases there so called “stamp duty” meaning that a transfer of shares is subject to a specific tax that must be paid in the jurisdiction where the portfolio company is situated regardless of where the owner is situated.

 

  • The international investment activities may however become subject to so called withholding taxes. This may be the case if the portfolio country jurisdiction does not have a double tax treaty with Sweden.  

 

For completeness, withholding tax may hence be imposed on a Swedish investment entity just as it would any other foreign entity investing into a jurisdiction from abroad unless double tax treaty between the countries addresses the matter. This is a tax on dividend that should be reclaimed and repaid but the fact that it is withheld may still prove cumbersome. 

  • Lastly in this summary over taxes affecting investment activities; How about the corporate tax rate? 


The corporate tax in Sweden is 20,6 % currently. Also in this regard it is noteworthy that the tax levels are much lower than the income tax.

 

 All in all Sweden may not be an all to bad country for investment activities.


All of the above should only be seen as general orientation and not be used as tax advice in any specific situations, you should then seek tax counsel for your individual situation. 


Stockholm, 31 May 2023

Author: Katarina Strandberg

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