(a) Participation exemption applies to capital gains on certain shares and share-based instruments.
(b) This rate is usually reduced under double tax treaties.
(c) Royalty payments are considered taxable in Sweden at the ordinary corporate income tax rate. The right to tax royalty is usually limited, and the tax rate reduced, under double tax treaties.
New legislation in Sweden means that loans advanced by foreign entities are taxable in the hands of the Swedish borrower, provided that such taxation would have been imposed had the lender been a Swedish company. Under the previous rules loans from foreign ...
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New legislation in Sweden means that loans advanced by foreign entities are taxable in the hands of the Swedish borrower, provided that such taxation would have been imposed had the lender been a Swedish company. Under the previous rules loans from foreign entities were not taxed.
The government has introduced limitations regarding deductions for interest payments made between affiliated companies. The provision comes after two cases from the Supreme Administrative Court. The changes entail limitations for Swedish companies to make interest deductions for internally financed acquisition for shares in a unity of interests. The previous rule was that deductions could be made regardless of whether the interest deduction had any connection to the acquisition of the income. This led to aggressive tax planning. The Swedish tax authority estimated that this type of tax planning reduced the tax income by SKr7 billion ($993 million). The provisions in force since January 1 2009 result in some restrictions to the right of deduction for interest payments between affiliated companies. Foreign companies are also governed by the provision. This provision has been softened by the fact that the corporate tax rate has been reduced from 28% to 26.3%.
Transfer pricing documentation requirements have been in force for two years in Sweden and commentators are expecting advance pricing agreement (APA) rules to come soon. The Swedish Tax Agency is engaged in a consultancy process which is intended to lay the foundations for an APA programme.
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