Corporate Income Tax Rates in Sweden

Swedish corporate tax rate is one of the most favorable in the world, and the country is very open to foreign business owners. By international standards, the corporate income tax rates in Sweden are very low, and it is based only on annual profit. Licensing taxes and local taxes are also nonexistent. This tax climate has made it very beneficial to establish a subsidiary or holding company within the country. Other tax benefits include exemptions on capital gains, deductible interest payments, low withholdings on dividends and liberal rules regarding capitalization.

Corporate Tax in Sweden

Corporate tax in Sweden, the rate is 26.3 percent, which is very reasonable when compared to international standards. The Swedish corporate income tax rate is even more reasonable when companies exercise the option of making deductible appropriations to a tax allocation reserve. Companies in Sweden are taxed on their worldwide income. However, losses can be carried over and deducted from profit indefinitely.

Profit Transfer

All companies within a corporation are considered separate entities for the purpose of taxation, and no taxes are levied against the group as a whole. This allows companies to implement efficient corporate tax planning and transfer large percentages of profit to other companies within the group. Transfers can be conducted as long as the group holds 90 percent or more of the shares of the transferring companies.

Dividends Tax Rate

Any dividends distributed to foreign corporate shareholders are exempt from withholding tax in Sweden, which means that dividends on non-listed shares are also exempt from withholding tax. This dividends tax rate should be very attractive to foreign corporate shareholders and is what makes Swedish Holding Companies so attractive. In the instances where dividends are not exempt, the withholding tax rate is 30 percent, but this amount can usually be waived or reduced by invoking international double taxation treaties.

Capital Gains Tax

Capital gains on non-listed shares and shares held by foreign individuals or entities are also exempt from withholding tax (capital gains tax). In addition, listed shares equaling 10 percent of company voting rights that have been held for at least one year qualify for an exemption. However, capital losses on shares cannot be deducted.

Tax Deductible Interest Costs

Mostly there are fully tax deductible interest costs in Sweden. This allows companies to avoid taxes by establishing an internal structure where return on investment is distributed as interest. However, Sweden’s tax law applies limits to the deductibility of interest on loans originating within a group.

Royalties and Value-Added Tax

Royalties are not subject to withholding tax in Sweden, but value-added tax (VAT) is at a rate of 25 percent. A reduced VAT tax rate of 12 percent or 6 percent applies to food, lodgings, sporting events, print media and public transport.

Click here to read more about Swedish tax planning solutions.

[button_round color=”green” url=”http://siguientecap.com/our-services/tax-planning/”] Read more about Swedish tax planning solutions [/button_round]