Swedish Tax Treaties and Benefits for Holding Companies

Swedish tax treaties and benefits for holding companies make Sweden a favorable country to use for international tax planning. Sweden is an important financial center in Northern Europe and a business-friendly country that welcomes foreign holding companies. Entities that pay fair corporate income tax rates overseas are granted an exemption from Sweden’s Controlled Foreign Corporation (CFC) income tax. Sweden has beneficial tax structures for holding companies and low corporate income tax rates that are based on annual profits. Holding companies are also granted favorable withholding tax benefits for key employees and executives. The country has 87 double tax treaties, a dividend exemption and a capital gains tax exemption.

Tax Benefits with Swedish Holding Companies

There are many tax benefits with Swedish Holding Companies. In addition to treaties that allow companies to avoid double taxation, Sweden has a CFC income tax white list that includes 153 countries. It also has a blacklist and a gray list. Companies based in white-list countries are exempt from CFC taxes. Entities based in white-list countries are not subjected to CFC taxes even if their earnings are taxed at a rate less than 15.4 percent. Corporations with ties to countries on the blacklist, including notorious tax havens, are subject to CFC taxes only if their earnings are taxed at a rate below 15.4 percent. Gray-list countries are held to a similar standard in regard to profits related to financial services. Furthermore, corporations that are engaged in the banking, finance or insurance industries are not granted the same white-list tax protection.

Sweden’s blacklist includes 54 countries that are corporate tax havens according to their generous tax rates. The gray list focuses on CFC’s that already enjoy low taxes. The gray list covers 21 countries, including seven countries in the European Economic Space. For example, Ireland has a double tax treaty with Sweden, but national companies engaged in banking, finance or insurance operations are subject to gray-list tax standards. Sweden’s fair corporate tax system means that corporations on black and gray lists can establish holding companies in Sweden if they are willing to pay their fair share of taxes up to the standard CFC rate of 26.3 percent.

Companies in the gray-list countries of Australia, Belgium, Belize, Canada, Cyprus, Hong Kong, Iceland, Estonia, Lebanon, Luxembourg, the Netherlands, Panama, Serbia and Montenegro, Singapore, Switzerland, Thailand or Turkey must satisfy 15.4 percent tax duties. The blacklist covers tax havens, including Antigua and Barbuda, the Bahamas, Bermuda, the Virgin Islands, the Cayman Islands, Fiji, French Polynesia, Gibraltar, Grenada, Guam, Monaco, Puerto Rico, the U.A.E. and many island nations with evasive tax codes.

Despite this small amount of red tape and updated tax provisions that target second- and third-tier holdings, Sweden welcomes corporate holding companies from all countries around the world. Legal forms of companies in Sweden and tax laws have been adjusted to make the country favorable to use in international corporate structures. Services relating to administration of companies in Sweden can be found at an international competitive price.

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