Tax Havens, Low and Generous Tax Rates on Swedish Holding Companies

Swedish laws on corporate tax has placed Sweden among attractive tax havens with generous tax rates, there are tempting low tax on Swedish Holding Companies today. It is now much favorable to place an international holding company in Sweden than in Holland, Denmark, Ireland or the Cayman Islands.

Sweden has become a very international favorable country to have as a base for corporate entrepreneurship with attractive company forms. Last year the rules changed so that it has become much easier to bring home tax-free profits and also bring profits tax-free to other countries through a Swedish Holding Company.

Swedish Holding Companies should be of great interest to American, Japanese or Chinese companies that do business in Europe and have the opportunity to place their holding companies in Sweden.

One of many advantages with Sweden is that corporate taxes are low, only 26.3%. Denmark and Holland have much higher corporate taxes. The tax on dividends from business related shares are now abolished in Sweden.

In fact, in U.S. eyes, Sweden is a tax haven since they define countries with a corporate income tax lower than 30% as tax havens.

Sweden also has unusually high number of double tax treaties with other countries, which means that entities should be taxed only once.

U.S. companies that have manufacturing operations in a country in Europe and its holding company in Sweden can get away with very low taxes in the producing country (only if it is at least 14.5%), and transfer profits to Sweden and then further due to tax treaties on to the U.S. tax-free.

There is a list of approved, so-called “white” countries as destinations for this type of transaction. The new EU countries are included as long as they are not dumping their corporate taxes too low.

Another important element in the bright entrepreneurial image of Sweden is that the rules of deduction are very good by international standards. It is also free to borrow money to finance a subsidiary. Other countries such as Denmark and Holland have many more restrictions regarding deductions.

What made the Swedish tax law puzzle complete was the implementation of tax-free capital gains on sale of subsidiaries.

The rules probably emerged after the Swedish government itself was forced to do business through the Netherlands to reduce tax through corporate tax planning. When large Swedish companies were sold through Dutch companies formations the state managed to saved four billion in tax.

Click here to read more about Swedish Holding Companies.

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