Sweden Attractive tax climate for holding companies

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Sweden Attractive tax climate for holding
companies

• February 2007

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Attractive holding company legislation

• As of July 1, 2003 capital gains from the
  disposal of business related shares and received
  dividends are exempt from tax.
• This applies to shares held in, or dividends
  received from, companies in Sweden and abroad.
• The participation exemption rules, in combination
  with other tax rules and case law, place Sweden
  among Europes most favorable jurisdictions for
  holding companies.
• The new legislation entered into full force in
  January 1, 2004.
• Source Rödl Partner

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Qualification for tax exemption

• Applies to business related shares
• Unlisted shares
• - Always (no qualification time or minimum
  holding of votes or capital, which is unique
  compared to other holding company jurisdictions)
• Listed shares
• - 10 percent holding of the voting rights or
• - held in the course of the holders business,
  and
• - holding period at least one year
• Other shares
• are either portfolio shares or stock shares and
  are taxable

Source Rödl Partner
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Summary of participation exemption

e.g. Joint stock co. Economic association
Business related shares Tax free dividends Tax
free capital gains Losses not deductible
Portfolio shares Taxable dividends Taxable
capital gains Losses deductible against gains on
other portfolio shares
Source Rödl Partner
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Simplified example
Foreign investor
No withholding taxes on dividends or interest
payments
Ownership

• Full deductibility of interest payments
  financing the participation
• No thin capitalization rules regarding interest
  to parent company or other associated enterprises

Swedish holding
Ownership/Participation
Capital gains and dividends exempted from tax
no qualification requirements!
Target company/ participation
Source Rödl Partner
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Other competitive tax rules

• Low effective corporate tax rate down to 23
  percent
• Interests fully deductible for tax purposes
• No thin capitalization rules
• No withholding taxes on interests
• No withholding taxes on dividends from unlisted
  shares
• No stamp tax or capital duties on share capital
• Extensive double tax treaty network

Source Rödl Partner
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Attractive corporate tax package
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Extensive network of double tax treaties
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• Source Rödl Partner
• This material is general only and is not offered
  as advice on any particular matter. Rödl
  Partner disclaims all liability to any person in
  respect of any act or omission in reliance on any
  part of the contents of this information.