Sweden: Tax changes in 2018 budget | KPMG | GLOBAL

Sweden: Tax changes in 2018 budget

Sweden: Tax changes in 2018 budget

The budget bill for 2018, presented this week, proposes a number of changes in the tax area, including new tax rules for the corporate sector.

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Among the measures are those that would require employers to submit employee tax withholdings monthly in an employer's declaration filed with the Swedish tax agency (the effective date would be 1 July 2018 or 1 January 2019 depending on the type of taxpayer).

Other tax measures are proposed to be effective beginning in 2018, such as proposals for:

  • Increasing the taxation on investment savings accounts and on capital insurance (by one percentage point instead of by 0.75 percentage point)
  • Easing the taxation of employee stock options for certain employees in start-up companies 
  • Expanding opportunities for growth by reducing employer fees for public limited companies and limited companies on “first-time employees”
  • Increasing the rate of the special income tax that applies with respect to foreign residents, to be increased from 20% to 25% of taxable income 
  • Providing new measures to encourage the reduction of emissions from cars, including measures concerning biofuel mixtures 
  • Adding new measures relating to the “congestion tax” and infrastructure fees (road, bridge, and ferry fees or taxes), not to be included in the flat-rate car benefit value 
  • Repealing the tax on advertising 
  • Increasing the transport surcharge for excise duty purposes
  • Changing the value added tax (VAT) declaration date  
  • Amending the reporting obligations and certain other matters relating to excise duties

New tax rules for the business sector expected in 2018

In June 2017, the Ministry of Finance announced its plan for new tax rules for the business sector. The government has now announced that concrete proposals under this business tax plan will be provided in 2018, with an anticipated effective date of 1 July 2018. Among those expected proposals are the following measures:

  • A general interest-rate restriction that would be based on an earnings before income tax (EBIT) rule so that the repayment for interest would be limited to a certain percentage (e.g., 35%) of EBIT.
  • The tax rate for companies and for expansion fund tax would be adjusted as a result of the general interest deduction limitation.
  • A prohibition on the deduction for interest on hybrid loans would be introduced to prevent interest from being deducted in one country and received without tax in another.
  • Deductions would not be allowed for interest expenses on loans within a group (or other interest group) that "exclusively or virtually exclusively" arise to create a “substantial tax benefit.” Also, deductions would not be allowed to be made for interest payments into “low-tax countries.”
  • As a temporary limitation (valid for two years), deductions for previous years' deficits would be allowed with no more than half of the year's surplus. To the extent that the deficit cannot be deducted, it would be available to be rolled on to the next year.

 

Read a September 2017 report (Swedish) or (English) prepared by the KPMG member firm in Sweden

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