The government recently proposed to extend existing laws which restrict the possibility of deducting interest expenses incurred on debt owed by affiliated parties relating to intra-group acquisitions of shares to include restrictions to cover all debt owed between affiliated parties. According to the government, the proposed new law will partly finance a reduction of the company tax rate.
The government has proposed changes to the taxation of certain loans granted by legal entities equivalent to Swedish aktiebolag (limited companies) to related parties, and plans to stop the deduction of interest paid on such loans. However, certain issues remain unresolved. For example, the question of which foreign legal entities are to be considered equivalent to aktiebolag remains unanswered.
The government has proposed tax regime changes which, among other things, will limit the ability of Swedish companies to make interest deductions in respect of internally financed acquisitions of shares (or similar instruments) in a commercial entity with which it has privity or unity of interest.
The government has proposed changes which would entitle Swedish companies to make contributions to a shelf company and would restrict group contributions from being made where they would give rise to a loss in the contributing company. It also proposed to eliminate the possibility to engage in underpriced transactions, and announced encouraging guidelines on future fiscal policy.
The government has proposed changes to Chapter 39a of the Income Tax Law. These changes are being considered following the European Court of Justice ruling in Cadbury Schweppes. The court ruled that the existence of controlled foreign company regulations is incompatible with Articles 43 and 48 of the EU treaty. It is proposed that the revised regulations will enter into force from January 1 2008.
The government has proposed changes to the controlled foreign company (CFC) rules. The proposal follows the European Court of Justice decision in Cadbury Schweppes, in which the court declared that general CFC rules are in breach of EU law. The Swedish proposal introduces a general exception for corporations which are resident in a member state of the European Economic Area.
The government is preparing a bill introducing new rules on the taxation of stock option plans for individuals moving in and out of Sweden. No exit tax will be triggered where the individual moves out of Sweden. Instead, Sweden will introduce a tracing rule which gives it the possibility to tax the exercise of stock options, irrespective of where the former Swedish resident now resides.
The EU Merger Directive has been amended in order to improve the system of taxation applicable to mergers, divisions, transfers of assets and exchanges of shares involving companies of different member states. The changes have recently come into force in Sweden.
The Board for Preliminary Rulings has recently delivered two preliminary rulings on the issue of cross-border transfers of losses within the European Union. In one case Swedish subsidiaries claimed deduction for a transfer of income to their Finnish parent. Based on Futura, the board found that under no circumstances could a profit-making subsidiary use a foreign parent's losses.
The European Commission has officially requested that Sweden modify Law 2001:1227 on tax returns and tax information. According to the commission, the law dissuades foreign financial institutions from providing cross-border services in Sweden and is thus incompatible with EU law. The government is now planning to amend the law, but such amendment is unlikely to satisfy the commission.
The government has issued a submission by the Council on Legislation which proposes changes to the legislation on closely held companies. Among other things, the rate of the 'splitting interest' - which regulates how much of the distributed income of closely held companies must be assessed as capital income - will be increased. The changes are scheduled to enter into force on January 1 2006.
The Swedish government has proposed a bill amending controlled foreign company legislation. If the bill comes into force on January 1 2004 as planned, shareholders in a foreign legal entity with low-taxed income will be taxed on a current basis on the income of the foreign entity. The bill follows legislation designed to make Sweden a more attractive country for holding companies.
Parliament recently decided on significant adjustments to the rules on intra-group dividends and capital gains on the alienation of shares within the corporate sector. The key features of the new rules include a provision that dividends received by a corporation from an unlisted company will be tax free, as will capital gains on such shares.
The Office of the Council for Advance Tax Rulings recently issued an advance ruling on the Swedish salary-basis rule. It held that remuneration to employees in branches established in non-EU countries should be considered when applying the rule, even if it has not been subject to Swedish social security fees and payroll taxes.
A recent decision of the Supreme Administrative Court held that the double tax treaty between Sweden and the Netherlands prevented Sweden from taxing a Dutch entertainment company that operated in Sweden without a permanent establishment. The court considered it significant that the performers had no interest in the company other than receiving their salary.
A report recommending the introduction of controlled foreign company (CFC) rules has been redrafted following criticism of its proposals. Under the new proposals, CFC tax will be levied on any income taxed at less than 15.4%, including passive and business income. The rules will not apply to CFCs resident in countries which appear on a special 'white list' drawn up under the report.
The Supreme Court has found that contracts involving payments of money undisclosed for tax purposes may remain valid and enforceable. The court ruled that in the case of an actual and serious dispute which concerns a civil right, the right to a trial on that issue exists, even if the contract conflicts with tax law.
Including: Computing Corporate Tax; Taxation of Individuals; Other Taxes