• Sweden
    Tax News: Dividends from tax havens

    14-09-2015

    Contributor: Tord Fredriksson.

    The Swedish Tax Agency have published its opinion 27th of August on taxation of dividends from tax havens to Swedish companies.

    Sweden introduced the current participation exemption rules on dividend and capital gains for companies in 2003.

    Dividends that is received by tax resident limited liability companies (Aktiebolag or AB) etc. on business-related shares are as a rule exempt from tax under the participation exemption regime (exemptions apply).

    In respect dividends from foreign entities there are additional requirements in order to be covered by the exemption

    • that the foreign entity has a legal form similar to a Swedish Aktiebolag, and
    • according to the Tax Agency is subject to some form of corporate income tax.

    If the conditions above is not fulfilled the Swedish Tax Agency will deem such a dividend as taxable.

    The degree of taxes paid is not decisive. It should be noted that the foreign company can be exempt from paying taxes as long as it is subject to tax in its jurisdiction and still qualify for the participation exemption.

    If the foreign company is tax resident in a jurisdiction where there are no corporate taxation the participation exemption will not apply and a dividend received by a Swedish company will be deemed taxable.

    Source: Swedish Tax Agency notice.

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