Sweden: Proposed tax on credit institutions & Postponement of new WHT Act

1. Proposed tax on credit institutions in Sweden

The Swedish Government is currently working on a new risk tax, which would affect credit institutions carrying out business in Sweden. If passed, the taxable basis is the sum of the credit institution´s total debt. It is proposed that the new law should enter into force January 1, 2022.

Credit institutions with a total debt that exceeds a certain limit at the beginning of the fiscal year would be taxable under the new legislation. The mentioned limit would, for fiscal year 2022, be SEK 150 billion and thereafter be indexed yearly. As for foreign credit institutions, only debt assignable to business which the credit institution carries out from a Swedish branch will be considered.

The taxable basis for a credit institution is the sum of the company’s debt at the beginning of the tax year. However, certain debt categories, such as intra-group debt, should not be included in the calculation.

For fiscal year 2022, the tax rate would be 0.05%, and for the following year the rate would increase to 0.06%.

The aim of the bill is to tax credit institutions whose risk exposure in the case of a financial crisis might cause extensive cost for the society, for example in the form of bailouts financed by the state. The proposed law is now subject to a constitutional review and has also been sent to the European Commission for an assessment of its compliance with the EU rules against state aid.

2. New Withholding Tax Act postponed

The process to implement a new Withholding Tax Act has been postponed by one and a half years.13 Consequently, the current proposal shall be applied in respect of dividends paid after December 31, 2023 (instead of after June 30, 2022).

Following recent Swedish case law, which has eased the previous very strict requirements on the receiving party’s legal status, it is likely that the new WHT act expressively will cover non-Swedish tax residents entitled to dividend – instead of the current wording: individuals and legal persons.

If you wish to discuss these topics, please contact: Svalner Skatt & Transaktion, Stockholm

Read the WTS Global Financial Services Newsletter here.