In April 2020, a first proposal for a new Swedish Withholding Tax Act was referred for consultation by the Swedish Ministry of Finance. The proposal suggested that the current Withholding Tax Act (Sw. Kupongskattelagen) will be replaced by a new law. The proposal was subject to heavy criticism and a revised proposal was published by the Swedish Ministry of Finance on 7 June 2022.
In the revised proposal, there have been changes e.g. in relation to the interpretation of the person entitled to the dividend. It is now suggested that when assessing who is entitled to a dividend, the starting point should be to assess who has the legal right to the dividend under applicable civil law, i.e., the same assessment that is made under the current Withholding Tax Act (rather than being based on the meaning of the term “beneficial owner” in an international context as initially proposed). The new proposal was suggested to enter into force starting July 1st, 2023, and apply on dividend payments made after December 31st of the same year.
However, in May this year, Sweden’s Minister of Finance communicated that the Ministry of Finance was still reviewing the feedback received during the second consultation period. The Minister of Finance did also confirm that the work with the new Swedish Withholding Tax Act has been slowed down due to the ongoing work within the European Commission for a harmonized Withholding Tax Act system within the EU. The result after the latest consultation period has not yet been presented.
In a press release in June this year, the European Commission presented a handful of new rules said to make Withholding Tax Act procedures in the EU more efficient and secure for investors, financial intermediaries and Member State tax administrations. These include a common EU digital tax residence certificate, two fast-track procedures complementing the existing standard refund procedure as well as a standardized reporting obligation. The Commission proposed that these new rules should come into force on January 1st, 2027.
Perhaps will the work towards a new Swedish Withholding Tax Act now continue. As for now, however, the current Withholding Tax Act is applicable until further notice.
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