What does the new UK FIG rules mean for taxation on Swedish dividends?

When the non-dom regime was abolished, new rules were introduced. The application of the FIG rules on dividends from Swedish companies has now been confirmed by the Swedish Board for Advance Tax Rulings. The ruling clarifies Sweden’s limited right to tax dividends under the treaty. For persons who apply the FIG-rules, tax on dividends from Swedish companies are capped at 5%.

From the 6th of April 2025, the UK’s long-standing “non-dom” and “remittance based taxation” regime has been abolished. The non-dom rules allowed individuals to exempt foreign income from UK taxation, as long as such income was not remitted to the UK. This meant that individuals could receive substantial foreign income without it being subject to UK tax, making the UK attractive for international businesspeople and investors seeking to minimise their tax burden. However, under the Sweden-UK tax treaty, Sweden retained the right to tax the income if the UK had not taxed it due to the fact that it had not been remitted to the UK. For Sweden, this meant that income originating from Swedish sources was fully taxable in Sweden as long as it was not taxed in the UK. 

In its place, a new system was introduced: Foreign Income and Gains (FIG). The main difference between these regimes is that the FIG rules are not based on which income is remitted to the country. Instead, they offer a general exemption from tax on certain foreign income during a four-year period in which the rules apply.

The Swedish Board for Advance Tax Rulings (Skatterättsnämnden) has now tested how income covered by the UK FIG-rules should be taxed in Sweden under both Swedish domestic law and the Sweden-UK tax treaty. The key conclusions were that if an individual is tax resident in Sweden, but treaty resident in the UK, and has income covered by the UK FIG rules (and therefore pays no UK tax on that income), the income must be taxed in Sweden, subject to the limitations set out in the tax treaty. For dividends, Sweden’s taxing rights are limited to 5 % of the gross amount under the treaty

A person who moves from Sweden to the UK and becomes covered by the FIG regime may receive dividends form a Swedish company. Even though the UK does not tax the dividend, Sweden’s right to tax is limited to 5 % under the treaty. Under the old UK rules, Sweden could ignore the treaty in some cases and tax foreign income fully when the UK did not tax it due to remittance restrictions. This exception does not apply to FIG.

The introduction of FIG came with several other reforms in the UK’s tax system. Whenever income is linked to two countries, it is essential to consider both domestic tax legislation and any applicable tax treaty. KPMG continues to monitor the developments and is available to support individuals and companies navigating cross-border taxation under the new rules.

Please feel free to contact us if you have any questions.

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The article in Swedish