Budget proposal for 2018 presented
Budget proposal for 2018 presented
The budget proposal for 2018 suggests a number of changes to the Swedish tax regime. Some of the changes for the corporate sector have been summarized below.
Budget proposal 2018
The Swedish government has submitted the 2018 budget proposal as well as the proposal for the autumn amended budget to the Parliament. The government has announced, among other things, that new tax rules for the corporate sector should be introduced and intend to come back with concrete proposals in 2018, read more below.
The autumn amended budget
From the autumn amended budget, it may be worth noting in particular that the Swedish Tax Agency receives a special increase in their budget in order to handle the parliamentary decision on new rules on individual-level information in employer's declarations.
The new rules imply, among other things, that information with regards to paid compensation for work and tax deductions for employees must be submitted monthly in an employer's declaration to the Swedish Tax Agency. The rules affect all companies and others who pay compensation for work that the payer is obliged to make tax deductions or pay employer fees for. The amendment enters into force on 1 July 2018 for certain taxpayers and from 1 January 2019 all taxpayers will be covered. The Swedish Tax Agency are currently in process of updating their IT system to allow this flow of information. This is a matter of priority as employers will also need to update their own systems before the time that this comes into force.
Budget Bill for 2018
Below is a selection of tax proposals that affect companies for 2018. The changes are expected to enter into force on 1 January 2018 unless otherwise stated.
Increased taxation of savings on investment savings accounts and in capital insurance
The government wants to raise the tax on savings on investment savings accounts and in capital insurance, and proposes that the flat rate income for the investment savings accounts and the taxable base for capital insurance should be calculated by multiplying the capital base with the government loan rate by one percentage point instead of today by 0.75 percentage points.
Lack of taxation of employee stock options in some cases
In order to facilitate small and young companies recruiting and retaining key personnel, easing of the taxation of employee stock options is proposed. The benefit of an employee stock option shall not be subject to taxation if certain conditions are met for both the company from whom the employee stock option is acquired and the employee stock option and option holder. The employer will therefore not pay employer fees either.
Raised special income tax for foreign residents
The government proposes that the special income tax for foreign residents be raised from 20 to 25 percent of taxable income (which does not constitute maritime income). The amendment is proposed to enter into force on 1 January 2018 and applies to income received after 31 December 2017.
Tax on air travel
A new tax is estimated at SEK 60, 250 and 400 per passenger, depending on the length of the flight. The law is proposed to enter into force on 1 April 2018.
In addition, there are number of areas for which the government wishes to revise / introduce new rules for:
New tax rules for the business sector
The government intends to return with concrete proposals regarding new tax rules for the corporate sector in 2018. Here are some of those proposals:
- A general interest-rate restriction should be introduced, according to the government. The government prefers an EBIT rule, i.e. that the repayment space for interest is limited to a certain percentage (35 percent according to the memorandum) of EBIT.
- The tax rate for companies and for expansion fund tax should be adjusted as a result of the general interest deduction limitation.
- A prohibition on the deduction for interest on such hybrid loans should be introduced to prevent interest from being deducted in one country and received without tax in another.
- Furthermore, deductions should not be allowed for interest expenses on loans within a group (or other interest group) that "exclusively or virtually exclusively" arise to create a "substantial tax benefit". Also, deductions should not be allowed to be made for interest rates to low-tax countries.
- As a temporary limitation - valid for two years - deductions for previous years' deficits should be allowed with no more than half of the year's surplus. To the extent that the deficit cannot be deducted, it should be able to be rolled on to the next year.
The rules should, according to the Government, enter into force on 1 July 2018.
The Coupon Tax Act should be reviewed
The Coupon Tax Act - which contains provisions on withholding tax on dividends, etc. - is, according to the government, very outdated and in need of a review. This should therefore be done "in order to make proposals for an effective, modern and predictable regulatory framework compatible with EU law".
Provisions on taxation and payment of tax for temporary work in Sweden should be introduced
Foreign companies that do not have a permanent establishment in Sweden who carry out certain activities in Sweden should be subject to the provisions on taxation and obligation to provide new information.
The budget proposition contains many concrete changes for January 1, 2018 and information about changes the government wishes to introduce or investigate in the future. Of course, we are monitoring developments and you are always welcome to contact us if you want to know more about any particular area. Voting in the Parliament regarding tax proposals in the Budget Bill for 2018 takes place in early December.
The full version in Swedish here
Read more on the Ministry of Finance webpage - Budget
The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.