Sweden: Revised proposal for legislation regarding withholding tax on dividends

The proposed changes would affect both foreign recipients of dividends and Swedish companies declaring and distributing dividends.

Revised proposal for legislation

The Ministry of Finance on 7 June 2022 released a proposal for new legislation regarding a withholding tax on dividends.

The draft legislation includes several amendments to a memorandum (April 2020) that were, among other things, made in response to comments from review bodies. The newly proposed measures would provide what are viewed as radical changes for both foreign recipients of dividends and for Swedish distributing companies (compared to the current coupon tax law) in terms of both tax liability and procedures. 


The proposal includes the following:

  • Withholding tax would be levied at 30% (as under current rules) on dividends from Swedish limited companies, Swedish European (SE) companies, and Swedish investment funds, as well as dividends from non-profit associations.
  • A taxpayer would be defined a person who is not subject to unlimited tax liability in Sweden and who is entitled to the dividend at the time of the dividend declaration.
  • The tax procedure law would apply to withholding tax on dividends.
  • A system would be created for “approved intermediaries.”
  • As a general rule, distributing companies, distributing non-profit associations or approved intermediaries that pay taxable dividends would need to take steps to withhold tax for withholding tax purposes. The tax withholding would be reported in a special tax return no later than four months after the dividend. Decisions on withholding tax would need to be made for each dividend occasion separately.
  • The scope of the tax evasion law would be extended to include withholding tax on dividends.

The proposed amendments are intended to enter into force on 1 July 2023 and with an effective date of 1 January 2024.

What’s next?

There are certain actions before the new proposal for a new law on withholding tax on dividends can become a reality. The government has begun a new consultation round that ends 7 October 2022. 

KPMG observation

The draft legal advice referral clarifies that the exemption for business-related shares would not be limited to the European Economic Area (EEA) which was proposed in the April 2020 memorandum. The exemption is thus proposed to include recipients outside the EEA.

One of the major changes in the new proposal is the introduction of a new declaration or return procedure. According to the proposal, returns would be submitted by the person who is required to withhold withholding tax on dividends—that is, the distributing legal entity or an intermediary, for example a central securities depository, which has been approved by the Swedish tax agency. According to the proposal, such a special return or declaration would have to be submitted at each dividend occasion. The declarations would need to contain information about the dividend itself, the dividend-related shares, and the recipients of the dividend. Other information to be stated in the declaration would be where the dividend recipients have their tax domicile and how large a “tax deduction” has been made for each of the recipients liable to tax under the new law on withholding tax on dividends. To prepare the declarations, certain necessary information would need to be provided to the person who is to prepare the declaration. In connection with this, a tax surcharge could be imposed on those who are liable for withholding tax on dividends if incorrect information has been submitted to the intermediary, the company or association that paid the dividend.

In general, persons not subject to unlimited tax liability in Sweden would be subject to tax liability for withholding tax on dividends (a change compared to the current coupon tax law). The coupon tax law's restriction to a foreign legal entity means that coupon tax cannot be levied on dividends to a limited taxable foreign association that is not a foreign legal entity (e.g., foreign contract law funds and trusts). This restriction would be removed according to the proposal, so that such recipients would also be subject to withholding tax. Furthermore, the person entitled to the dividend at the time of the dividend would be liable to tax (unlike the coupon tax law’s provision that ties being entitled to dividends to those persons who are entitled to withdraw dividends for their own purposes). The current draft also differs somewhat in the interpretation of "the person entitled to the dividend" compared with the April 2022 memorandum's proposal which suggested that the interpretation would be closer to the meaning of the term "beneficial owner" from an international context. In the current draft, the government believes that the right to the dividend would form the basis for the tax liability, even if the person entitled to the dividend has limited disposal of the funds received. However, this does not mean that it is the legal owner who is automatically considered to be the person entitled to the dividend.

In the proposal, there would be exemptions from tax liability, with most having a counterpart in the coupon tax law. Moreover, new exceptions are proposed to codify case law of the Court of Justice of the European Union. For example, dividends would be exempt from withholding tax if the person entitled to the dividend is a foreign equivalent of a Swedish foundation, non-profit association, registered religious community or other similar legal persons not taxable for dividend income in Sweden. The same would apply to foreign insurance and occupational pension companies that receive dividends attributable to insurance or occupational pension agreements that are taxed under Swedish rules regarding the policyholder. Similarly, it would be possible for natural and legal persons to deduct, from the taxable dividend, those costs that are directly related to the receipt of the dividend.

Read a June 2022 report (Swedish) and (English) prepared by the KPMG member firm in Sweden


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