Sweden: Proposed additions to interim report on implementation of EU global minimum tax directive

Supplementary provisions regarding remaining articles in the directive

Proposed additions to interim report

The Ministry of Finance released a memorandum with proposed additions and clarifications to the interim report on the proposal for implementation of the EU global minimum tax directive that was submitted to the government by the special investigator on 7 February 2023. Read TaxNewsFlash

The proposal outlined in the interim report was not totally complete because the Organisation for Economic Cooperation and Development (OECD) only recently published certain parts of the model rules. The memorandum therefore proposes supplementary provisions regarding the remaining articles in the directive, including relating to:

  • Regulations on the distribution of included taxes
  • Reorganizations
  • Joint ventures
  • Parent companies that are covered by rules on deductible dividends
  • Eligible dividend tax systems
  • Temporary safe harbor rule
  • Amount limits
  • Currency conversion
  • Definition of a group
  • Reporting
  • Payment-obliged group unit for supplementary additional tax
  • Decisions on national additional tax
  • Payment, settlement, interest and deferment of payment of tax
  • Possibility to apply for an advance notice in matters of additional tax

KPMG observation

An important clarification in the memorandum concerns the applicability of the temporary safe harbor rule. Group units covered by the so-called eligible dividend tax systems (which exist among others in Estonia and Latvia) may be subject to a special treatment under Article 7.3 of the Model Rules which enables the consideration of a fictitious tax. The memorandum now clarifies that if a group chooses to apply the rule in Article 7.3, the group may not use the temporary safe harbor rule for the state concerned during the remainder of the transition period. If the group instead chooses not to apply Article 7.3, the affected group may use the temporary safe harbor rule in the relevant state for the first financial year. For groups with operations in these countries, an active choice needs to be made.

Another welcome clarification in the memorandum concerns the routine profits test which is the third test in the temporary safe harbor rule. According to the routine profits test in the model rules, the additional tax amount must be zero for an individual state if the group entities in the concerned state have a profit according to the group's country-by-country (CbC) report that does not exceed the net amount, calculated according to article 5.3 of the model rules. The memorandum now clarifies that 5% must be used in the calculation of this amount and not 10% and 8%, respectively, because Article 5.3 lacks reference to Article 9.2 (which contains a temporary increase in the substantive amount when applying the ordinary rules). Although this makes it more difficult to meet the test, it is a clarification because the groups now know what applies before any calculations according to this test.

Although the temporary safe harbor rule is largely consistent with the OECD rule, it is an interesting feature that national groups are not covered. The way the rules are now designed, national groups that fall under the scope of the directive will have to make a complete calculation according to the rules on additional tax already in the first year. In this regard, however, the memorandum states that the international work in this area is not finished and that there may be reason to return to this issue. It can be added that for groups operating in a maximum of six states there is a phasing-in rule which means that the additional tax must be zero during the first five years, provided that certain conditions are met. However, whether and to what extent the reporting obligation will be reduced is not clear from the proposed rules.

Read a March 2023 report (Swedish) prepared by the KPMG member firm in Sweden



The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. 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. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 3712, 1801 K Street NW, Washington, DC 20006.