Sweden: Further guidance on application of “3:12 rules” in cases of significant outside ownership

Tax Court Board decision concerning application of “3:12 rules” in cases of significant outside ownership

Further guidance on application of “3:12 rules” in cases of significant outside ownership

The Tax Court Board (SRN) found in a preliminary notice that persons that directly held shares in a small company and also owned shares in the company indirectly through an intermediate entity, and were actively engaged in the management of the intermediate company, could not be considered “outsiders” under the “3:12 rules,” which limit the ability of a closely-held or family-owned company to pay preferentially-taxed dividends (instead of higher-taxed employment income) to its owners.


Under the so-called “outsider rule,” if at least 30% of a company’s shares are held by passive owners, the shares held by active shareholders are subject to the 3:12 rules only if there are “special reasons.” The Supreme Administrative Court (HFD) recently issued a preliminary ruling holding that conditions in a shareholder agreement providing for conditional contributions, principles for distribution of profits, and limitations on certain major cost increases did not constitute special reasons to apply the 3:12 rules. Read TaxNewsFlash

The government is conducting a study of the 3:12 rules to review how the rules may be changed to make the special relief rules for so-called qualified employee options more effective in attracting and retaining key talent. The report is due by 31 May 2024. Read TaxNewsFlash

Read a March 2024 report (Swedish) prepared by the KPMG member firm in Sweden


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