Sweden: Report on government study of “3:12 rules”

Rules that limit the ability of closely-held or family-owned companies to pay preferentially-taxed dividends

Rules that limit the ability to pay preferentially-taxed dividends

The committee appointed by the government to study the “3:12 rules” that limit the ability of closely-held or family-owned companies to pay preferentially-taxed dividends (instead of higher-taxed employment income) issued its final report.

The study, which was initiated by the prior government (read TaxNewsFlash), suggests the following proposed changes:

  • New composite model for calculating “low-tax distribution room”
  • Repeal of the capital share requirement (the “4% rule”)
  • Replacement of ceiling amounts for services taxed as capital gain (100 IBB) and dividend (90 IBB) with a combined ceiling amount of 90 IBB for both capital gain and dividend, applicable for the tax year and the two previous years
  • Shortened grace period from the current five to four years, which would affect application of the “outsider rule” (although no changes were specifically suggested with respect to the outsider rule itself)
  • Narrowing of the circle of relatives by not including siblings, spouses of siblings, and children of siblings

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



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