Sweden: Proposed changes to targeted interest deduction limitation rules
Proposed to become effective January 1, 2026
The government has proposed changes to the targeted interest deduction limitation rules implemented in 2019 through the bill "2025/26:20 Amendments to Interest Deduction Rules in Compliance with EU Law," proposed to become effective January 1, 2026.
The proposed changes, which are based on the previous referral to the Council on Legislation issued in June 2025, as well as the investigation "Enhanced Interest Deduction Rules for Companies" (SOU 2024:3) from June 2024, include alignment with legal developments within the EU regarding the deductibility of interest on loans within a community of interest. In contrast to the referral to the Council on Legislation and the investigation, the bill does not propose any changes to the general interest deduction limitation rules.
KPMG observation
Under the proposed changes, a single rule will apply to all cases in which the interest recipient is located in another EEA state, which is a helpful development. However, two parallel targeted interest deduction limitation rules will still apply depending on the location of the interest recipient. If the interest recipient is in Sweden or a state outside the EU, the right to interest deduction will be assessed based on the same rules that apply today. If the interest recipient is in another EEA state than Sweden, the right to interest deduction will be assessed under the new proposed rule.
Read an October 2025 report prepared by the KPMG member firm in Sweden