Sweden: Parliament approves legislation to exempt dividends paid to foreign governments from withholding tax, strengthen tools to fight VAT fraud
Effective July 1, 2026
The Parliament (Riksdagen) on May 20, 2026, approved the government’s bill to exempt foreign states and foreign equivalents of Swedish regions, municipalities, and municipal federations from withholding tax on dividends paid by Swedish limited liability companies (LLCs), European companies seated in Sweden, mutual funds, and special funds. The exemption applies to entities in the EEA or in states that have an information-exchange agreement with Sweden, effective July 1, 2026.
The Parliament on May 6, 2026, also approved Report 2025/26:SkU22 adopting government proposals to strengthen the Swedish tax agency’s tools against VAT fraud—allowing expanded checks during VAT registration, refusal or cancellation of VAT registration, marking VAT numbers invalid in VIES, and blocking crediting of excess input VAT where tax evasion risk exists. The provisions are effective as of July 1, 2026.
For more information, contact a KPMG tax professional in Sweden:
Clara Fex Rytterborg | clara.fex.rytterborg@kpmg.se