• Service: Tax, International Tax
  • Type: Regulatory update
  • Date: 6/13/2014

Sweden - Corporate tax reform recommendations for financing activities 

June 13:  The third (and last) report, issued by a committee charged with making recommendations to the Swedish government for corporate tax reform has been presented to the Finance Ministry. The report includes recommendations relating to financing activities of corporate taxpayers.


In January 2011, a committee of inquiry was appointed to consider revisions to the current corporate tax law. The assignment was to be presented in three stages. The committee had previously delivered two interim reports that concerned risk capital and research and development (R&D) measures:

  • Skatteincitament för riskkapital (SOU 2012:13)
  • Skatteincitament för forskning och utveckling (SOU 2012:66)

Third report

The corporate tax reform committee presented its third—Neutral bolagsskatt för ökad effektivitet och stabilitet—that proposes a new system for corporate taxation, in two parts.

  • Deductions for interest expenditure and other financial costs would be limited to only financial costs for which there is corresponding financial income. No other financial costs would be deductible. This proposal therefore means deductions for net financial costs would be discontinued.
  • A standard deduction would be introduced for all financing costs—a “financing allowance”—at a rate of 25% of a company’s entire taxable profit.

In principle, the limitation of deductions would apply to all costs that are interest expenditure in financial terms. A new definition of financial costs for tax purposes would be very similar to the definition of financial costs used in accounting.

In general, the proposal would mean that equity and debt would be taxed equally for the great majority of non-financial companies.

Read a June 2014 report prepared by the KPMG member firm in Sweden: Tax News (June 2014)

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