Sweden remains a stable and transparent jurisdiction for business, with a straightforward corporate tax system. Understanding the corporate income tax framework—bolagsskatt—is essential for entrepreneurs, foreign investors, private equity funds, and family offices considering entry into the Swedish market.
Overview of Corporate Income Tax (Bolagsskatt)
In Sweden, corporate income tax is levied on the taxable profits (skattepliktig inkomst) of legal entities such as:
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Aktiebolag (AB) – Limited liability companies
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Ekonomiska föreningar – Economic associations
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Stiftelser – Foundations
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Utländska företag med fast driftställe i Sverige – Foreign companies with a permanent establishment
As of January 1, 2021, the standard corporate tax rate is 20.6%.
Taxable Income and Deductions (Skattepliktig inkomst och avdrag)
Taxable income in Sweden is calculated based on the accounting profit, adjusted for non-deductible expenses (icke avdragsgilla kostnader) and non-taxable income (skattefri inkomst).
Common deductible items include:
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Räntekostnader (interest expenses)
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Avskrivningar (depreciation) – Calculated according to tax rules, not just accounting standards
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Förluster (losses) from previous years – Carried forward indefinitely, subject to change of ownership rules
Notably, Sweden has implemented interest deduction limitations under Chapter 24 of the Inkomstskattelagen (1999:1229) (Swedish Income Tax Act), in line with the EU ATAD directive.
Participation Exemption (Näringsbetingade andelar)
Swedish law provides a participation exemption regime, exempting capital gains and dividends from qualifying shareholdings in subsidiaries.
According to Inkomstskattelagen Chapter 24, Sections 13–22, a näringsbetingad andel (business-related share) must meet the following:
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The subsidiary is a Swedish limited liability company or equivalent foreign legal entity
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The parent company holds at least 10% of the voting rights
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The shareholding is not held as inventory
Both capital gains (kapitalvinster) and dividends (utdelningar) are exempt from tax if the shares are classified as näringsbetingade.
Permanent Establishment (Fast driftställe)
Foreign companies are only subject to corporate tax in Sweden if they maintain a fast driftställe (permanent establishment). This concept aligns with OECD guidelines and includes:
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A fixed place of business (kontor, fabrik, verkstad)
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A dependent agent with authority to conclude contracts.
Transfer Pricing and Documentation Requirements
Sweden follows OECD transfer pricing principles. Companies engaged in cross-border transactions with related parties must comply with the arms-length principle (armlängdsprincipen) and maintain adequate transfer pricing documentation.
Failure to meet documentation requirements may lead to administrative penalties (skattetillägg) and transfer pricing adjustments by Skatteverket (Skatteförfarandelagen (2011:1244) – Tax Procedure Act, Inkomstskattelagen Chapter 14 and 19).
Group Taxation and Interest Deduction Rules
Sweden does not apply tax consolidation, but group contributions (koncernbidrag) are allowed between Swedish companies in a 90% ownership structure. These are deductible for the paying company and taxable for the recipient.
Interest expenses are generally deductible, but under the anti-avoidance rules in Chapter 24 Inkomstskattelagen, interest on intra-group loans may be non-deductible unless certain economic substance tests are met.
Withholding Tax on Dividends (Kupongskatt)
A withholding tax (kupongskatt) of 30% (cf. Kupongskattelagen (1970:624)) applies to dividends paid to foreign shareholders, unless reduced or exempt under:
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The EU Parent-Subsidiary Directive
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Domestic exemptions for certain qualified foreign entities.
Filing and Payment Deadlines (Deklaration och betalning)
Corporate income tax is reported annually in the inkomstdeklaration 2 (tax return form for corporations). The general deadline is six months after the end of the fiscal year.
Preliminary tax (F-skatt) must be paid monthly based on estimated income.
Interest is charged on underpayments. Refunds are possible if tax paid exceeds actual liability.
Sweden offers a competitive corporate tax environment with a relatively low rate and several exemptions for international structures. Its legal framework is predictable, with strong alignment to EU law and OECD guidelines. Understanding the nuances of bolagsskatt, including interest deduction limits, transfer pricing, and participation exemptions, is crucial for structuring efficient operations in the Swedish market.
For professional support in structuring Swedish entities or navigating tax compliance, please contact your Damalion expert now..
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