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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Corporate income tax (bolagsskatt) in Sweden — key facts for international investors: rate & base, participation exemption, WHT overview, loss use, transfer pricing, VAT, payroll, and a clean compliance sequence.
For holding companies, SPVs, PE/VC portfolio entities and operating subsidiaries • Damalion facilitates bank introductions, company formation and coordination with Swedish advisors. This page is informational and not tax advice.
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Executive snapshot
Sweden offers a transparent corporate tax framework, robust treaty network and well-known participation rules for qualifying shareholdings. Investors value predictable compliance, substance-driven planning and straightforward banking once KYC/AML is satisfied. We facilitate structuring and banking steps, and coordinate with licensed Swedish counsel where needed.
Key facts at a glance
| Topic | Essentials | Notes for cross-border groups |
|---|---|---|
| Corporate income tax | Single national rate; taxable on Swedish-source profits and worldwide income for Swedish tax residents (subject to reliefs). | Effective rate depends on deductibility limits, interest barriers and local incentives. Model groups on post-interest basis. |
| Tax base | Accounting profit adjusted for tax rules; depreciation, interest limitation and specific add-backs apply. | Interest barrier and anti-hybrid rules can affect shareholder and intercompany funding. |
| Losses | Carryforward generally permitted; change-of-ownership and value-shift restrictions may apply. | Plan acquisitions and mergers to preserve tax attributes; consider step plans for group relief effects. |
| Participation exemption | Dividends and capital gains on qualifying “business-related” shares may be exempt. | Check holding period, share class and business-related criteria; treaty and EU directives may interact. |
| Withholding tax (WHT) | Dividends may face domestic WHT with potential reductions under treaties/EU rules. | Assess recipient status, substance and beneficial ownership; monitor evolving WHT reform proposals. |
| Interest & royalties | Domestic WHT landscape is limited; deductibility subject to interest limitation and anti-avoidance rules. | Substance, pricing and documentation remain decisive; evaluate financing chains. |
| Transfer pricing | Arm’s length principle; local file/master file and benchmarking expected for material transactions. | APAs possible; align DEMPE for intangibles and management-fee frameworks. |
| VAT | Standard rate applies; exemptions and reduced rates for specific sectors. | Holding companies may face input VAT recovery constraints; consider cost-sharing and group VAT options. |
| Payroll & social charges | Employer contributions apply; payroll reporting is monthly. | Review permanent-establishment risk, remote staff and director fees. |
| Substance & governance | Board control, local decision-making and records underpin residence and treaty access. | Document board calendars, intercompany policies and treasury procedures. |
Compliance sequence — simple and predictable
- Incorporate & register. Obtain corporate ID, tax/VAT registrations and banking.
- Set intercompany terms. Loan/funding, services, IP and distribution agreements with pricing policy.
- Monthly operations. VAT, payroll and employer filings; pay preliminary tax.
- Year-end close. Financial statements, tax adjustments and transfer pricing documentation.
- File & pay. Corporate return and final tax; update group files and governance records.
Banking and KYC
Swedish and international banks expect clear ownership charts, source-of-funds and coherent payment flows. We facilitate introductions and “bank-ready” files so compliance can review efficiently. Acceptance is at the bank’s discretion.
