SWEDEN — Economy Snapshot & Entrepreneurial Momentum
Sweden remains one of Northern Europe’s most resilient, innovation-driven economies, underpinned by strong digital infrastructure and a highly skilled workforce. Swedish entrepreneurs are especially active in green technology, fintech, life sciences, advanced manufacturing, and e-commerce. These sectors generate recurring profits and—when business owners wish to take cash off the table—dividend distributions become central to wealth planning.
SWEDEN — Common Dividend-Distributing Structures
- Private Limited Company (aktiebolag – AB): Minimum share capital SEK 25,000.
- Public Limited Company (publikt AB): Minimum share capital SEK 500,000.
Dividends are paid from distributable equity after approval by the shareholders’ meeting and subject to creditor-protection rules.
SWEDEN — Dividend Taxation Framework
Corporate level: Swedish company profits are generally taxed at 20.6% before dividends can be paid. Income Tax Act (Inkomstskattelagen, 1999:1229); Withholding Tax Act (Kupongskattelagen, 1970:624).
- Individuals (portfolio investors): dividends taxed at 30% as capital income.
- Owners of closely held companies: the “3:12 rules” (Chapter 57, Inkomstskattelagen) apply—an allowance portion is taxed at 20%; amounts above the threshold can be taxed as earned income at higher progressive rates.
- Corporate shareholders (inbound dividends): under Chapter 24, Inkomstskattelagen, a participation exemption may apply (e.g., unlisted shares or significant holdings), potentially exempting dividends at the recipient company.
SWEDEN — Withholding Tax & Treaty Relief
Outbound dividends to non-residents: default 30% WHT under Kupongskattelagen (1970:624). Sweden’s treaty network and the EU Parent–Subsidiary Directive can reduce this, often to 0–15% depending on participation thresholds and conditions.
LUXEMBOURG — Why This Jurisdiction Attracts Swedish Shareholders
Luxembourg combines a central EU location, multilingual talent, sophisticated service providers, and a deep treaty network. For dividend planning, the SOPARFI (standard Luxembourg holding company) is key because of its participation exemption and access to treaty/EU relief, enabling efficient inbound and outbound dividend flows. Swedish investment funds may also combine their structures with Luxembourg alternative investment funds.
LUXEMBOURG — Common SOPARFI Vehicles
- SA (Public Limited Company): minimum share capital €30,000.
- SARL (Private Limited Company): minimum share capital €12,000.
Both are governed by the Company Law of 10 August 1915 and permit dividends subject to solvency/distribution rules and shareholders’ approval of annual accounts.
LUXEMBOURG — Dividend Taxation Framework
Corporate level: Profits are taxed at a combined rate that typically approaches 23.87% in Luxembourg City (corporate income tax, municipal business tax, and contribution to employment fund) Income Tax Law of 1967 (LIR) and the Company Law of 1915.
- Inbound dividends (Article 166 LIR — participation exemption): dividends received by a SOPARFI are exempt if (i) the payer is fully taxable, (ii) the SOPARFI holds ≥10% of the capital or acquisition cost of €1.2m, and (iii) a 12-month holding period is met (or committed to be met).
- Outbound dividends: domestic law levies 15% WHT (e.g., Article 146 LIR). This can be reduced to 0% under the EU Parent–Subsidiary Directive (2011/96/EU) or applicable double tax treaties where conditions are satisfied.
SWEDEN and LUXEMBOURG — Double Tax Treaty
Sweden and Luxembourg have a double tax treaty that can further lower withholding tax on dividends paid between qualifying residents of each state, complementing EU rules for corporate parents. Actual treaty rates depend on participation thresholds, the nature of the recipient (company vs. individual), and anti-abuse provisions. In practice, a Swedish OpCo paying dividends to a Luxembourg SOPARFI may achieve reduced WHT if conditions are met, and inbound dividends at the SOPARFI may be exempt under Article 166 LIR.
Practical Comparison — Sweden vs. Luxembourg SOPARFI
- Individuals in Sweden: 3:12 rules can push marginal rates high when extracting profits personally.
- Corporate holding route: A Luxembourg SOPARFI can receive dividends exempt (Art. 166 LIR) and distribute onward with treaty/EU-reduced WHT when requirements are satisfied.
- Outcome: For cross-border growth and reinvestment, the SOPARFI route can materially improve the after-tax position versus direct individual extraction in Sweden.
Damalion — How We Facilitate for Swedish Clients
- Entity setup: Incorporation of Luxembourg SOPARFI (SA/SARL), drafting articles, notary coordination, RCS registration, domiciliation by accredited partners, substance services
- Directors & governance: Provision of local directors, board support, domiciliation, and corporate secretarial services.
- Accounting & compliance: Bookkeeping, annual accounts, and regulatory filings per Luxembourg law.
- Tax design: Mapping Article 166 LIR participation exemption, EU Parent–Subsidiary eligibility, and Sweden–Lux treaty routes.
- Banking introductions: Damalion connects you with selected Luxembourg and Swiss bank partners for opening and operations.
- Cash-flow modeling: We compare direct Swedish distributions vs. SOPARFI routes, including timing, reinvestment, and exit scenarios.
Smart FAQ — Sweden & Luxembourg Dividend Rules
1) How are dividends from a Swedish AB taxed at shareholder level?
Portfolio investors: 30% capital income tax. For closely held companies, 3:12 rules apply—an allowance portion at 20%, amounts above threshold may be taxed as earned income at higher progressive rates.
2) Which Swedish laws govern dividend taxation?
Income Tax Act (Inkomstskattelagen, 1999:1229)—incl. Chapter 57 (3:12)—and the Withholding Tax Act (Kupongskattelagen, 1970:624).
3) What corporate forms commonly distribute dividends in Sweden?
Private AB (SEK 25,000 capital) and Public AB (SEK 500,000).
4) What is Sweden’s corporate tax before dividends?
20.6% on taxable profits; dividends must come from distributable equity after shareholder approval.
5) Do Swedish companies enjoy participation exemption on inbound dividends?
Yes—under Chapter 24 of the Income Tax Act for qualifying holdings.
6) What is the default Swedish WHT on dividends to non-residents?
30% under Kupongskattelagen, reduced by treaties or EU Parent–Subsidiary rules.
7) Why do Swedish entrepreneurs consider Luxembourg?
The SOPARFI provides robust participation exemption, extensive treaty network, and predictable corporate law for cross-border dividend flows.
8) What is a SOPARFI?
A standard Luxembourg holding company (SA or SARL) used to hold/control participations and manage dividend flows.
9) Which texts cover Luxembourg dividend taxation?
Luxembourg Income Tax Law of 1967 (LIR), notably Article 166; Company Law of 1915 for corporate distributions.
10) What are the Article 166 LIR thresholds?
≥10% holding or €1.2m acquisition price, with a 12-month holding period; payer must be fully taxable.
11) What is Luxembourg’s default WHT on outbound dividends?
15%, potentially reduced to 0% under EU Parent–Subsidiary or an applicable treaty if conditions are met.
12) Does a Sweden–Luxembourg tax treaty exist for dividends?
Yes—it can reduce WHT on cross-border dividends between qualifying residents, complementing EU rules for corporate parents.
13) What are SOPARFI legal forms and minimum capital?
SA (€30,000) and SARL (€12,000).
14) How does Damalion help implement SOPARFI structures?
We handle incorporation, directors, domiciliation, accounting, treaty/EU analysis, and dividend cash-flow design.
15) Which Swedish sectors most use holding structures?
Green tech, fintech, life sciences, advanced manufacturing, and e-commerce.
SWEDEN — Dividend & Treaty Quick Guide
- Structures: Private AB (SEK 25,000) and Public AB (SEK 500,000).
- Corporate tax: 20.6% before distributions; dividends from distributable equity after shareholder approval.
- Shareholder taxation: 30% capital income for portfolios; 3:12 rules for closely held companies (20%/earned-income blend).
- Inbound dividends to Swedish companies: participation exemption possible (Ch. 24 IL).
- Outbound dividends to non-residents: 30% WHT; treaties/EU rules can reduce.
Damalion — Sweden-Focused Execution
- Comparative cash-leak modeling: direct Swedish distribution vs. SOPARFI route.
- Coordination with Swedish counsel on Inkomstskattelagen & Kupongskattelagen.
- Banking introductions, governance, and compliance.
LUXEMBOURG — SOPARFI Dividend Playbook
- Vehicles: SOPARFI via SA (€30,000) or SARL (€12,000).
- Participation exemption (Art. 166 LIR): inbound dividends exempt if conditions met (≥10% or €1.2m; fully taxable payer; 12-month hold).
- Outbound dividends: 15% WHT under domestic law; 0% possible via EU Parent–Subsidiary or treaty relief where eligible.
- Operating model for Swedes: Swedish OpCo → SOPARFI (Lux) → reinvestment/expansion; optimize WHT and timing of personal cash-outs.
Damalion — Luxembourg company registration services
We support Swedish entrepreneurs and investors to register their company and investment vehicles in Luxembourg:
- Incorporation, notary, RCS filings.
- Substance: directors, registered office, compliance.
- Tax mapping: Article 166 LIR, EU Parent–Subsidiary, Sweden–Lux treaty paths.
- Introductions to selected bank partners in Luxembourg and Switzerland.
Please contact your Damalion expert now.
5 Best Things to Do in Sweden
- ABBA The Museum — interactive music history in Stockholm.
- Vasa Museum — 17th-century warship and maritime heritage.
- Icehotel Jukkasjärvi — seasonal ice & snow hotel above the Arctic Circle.
- Liseberg Amusement Park — rides and entertainment in Gothenburg.
- Visby, Gotland — medieval UNESCO World Heritage town.
5 Best Things to Do in Luxembourg
- Bock Casemates — historic underground fortifications.
- MUDAM (Museum of Modern Art) — contemporary art exhibitions.
- Grand Ducal Palace — official residence of the Grand Duke.
- Mullerthal Trail — hiking in Luxembourg’s “Little Switzerland.”
- Vianden Castle — restored medieval castle with panoramic views.
