SWEDEN Law and Practice Contributed by: Christoffer Dahl, Niclas Söderlund, Michel Weimer and Björn Mårtensson, XR Legal
a deduction may only be granted if the acquisition is essentially commercially justified. Deduction limitation for net interest expenses Net interest expenses surviving the targeted interest deduction regime are also limited to certain amounts. There are two applicable rules: • Safe harbour rule: Under which net interest expenses up to SEK5 million on a group level are deductible. • Earnings stripping rules: Under which a company’s net interest expenses are deductible up to 30% of the tax EBITDA. Under the earnings stripping rules, net interest expenses exceeding the maximum deduction may be carried forward for six years. However, any inter - est expenses carried forward are lost in the event of a change of control. Shell Company Rules The divestment of a shell company (Sw: Skalbolag ), that is to say, a company that has no business opera - tions and consists primarily of liquid assets, may be subject to capital gains tax in Sweden even if the shares in it qualify for participation exemption. There are exceptions for minority shareholders and internal transactions. The rules only apply to the transfer of Swedish tax residents (including, for example, com - panies with registered branches or that own shares in Swedish subsidiaries). The rules regarding shell company taxation are mechanical, and although there are exceptions to shell company taxation, it is generally advisable to submit a specific shell company tax return ( Skalbolagsdeklara- tion ) within 60 days of the transfer to avoid the risk of capital gains taxation on the transferred shares. 5.3 Blacklists and Non-Cooperative Jurisdictions Sweden generally uses the European Council’s list of non-cooperative jurisdictions for tax purposes. Transactions involving entities located in blacklisted jurisdictions may lead to, for example, denial of inter -
est deduction, DAC6 reporting, withholding tax being imposed or the CFC rules applying. 5.4 Reporting Obligations and Disclosure Regimes Sweden has implemented the DAC6 Directive. This requires tax intermediaries (lawyers, accountants, banks) to report “cross-border arrangements” to the STA if the transaction exhibits certain “hallmarks” of aggressive tax planning. Failure to report can lead to significant administrative fines. 5.5 Role of Tax Authorities and Enforcement Measures Investigations into possible tax fraud may be led by the STA or the Swedish Economic Crime Author - ity (ECA), whereby the STA performs administrative audits and the ECA pursues criminal investigations. Both the STA and the ECA have extensive author - ity to access records, both from the taxpayer within the scope of the investigation and from third parties. Audits may be general or targeted. Unannounced Visits The STA often shows up unannounced in order to investigate, for example, cash registers and whether all staff members are properly registered. Raids Depending on whether the investigation is being con - ducted by the STA or ECA (criminal procedure), dif - ferent rules granting different levels of authority apply. Under the Tax Procedure Act, the STA may apply to an administrative court for permission to search business premises to seize documents or digital data if there is a risk that a taxpayer will hide or destroy evidence. If the investigation is led by the ECA, raids may be per - formed in co-operation with prosecutors and police officers. There is no limitation as to what may count as business premises – a raid can be made at, for example, a private home.
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