SWEDEN Law and Practice Contributed by: Björn Wendleby, Rico Benavides, Per Josephson and Stellan Koch, Harvest Advokatbyrå
2.6 Tax Regime All Swedish special funds are exempt from taxa - tion and are not liable to pay Swedish income tax. AIFs that do not meet the requirements of special funds are subject to the Swedish corpo - rate tax of 20.4% if domiciled in Sweden. External and internal AIFMs are taxed based on the applicable tax rules for their specific legal structure. For example, an external AIFM oper - ating as a Swedish limited liability company is subject to a corporate tax rate of 20.4%. Investors in special funds domiciled in Swe - den without an investment savings account are required to pay income tax – ie, a flat annual amount equal to 0.4% of the value of their shares at the beginning of the calendar year. This flat income is then taxed at 30% for indi - viduals and 22% for legal entities. Additionally, dividends from shares or units in the special fund are taxable. Any profit from a transfer initiated by the investor is also subject to taxation, with the calculation varying depending on whether the special fund is listed or unlisted. Non-residents are generally taxed in their coun - try of residence. Under the Foreign Account Tax Compliance Act (FATCA) and Common Report - ing Standard (CRS) agreements, the Swedish Tax Agency is obligated to report information on taxable accounts held by non-residents to the designated foreign competent authority speci - fied in the agreements. Pension fund investors domiciled in Sweden are exempt from capital gains tax on transfers and pension pay-outs but are subject to tax on the return on capital and income tax on pension dis - bursements.
Other relevant operational requirements include customer due diligence measures based on Sweden’s implementation of the Anti-Money Laundering and Terrorist Financing Directive, which applies to AIFs. AIFMs registered in Sweden are not subject to specific additional operational requirements. 2.5 Fund Finance In Sweden, the fund finance market for AIFs is well-established and subject to regulatory over - sight. Swedish AIFs can generally access borrowing through banks and other financial institutions. Larger and more established funds, especially those managed by licensed AIFMs, tend to have better access to financing due to their compli - ance with regulatory standards and market repu - tation. Borrowing by AIFs in Sweden is primarily gov - erned by the AIFMD, as implemented in Swedish law. Restrictions depend on the fund’s invest - ment strategy and the agreements with inves - tors. For instance, leveraged funds must dis - close their borrowing levels to both investors and regulators, and there are caps on borrowing depending on the fund type. It is common for lenders to require security when financing funds, such as pledges over fund assets or guarantees from parent companies. Lenders often conduct thorough due diligence to evaluate risks before extending credit, particu - larly for private equity or venture capital funds. There are no common issues in relation to fund finance.
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