SWEDEN Trends and Developments Contributed by: Corinne Ekman, Mikael Nagy and Joacim Kanstedt, Gernandt & Danielsson Advokatbyrå KB
However, since the Swedish Tax Agency (STA) initiated a review of the private equity sector in 2009, it has been the STA’s opinion that carried interest should be regarded as a performance- based remuneration attributable to work car - ried out in the course of employment within the advisory company. As such, it should, in their opinion, be subject to taxation as income from employment for individuals (at progressive tax rates up to approximately 52%) and social security contributions at 31.42% payable by the employer. The STA does however acknowledge that there are situations where carried interest may be taxed under the rules on closely held companies (the so-called 3:12 rules), with taxa - tion under the income categories of capital and employment but without being subject to social security contributions. In August 2024, the Swedish government initi - ated a legislative process regarding the taxation of carried interest, which proposal was submit - ted on 28 January 2025. The purpose of this ini - tiative was to assess how such taxation could be made more predictable and to propose pro - visions resulting in taxation comparable to that applied under the closely held company rules. In summary, the proposal suggests that the rules on closely held companies should gener - ally apply to persons that, due to work or ser - vices, otherwise are entitled to carried interest in alternative investment funds (as defined under Swedish law), by expanding the definition of the term “substantially active” ( verksam i betydande omfattning ). Further, the proposal introduces specific provisions under the 3:12 rules appli - cable only to shareholders in companies entitled to carried interest. The new provisions are pro - posed to enter into force on 1 January 2026. In its consultation response ( remissvar ) regarding
the proposal, the STA raised no objections to the implementation of the proposed provisions; however, they did indicate that certain provisions would benefit from further clarification. Conclusion The Swedish venture capital market is well positioned for significant growth, underpinned by a resilient economy, cutting-edge industries, and a strong commitment to sustainability and innovation. As we move into 2025, the start-up ecosystem and business landscape present a unique blend of opportunities and challenges for venture capital funds. While ongoing global geo - political tensions and evolving regulatory frame - works require vigilant navigation, the potential for lucrative investments and impact opportuni - ties remains robust. Emerging from 2024, the Swedish market has demonstrated renewed momentum, showcas - ing its capacity for recovery and innovation. The positive rebound witnessed in the latter half of 2024 and start of 2025 has instilled confidence in investors, particularly in sectors that align with Sweden’s strategic emphasis on technological advancement and environmental responsibility. This focus not only enhances the attractiveness of Swedish start-ups but also positions them favourably in the eyes of global investors seek - ing sustainable and impactful opportunities. Venture capitalists can expect a dynamic pipe - line of domestic and cross-border transac - tions, with numerous start-ups and established firms looking to leverage the Swedish market’s strengths. By staying informed about emerging market trends and actively engaging with local networks, investors can identify promising ven - tures that align with their investment strategies.
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