Sweden has proposed changes to the Qualified Domestic Minimum Top-Up Tax (QDMTT) rules under the Minimum Taxation Directive (2022/2523), making joint ventures and their subsidiaries directly liable for Swedish domestic top-up tax.
Sweden’s Ministry of Finance has issued a memorandum Fi2026/0119 on 25 May 2026 proposing amendments to the rules on Qualified Domestic Minimum Top-Up Tax (QDMTT) under the Minimum Taxation Directive (2022/2523), aimed at changing how joint ventures and their subsidiaries are treated for Pillar Two purposes.
Under the proposal, a joint venture resident in Sweden and its subsidiaries will become directly liable for the full amount of Swedish domestic top-up tax allocated to them, provided they belong to a group within the scope of the top-up tax rules. The same liability structure will also apply to subsidiaries of joint ventures.
The reform would extend existing five-year exemption rules, including those for groups in the initial phase of international activity and groups consisting solely of domestic operations during their first five years under the supplementary tax regime. These exemptions will also apply to Swedish national supplementary tax borne by joint ventures and their subsidiaries.
If the full top-up tax is not collected through Swedish domestic rules, a parent entity will remain liable under the primary rule for its share of any outstanding amount, according to the proposal.
The Ministry of Finance said the current framework places liability on entities other than the joint venture itself, which prevents Swedish QDMTT from qualifying for other jurisdictions’ safe harbour rules. This can lead to parallel taxation outcomes where Sweden collects the full top-up tax while foreign jurisdictions may still impose liability under primary or secondary Pillar Two rules. The proposed amendments aim to address this issue and align the Swedish regime with international safe harbour treatment.
Administrative changes are also included. Joint ventures and their subsidiaries that become liable for Swedish QDMTT will be required to submit a top-up tax return, and related procedural rules will be adjusted accordingly. Other requirements under the broader Pillar Two framework, including registration and record-keeping obligations, are also reflected in the proposal.
The changes are proposed to enter into force on 1 March 2027 and apply to fiscal years beginning after 28 February 2027. A transitional option will allow reporting entities, joint ventures and subsidiaries to apply the rules retroactively for fiscal years beginning after 31 December 2024.
Earlier, Sweden published amendments to its Top-up Tax Act (2023:875) in the Official Gazette (SFS 2026:305) on 31 March 2026, allowing a single resident group entity to assume responsibility for a group’s supplementary top-up tax under domestic Pillar Two rules.
