Sweden has proposed amendments to its Supplementary Tax Act to incorporate OECD Pillar Two guidance, introduce permanent safe harbours for qualifying minimum tax regimes and tax incentives, and extend transitional relief to reduce compliance burdens for multinational groups.
The Swedish government’s legislative proposal (Proposition 2026/27:4), submitted to the Swedish Parliament (Riksdag) on 13 October 2026, incorporates the OECD/G20 Inclusive Framework’s Pillar Two administrative guidance issued between June 2024 and May 2026 into domestic law.
Implementation of OECD administrative guidance
The bill updates the Swedish Supplementary Tax Act (lagen om tilläggsskatt) to align with global minimum tax standards under the OECD Pillar Two framework, incorporating administrative guidance from June 2024, January 2025, and January & May 2026. The proposal ensures compliance with EU Directive 2022/2523, maintaining harmonisation between EU rules and evolving OECD Inclusive Framework guidelines.
Zero-top-up treatment & parallel minimum tax regimes
To prevent double taxation and eliminate redundant calculations for multinational enterprise (MNE) groups, the bill introduces two new permanent simplification rules:
- Side-by-Side safe harbour:
- Applies to corporate groups headed by an Ultimate Parent Entity (UPE) located in a jurisdiction approved by the Inclusive Framework as maintaining a qualifying parallel minimum tax regime covering both domestic and foreign income (e.g., the United States’ regime).
- Under this rule, top-up tax under both the Income Inclusion Rule (IIR) and the Undertaxed Profits Rule (UTPR) is deemed to be zero for constituent entities, joint ventures, and JV subsidiaries in Sweden.
- Ultimate parent entity (UPE) safe harbour:
- Applies to groups where the parent entity is based in a jurisdiction with an approved parallel regime covering domestic income only.
- In these cases, Swedish UTPR top-up tax is set to zero regarding constituent entities located in that parent jurisdiction.
Qualified tax incentives & deferred tax adjustments
- Substance-based tax incentive (SBTI) safe harbour: The rules allow multinational enterprises (MNEs) to treat expenditure- or production-based tax credits as an addition to covered taxes rather than as a reduction in income, potentially reducing their top-up tax liability. This adjustment is capped based on local economic substance, at either 5.5% of payroll costs and depreciation of tangible assets or, under a five-year election, 1% of the carrying value of tangible assets.
- Deferred tax provisions: The rules adjust the transitional accounting treatment of deferred tax assets (DTAs) and deferred tax liabilities (DTLs). They exclude DTAs arising from special government arrangements, tax benefit agreements, or asset revaluations entered into after 30 November 2021, preventing multinational enterprises from using these arrangements to artificially shield future low-taxed profits when entering the Pillar Two regime.
Extensions of temporary safe harbours
- Transitional CbCR safe harbour extension:
- Extends temporary safe harbour relief by one year, applying to fiscal years beginning before 1 January 2028 (provided the fiscal year ends no later than 30 June 2029).
- The transition rate for the Effective Tax Rate (ETR) test for fiscal years starting in 2027 is established at 17%.
- UTPR safe harbour for 52/53-week accounting periods:
- Expands the transitional UTPR safe harbour definition to accommodate MNE groups using non-standard 52-week or 53-week accounting periods starting on or before 31 December 2025 and ending before 4 January 2027.
Legislative council review & expected impacts
The government referred the draft proposal to the Legislative Council (Lagrådet) on 17 August 2026. The Council provided technical and constitutional comments, including references to international bodies and section numbering, which the government accepted and incorporated into the final bill.
The proposed changes are expected to have a negligible impact on Swedish tax revenue. However, the introduction of safe harbours is expected to reduce administrative and reporting burdens for multinational corporations operating in Sweden by simplifying compliance with the Pillar Two rules.
Timeline & entry into force
The proposed amendments will enter into force on 1 January 2027 and will generally apply to tax years beginning after 31 December 2026. However, certain safe harbour rules may be applied voluntarily at an earlier date, for fiscal years beginning after 31 December 2024 or 2025, depending on the specific rule.
