On 14 June 2018, the Swedish Parliament approved the bill introducing new tax rules for the business sector. The bill includes following measures:
- A reduction in the corporate tax rate from 22% to 21.4% in 2019 and 2020, and to 20.6% from 2021;
- Under the new general interest limitation rules, the deductibility of net interest expense would be limited to 30% of earnings before interest, tax, depreciation and amortization (EBITDA);
- Unused interest deductions can be carried forward for a maximum period of 6 years but are lost in case there is a change in ownership;
- The earnings before interest, tax, depreciation and amortization (EBITDA) rules do not apply if the interest paid does not exceed SEK 5 million;
- Changes to narrow the scope of the current interest restriction rules including that a deduction will only be allowed if the beneficial owner of the interest income is subject to tax at a rate of at least 10% and is domiciled in an EEA country or a country with which Sweden has a tax treaty, and that a deduction will always be denied in cases where intra-group debts are exclusively or virtually exclusively (90%-95%) incurred in order to receive a substantial tax benefit for the group;
- The hybrid rules on interest deductions apply when the same interest expense is already deducted in another state or when the corresponding income is not taxed in another state due to the legal classification of income for tax purposes;
- Interest expenses may not be included in the cost of inventories, buildings or landfills, which means that such expenses may not be capitalized;
- A reversal of accrual funds should be calculated to balance the lower tax, when dissolution occurs during the year with lower corporate income tax;
- A 6% temporary flat rate taxation of the security reserves of non-life insurance companies is introduced as well as a permanent annual standard income based on the interest rate on government loans;
- A restriction on the inclusion of interest expense for the capitalization of certain acquired assets, including inventory, buildings, machinery and equipment, and intangible assets; and
- New rules for financial leasing, including that the leasing fee must be re-characterized into an interest component and an amortization of debt component with the leasing component treated as normal interest expense, unless the yearly leasing fees of the lessee are below SEK 1 million.
The measures will apply from 1 January 2019.
