Sweden proposes major corporate income tax changes

On 21 March 2018, the Swedish Government submitted a draft bill regarding important changes in the corporate taxation area to the Council on Legislation for their consideration.

The main proposals are:

  • A general provision limiting the deductibility of net interest expense to 30% of earnings before interest, tax, depreciation and amortization (EBITDA)
  • Reduction of the corporate income tax in two phases, from 22% to 20.6%
  • Limitation of interest deductibility in certain cross-border transactions (anti-hybrid provisions)
  • Retention of the current interest deduction limitation rules on intercompany debt, however, with a narrower scope
  • Introduction of tax rules regarding financial leasing
  • Introduction of accelerated depreciation on tenement buildings
  • Increased standardized income on tax allocation reserves
  • Introduction of standardized income on contingency reserves for non-life insurance companies

The new rules are proposed to come into effect 1 January 2019.

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