Global Tax Alert | 21 June 2018

Sweden enacts major corporate income tax changes

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On 14 June 2018, the Swedish Parliament voted to enact a bill regarding important changes in the corporate taxation area.

The main changes 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 will come into effect 1 January 2019 and will apply for the first time to fiscal years beginning after 31 December 2018.

For background on these changes, see EY Global Tax Alert, Sweden proposes draft bill with major corporate income tax changes, dated 26 March 2018.

For additional information with respect to this Alert, please contact the following:

Ernst & Young AB, Stockholm
  • Erik Hultman
    erik.hultman@se.ey.com
  • Rikard Ström
    rikard.strom@se.ey.com
Ernst & Young LLP, Nordic Tax Desk, New York
  • Antoine Van Horen
    antoine.vanhoren@ey.com
  • Susanne Hamre Skoglund
    susanne.skoglund@ey.com
  • Nicole Maser
    nicole.maser1@ey.com

EYG no. 03204-181Gbl