New Swedish limitation of interest deductions
01 July 2012
On June 8 2012, the Swedish government proposed new legislation which will entail further restrictions on the deductibility of interest expenses on inter-company loans. Peter Utterström of Delphi presents the main features of the legislation, how it has been received, and necessary actions to take if the bill is adopted.
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Utterstrom believes it will be very difficult for the Swedish Tax Agency to determine whether a transaction is made for business reasons or for tax purposes
Source: Magnus D |
The purpose of the proposed legislation is to prevent aggressive tax
planning, i.e. cases where the Swedish rules for interest expenses are
used to decrease the taxable income in Sweden so as to obtain a lower,
or zero, rate of taxation in another state.
Applicable to all internal debts
The present restriction is limited to interest deductions on loans
deriving from an acquisition of shares between affiliated companies.
However, the legislation now proposed will entail limitations on
interest deductions applicable to all inter-group loans, regardless of
the purpose of the loan, including for example, loans for the purchase
of machinery, equipment and patents, as well as loans taken to finance
capital injections or dividend distributions.
The 10% rule
The present legislation...
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