This content is from: Sweden

Sweden: To impose a ‘risk tax’ for banks and credit institutions

Amanda Jern, Peter Nilsson and Gustaf Hylén of KPMG Sweden explain why it is important for banks and credit institutions to review gross debt and consider the impact of the new ‘risk tax’.

On October 28 2021, the Swedish government submitted its proposal for a new ‘risk tax’ aimed at larger banks and credit institutions. 

The proposal, although highly criticised by several organisations during the consultation procedures, has been proposed to be incorporated as Swedish legislation as of January 1 2022.

The proposal is aimed at larger banks and credit institutions, with the argument that the business of these institutions compose a major financial risk to the Swedish society, should a new global financial crisis occur.

Risk taxation – the short version

The risk tax will apply to the extent a credit institution (on a group level) has liabilities linked to Swedish operations of more than SEK 150 billion ($15 billion) at the beginning of 2022. The threshold amount will increase annually based on an index. All liabilities within a group should be included, except the following:

  • Intra-group debt; 
  • Provisions and untaxed reserves; and
  • Debt which is not attributable to Sweden (i.e. debt in a non-Swedish group company which is not attributable to the business of a Swedish branch/Swedish operations).

The proposed tax rate is 0.05% (0.06% from 2023) imposed on the gross debt linked to Swedish operations. Hence, a group with a gross debt of SEK 150 billion would have a total tax liability of SEK 75 million for 2022, while a group with gross debt of SEK 149 billion would not have any tax liability.

State aid

With reference to the above, a common opinion expressed during the consultation procedures has been that taxation in this form should be considered state aid distorting competition on the credit market within the EU. 

State aid is not allowed within the EU without a formal approval from the European commission. The opinion is based on the fact that the taxation is not progressive, but rather targeting larger institutions leaving other actors on the market without tax liability. Furthermore, as stated above, the taxation is proposed to be levied on the full gross debt and not only on gross debt exceeding the proposed threshold amount. 

However, the Swedish government is not considering the risk tax as state aid in the sense argued by several organisations providing comments during the consultation procedures. It is possible to argue that the argumentation presented is vague. The content of the argument is that the taxation of, specifically, larger institutions is valid based on the risk these are imposing on the Swedish society in case of a financial crisis. Other credit institutions are not imposing the same risk and therefore are not considered being in a comparable situation. 

Despite this, on September 3 2021, the Swedish government asked the European Commission for a confirmation of their view in the matter. According to the government, the proposal will not be implemented before a confirmation by the Commission is received. In other cases, the time to receive a decision from the Commission has been over a year (for example C 596/19 P and C 562/19 P regarding targeted taxation in Hungary and Poland).


Whether or not it is possible to receive a confirmation by the Commission and have time to vote and implement the new legislation for it to enter into force on January 1 2022 is hard to predict. 

While it is proposed that the legislation will enter into force in less than two months, a conformation by the Commission was applied for as late as September 2021, and to our understanding, is not likely to be seen in the near future. 

Anyway, since it is clear that the government would like the proposal to be a reality as early as January 2022, it is imperative, not to say urgent, for banks and credit institutions to review their gross debt and consider the effects of the new risk tax. 

Amanda Jern
Senior manager, KPMG

Peter Nilsson 
Director, KPMG

Gustaf Hylén
Senior associate, KPMG

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