Sweden To Tighten Interest Deduction Rules

by Ulrika Lomas, Tax-News.com, Brussels

21 November 2011

The Swedish government has announced plans to set up a corporate tax committee tasked with examining the issue of questionable, ‘aggressive’ tax planning in the private healthcare and education sectors with respect to interest deductions.

The government aims to establish proposals for stricter legislation to close existing loopholes.

It is reported that some subsidiaries in Sweden borrow money from a parent company located in low-tax jurisdictions at high interest rates to avoid realizing a visible profit in Sweden and thus avoid corporate taxation.

Underlining the need for stakeholders in these sectors to act responsibly in accordance with good business ethics, Sweden’s Finance Minister Anders Borg explained that the committee would review existing rules pertaining to interest deductions and would submit a final report to the government by November 1, 2013.

Borg nevertheless revealed government plans to propose measures aimed at tightening interest deductions in spring 2012.

Borg underscored that the government’s starting point is that "taxes must be paid equally by all, under current legislation, no matter what industry you belong to".

"I want to be clear that the point is that this sort of aggressive tax planning will not be allowed in the future," he added.

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