Sweden Proposes Additional Tax for Large Corporate Groups

The Swedish government has today announced a legislative proposal aimed at introducing an additional tax for companies within large corporate groups. This proposal is part of international efforts to combat tax evasion and protect national tax bases. It seeks to implement an EU directive designed to establish a global minimum tax level for large multinational and national corporations within Swedish law.

The proposal entails that companies within multinational and national corporate groups with low-taxed profits may face an additional tax in Sweden. This additional tax aims to reduce the benefits of shifting profits from high-tax countries to low-tax or tax haven jurisdictions. The proposal seeks to ensure a minimum taxation rate of 15 percent on a group’s profits and applies to companies that are part of national or multinational groups with annual revenues equivalent to at least 750 million euros.

According to the proposal, companies subject to the new law will be required to submit an additional tax report to the Swedish Tax Agency. This report will serve as the basis for the Tax Agency’s assessment of whether the group meets the minimum taxation requirements. The proposal also introduces a new reporting fee that can be imposed if the additional tax report is found to have serious deficiencies. Sanctions, such as late fees and tax penalties, may also be applied for violations of the rules.

To reduce administrative costs, a temporary simplification rule will be introduced for three years. This rule allows the group to obtain information from existing country-by-country reports, facilitating their reporting obligations under the additional tax rules. Permanent simplification rules will be introduced in the future, aligning with the progress of work within the OECD.

The additional tax is based on an EU directive that is to be incorporated into Swedish law. The directive, in turn, is based on proposals developed within the OECD.

The new provisions are proposed to take effect on January 1, 2024.