Swedish Holding Companies and Company Formation in Sweden
Swedish Holding Companies are important tools for international groups of companies to decrease their consolidated tax expenses. We offer holding company formation in Sweden and full range of administration services. The tax exemption for capital gains and dividends on shares held for business purposes in combination with an extensive tax treaty network and the absence of thin capitalization rules, make Sweden an attractive location for international holding companies.
At a reasonable cost, Siguiente Capital AB (publ.) offers to manage your Swedish Holding Companies (MEMO). We will supply you with a recently formed Swedish limited liability company as well as handle all administration in connection with its management.
A Swedish Holding Company is constituted as an “AB” (short for “Aktiebolag” which is the equivalent of a limited company). The minimum share capital for a Swedish Holding Company is SEK 50.000 which must be wholly paid up.
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Tax Rate on Swedish Holding Company
Normal tax rate on Swedish Holding Company is 26.3%. By way of using the possibilities of postponing tax payments the effective tax rate is often lower. A Swedish Holding Company is fully subject to tax on its worldwide income.
Dividends from shares held as so called ”business related shares” are exempt from tax in Sweden. Shares are regarded as business related shares if one of the following criteria is met:
• The shares are not listed on any stock exchange (unquoted shares).
• Listed shares represent 10% or more of the voting power in the company.
• The business of the holding company or its subsidiaries is related to the business of the held company.
This means that shares held by a Swedish Holding Company would usually be regarded as business related shares.
There are exceptions for dividends from controlled foreign companies in certain tax haven countries (CFC rules). Profits in such companies shall according to Swedish tax law be taxed in Sweden when they arise, no matter whether profits are distributed as dividends or not. Therefore a Swedish Holding Company would normally be imposed with the ordinary corporate tax of 26.3 % on profits in a CFC company.
Capital Gains Exemption
Capital gains from the sale of business related shares are exempt from tax at the same conditions that apply to dividends for a Swedish Holding Company. This creates excellent flexibility for internal restructuring of businesses and for sales of companies.
There are a few exceptions: If the business related shares are quoted they must have been held for a year or more. Another exception regards sales of shares in so called “shell companies”. With some planning, the problems with shell companies can be avoided without great difficulties.
Other Advantages with a Holding Company in Sweden
Besides the common advantages of a holding company, corporate structures may also benefit from the following advantages with a holding company in Sweden:
• Dividends distributed by a Swedish Holding Company are exempt from withholding tax if the three following conditions are met:
1. The shares are held as business related shares.
2. The recipient is subject to an income tax rate of at least 14.6%.
3. The recipient owns at least 25% of the share capital of the Swedish Holding Company.
If the recipient is resident in a country listed in the “White List”, the withholding tax exempt conditions are always met.
• Interest paid by a Swedish Holding Company is exempt from withholding tax.
• No withholding tax is levied on payments of royalties made by a Swedish Holding Company to foreign companies.
• There are no thin capitalization rules. This means that shareholders
domiciled outside of Sweden may choose to record a low share capital in
the Swedish Holding Company and instead lend money to the company.
• Sweden is a member of the European Union (EU).
• Accounting kept in Euro is possible.
• Sweden has double tax treaties with more than 80 countries.
• Advisors’ fees are low in Sweden.
At an all-in price, Siguiente Capital AB will provide you with a variety of company management services for your Swedish Holding Company:
• Registered office facilities.
• Directors and accountant (companies with low billings or low value of assets may choose not to have an auditor).
• Bank account.
• Current recording of transactions, annual accounts, annual reports and tax returns.
• Correspondence with the Tax Agency and the Companies Registration Office.
• Documented board meetings and general meetings.
• Other corporate matters.
As a supplement to our management services, Siguiente Capital AB also offers wide-ranging accounting services including:
• Opening up and administering of the company’s bank account.
• Invoicing and payments.
• Current recording of transactions and financial administration.
• Current reports of profit/loss and balance.
• Annual reports, annual accounts and periodic reports.
• Tax returns (incl. Value Added Tax) and income-tax returns.
• Other accounting services.
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Download MEMO about Swedish Holding Companies by Siguiente Capital AB administration.