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Sweden: Certain business tax measures to consider before year-end

Sweden: Certain business tax measures to consider

Business taxpayers in Sweden may want to consider the following tax changes before the end of 2019.

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  • Interest deduction limitations: For fiscal years beginning on or after 1 January 2019, there are new rules that may limit the deduction of interest. The new general interest deduction limitation rules may mean that a company is not allowed to deduct its interest expenses to the extent that these interest expenses exceed the company’s interest income. The determination of how much interest expense that a company may deduct generally is based on EBITDA (earnings before interest, tax, depreciation and amortization). Negative net interest income may then be deducted by either a maximum of SEK 5 million within an interest group or by an amount corresponding to 30% of taxable EBITDA per company.
  • Corporate income tax rate: A reduced tax rate of 21.4% applies. To avoid situations that the reduced corporate tax rate could result in certain tax planning situations, there were changes adopted to the rules reversing the accrual fund for legal persons.
  • Depreciation deduction, apartment buildings:  In general, the depreciation deduction with regard to apartment buildings would be 2% annually. However, for financial statements beginning for 2019, it may be appropriate to claim a “primary deduction” for depreciation of the apartment building for the first six years after the building has been completed. The primary deduction means that a deduction for the value reduction of an additional 2% per year is made during the first six years (for a total of 12%). In practice, the primary deduction means that the building will be fully depreciated some six years earlier. These rules apply to new construction (apartment buildings) completed from 1 January 2017, and to additions and structural modifications or rebuilds completed from 1 January 2017.


Read a November 2019 report (Swedish) [PDF 600 KB] prepared by the KPMG member firm in Sweden

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