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Holding swedish real estate

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Direct holding of real estate

This section discusses the most important tax implications of the direct holding of real estate. First of all, it discusses the impact for resident individuals and non-resident individuals. Thereafter it discusses the impact for resident companies and non-resident companies.

Resident individuals

Personal income tax
Income derived from real estate such as rental income is subject to individual income tax. The rate is between 30%-55% depending on the individual’s other income.

Deductibility of costs, interest and depreciation
Individuals are allowed to make a general deduction from the rental income. The deduction is 40.000 SEK per property for the income year 2019. Thereafter, the individual may also deduct 20% of the income from rent. The deductions may not exceed the income. The remaining surplus is subject to individual income tax.

For example, if the rental income is 100.000:

  • Rental Income SEK: 100 000
  • Fixed general deduction: -40 000
  • Deduction 20% of rental income: -20 000
  • Taxable profit: 40 000

Non-resident individuals

Non-resident individuals are treated the same way as resident individuals.

Resident companies

Corporate income tax
Business income such as rental income and capital gains are subject to corporate income tax. The profits are taxed against a flat tax rate of 21.4%. As from January 2021, the corporate income tax rate will be 20.6%.

Deductibility of costs, interest and depreciation
Acquisitions, construction of new buildings, improvements and extensions of buildings should be capitalised and deducted through depreciation. The normal yearly depreciation rate varies between 2-5%. Maintenance costs are deductible in the year of recognition. Interest on all types of loan are deductible. However, several restriction rules may apply.

Anti-tax avoidance directive
The anti-tax avoidance directive (ATAD) is a directive published by the OECD and will be implemented by European countries. ATAD contains certain interest restrictions that may affect investors of real estate.

Losses – carry back/forward
Losses from a direct sale of real estate are deductible against capital gains from real estate. Non-utilised losses can be carried forward. Tax losses of a Swedish real estate company can be carried forward indefinitely and offset in total against future profits of this company. However, there are some limitations that can occur due to changes of ownership.

Non-resident companies

Non-resident companies are treated in the same manner as resident companies.


Indirect holding of real estate

This section discusses the most important tax implications of the indirect (shares) holding of real estate. First of all, it discusses the impact for resident individuals and non-resident individuals. Thereafter it discusses the impact for resident companies and non-resident companies.

Resident individuals

Personal income tax
Individuals who hold shares in a Swedish company generate capital income that is subjected to a 20%-55% capital gains tax rate.

Deductibility of costs, interest payments and depreciation
As the distribution of dividends are qualified as capital income, no costs related to the dividends are deductible. Interest expenses are in general deductible.

Non-resident individuals

Dividends to a non-resident individual are in general subject to a 30% withholding tax but may be reduced in double tax treaties.

Resident companies

Corporate income tax
Business income such as rental income and capital gains are subject to corporate income tax. The profits are taxed against a flat tax rate of 21.4%. As from January 2021, the corporate income tax rate will be 20.6%.

Deductibility of costs, interest payments and depreciation
Interest costs from loans for acquiring the share of a real estate company are in general deductible from the business income. New rules, based on the anti-tax avoidance directive (ATAD), are in force since 2019 that may restrict the deductibility.

Anti-tax avoidance directive
The anti-tax avoidance directive (ATAD) is a directive published by the OECD and will be implemented by European countries. Sweden has implemented new interest restrictions in general and for loans from low taxed jurisdictions and loans in connection acquisitions of shares within a group.

Distribution of income and gains
Dividend distributions to other Swedish resident corporations are generally exempt from dividend withholding tax, if the shares are unlisted or the mother-company holds more than 10 % of the shares.

Non-resident companies

Non-resident companies are treated in the same way as resident companies since income generated from immovable property is taxable in Sweden.

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