Swedish tax alert - Proposed new tax regime for cost of capital

On 12 June 2014, the Swedish Corporate Taxation Committee (Sw. Företagsskattekommittén) presented its final report, which suggests a completely new model for the corporate tax treatment of cost of capital.

The Committee proposes a modified CBIT model (Comprehensive Business Income Tax) where the aim is to treat debt and equity in a tax neutral way. Deduction for net financial costs is proposed to be denied, allowing for a reduction of the effective corporate tax rate to 16.5%, although the statutory rate of 22% is retained.

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