Swedish Tax Alert - Increased taxation for real estate transactions
Today, new rules were proposed for increased taxation on real estate transactions.
Some of the key changes are:
- When a property is sold by way of a direct or indirect sale of the shares in a PropCo (a Swedish company owning a property), the PropCo will, for tax purposes, be considered to have sold and acquired the property at fair market value. This “deemed transaction” will result in a fictitious capital gain taxable for the PropCo at a rate of 22%.
- The PropCo will in addition be taxed on a fictive income similar to the stamp duty that would have been due in case of a direct sale of the property.
- Stamp duty will be levied on land re-allotment (Sw. fastighetsreglering) and land partitioning (Sw. klyvning).
- No stamp duty will be levied on intra-group transfers of properties.
- For businesses, the stamp duty rate is lowered from 4.25% to 2%.
The proposal must be approved by Parliament before any change in legislation can enter into force. The changes are proposed to enter into force on 1 July 2018.