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.

Feel free to contact Ebba Perman Borg (Head of Tax) or Elin Delerud (Managing Associate) if you would like to know more about how the proposed changes may impact your business.