Sweden: What happened in 2019 and significant events in 2020

2019 was a busy year, with a number of important new legal developments in Swedish law. Some were home-produced; others were EU related. 2020 is likely to see significant changes as proposals and consultations launched in 2019 take more solid form.
The Year in Review and Year to Come summarise a selection of the major developments last year, and major developments expected over the coming year, with links to further reading, where available.

Key updates to


pieces of legislation in 2019 and 2020

Significant legal and regulatory events in 2019

2019 was a busy year, with a number of important new legal developments in Swedish law. Some were home-produced; others were EU related.

Corporate and Commercial

Foreign Direct Investments: In March, the EU adopted Regulation (EU) 2019/452 for the screening of foreign direct investments (FDI) into the Union. It aims to provide a common framework for limiting influence over the EU’s strategically important sectors from outside the union, such as China and Russia. The regulation provides a structure for co-operation and exchange of information about FDIs likely to affect security or public order. The Regulation applies from 11 October 2020. The Swedish government is preparing legislation on FDI in Sweden, focusing on immovable property and important infrastructure such as airports and ports.

Shareholder Rights Directive: The Swedish implementation of the EU Shareholder Rights Directive (EU) 2017/828 came into force in June. This resulted e.g. in: a new chapter in the Swedish Companies Act (Sw. Aktiebolagslagen (2005:551)) with a special decision-making arrangement for “significant transactions with related parties”; more detailed provisions for remuneration to senior executives; and provisions stating that public listed companies must submit a report at the annual general meeting on the remuneration received by senior executives during the past financial year.

Prospectus regulation: EU Prospectus Regulation (EU) 2017/1129 came into force in July. It establishes requirements for the preparation, approval and distribution of prospectuses to be published when securities are offered to the public or admitted to trading on a regulated market within the EU. At the same time, a Swedish act with supplementary provisions (Sw. lagen (2019:414) med kompletterande bestämmelser till EU:s prospektförordning) on investigative and intervention powers granted to the Swedish Financial Supervisory Authority (Sw. Finansinspektionen) came into force.

Nasdaq First North became a SME Growth Market: In connection with the introduction of MiFID II, the EU introduced a new type of trading platform called SME Growth Market. On 1 September, Nasdaq First North changed its status to an SME Growth Market. This means that certain regulatory requirements are eased. For example, the requirements for storing insider information are lowered and the requirements on prospectuses for issues and list changes do not have to be as comprehensive as before.

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Significant GDPR fines: The Information Commissioner has announced her intention to fine BA £183m and Marriott £99m for breach of the EU General Data Protection Regulation after they suffered a cyber-attack. In Sweden the Swedish data protection authority (Sw. Datainspektionen) issued its first GDPR fine. The fine of SEK 200,000, combined with a warning, concerned the use of facial recognition technology to monitor the attendance of students at a public school. Even though the facial recognition technology was only used for a limited testing period, several GDPR articles were deemed to have been violated and the prior consents had not been given on a valid legal basis.

European Parliament voted in favour of copyright articles: After years of negotiation and debate, the European parliament voted in favour of Articles 15 and 17 as part of the new directive on copyright (Directive (EU) 2019/790). These two articles within the new directive have sparked major controversy and have been dubbed “the link tax” and “the meme ban”. Critics are worried that the new directive will drastically impede the freedom of the internet, and in particular, the possibility to upload content to social media platforms. The directive is due to have been adopted and implemented by the EU Member States by 2021.

Obligations concerning industrial peace in workplaces extended: Amendments to the Employment (Co-Determination in the Workplace) Act (Sw. lag (1976:580) om medbestämmande i arbetslivet) came into force. The amendments ensure that the employee’s right to initiate or participate in an industrial action against an employer bound by a collective agreement can only be exercised under certain conditions.

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Banking and Financial Markets

Investment funds: The EU made changes to the way investment funds can be marketed under AIFMD and UCITS to take effect in 2021, and delayed the application of the PRIIPs KID to UCITS.


EU Securitisation Regulation: The Regulation, which consolidated existing risk retention, disclosure and due diligence requirements and established a new regime for simple, transparent and standardised (STS) securitisations, applies to securitisations which closed on or after 1 January 2019.

Sanction case in Swedbank investigation: The Swedish Financial Supervisory Authority (Sw. Finansinspektionen (FI)) opened a sanction case in the investigation into Swedbank AB’s governance and control of measures to combat money laundering in the bank’s subsidiaries in the Baltic countries.

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Banking package: EU updates bank prudential rules: Adopting important changes to the EU rules on the prudential regulation of banks and on bank resolution. CRR2, CRDV, BRRD2 and SRMR2 were published in the Official Journal in June. Some provisions (such as the EU’s implementation of the international standard on total loss absorbing capacity (TLAC) for global systemically important banks) apply immediately, though most new rules will not take effect until 2021.


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Changes to regulations on dealing in securities: The Swedish Financial Supervisory Authority (Sw. Finansinspektionen (FI)) provided new regulations based on Article 42 in MiFIR to strengthen the protection of private investors. These regulations give FI the possibility to prohibit or limit marketing, distribution or the selling of a certain financial instrument if such instrument causes problems to the investor protection. Further, FI is providing new provisions in their securities regulation to clarify which information a securities company needs to provide to FI when applying for a permit for ancillary business under the Swedish Securities Market Act (Sw. lagen (2007:528) om värdepappersmarknaden).

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Complementary Swedish provisions on transparency of securities financing transactions and of reuse: A new law was introduced containing complementary provisions to the implementation of EU Regulation (2015/2365) on transparency of securities financing transactions and of reuse. The new provisions regulate the Swedish Financial Supervisory Authority’s (Sw. Finansinspektionen) rights of surveillance and investigation and the possibilities to take sanction measures in the event of an infraction of the provisions regarding reporting, archiving and reuse.

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Arbitration Law

New legislation to modernise the Arbitration Act: The Swedish Arbitration Act (Sw. lag (1999:116) om skiljeförfarande) was amended in March. The new rules apply to arbitral proceedings seated in Sweden that have been initiated after 1 March 2019. The amendments include: rules on multi-party arbitration; the possibility to appeal decisions relating to an arbitrator’s competency; and the reduction of the time period during which a party may challenge an arbitral award. The main purpose of the revision is to make Swedish arbitration law more accessible, especially for non-Swedish parties, and to ensure that Stockholm continues to be an attractive venue for international dispute resolution.

The SCC launches a new platform to digitalise arbitration proceedings: The Arbitration Institute of the Stockholm Chamber of Commerce (SCC) introduced a new digital platform for arbitration proceedings. As of September, all SCC arbitrations have access to the new platform where the SCC, the parties and the tribunal can share case-related documents. The platform eliminates the need to share sensitive or bulky files and documents by email or other channels. The introduction of the platform is part of SCC’s continued ambition to provide the best tools to safeguard the integrity and efficiency of arbitral proceedings.


The introduction of a bank tax: The Swedish government announced plans to introduce a bank tax from 2022. The new tax is expected to generate revenues of EUR 470m.

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The introduction of tax dispute settlement mechanisms: The Swedish act to implement Council Directive (EU) 2017/1852 came into force in November. The directive introduced common EU rules on dispute resolution in cases of double taxation within the EU. The Member States shall, through mutual agreements, try to agree on how to resolve double taxation situations. For Sweden, this means that the Swedish Tax Agency, together with the relevant foreign competent authority, will try to resolve disputes.

Further interest deduction limitations: As a result of the OECD reports addressing base erosion and profit shifting and Council Directive (EU) 2016/1164, new rules on interest deduction limitations within the corporate sector came into force in January. The new rules were combined with a reduction of the corporate income tax rate.

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Liability for VAT when hiring out medical personnel: The Supreme Administrative Court held that the Swedish VAT exemption for medical care does not apply to a staffing agency that supplied doctors and nurses to hospitals and other suppliers of medical care. According to the court, hiring out of medical personnel does not constitute hospital care, which is exempt from VAT under Council Directive 2006/112/EC. Following the ruling, the exemption has been discussed by the Swedish Tax Agency, the Swedish Council for Advance Tax Rulings and the Parliament.

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Ruling on withholding tax and yield tax: The Swedish Supreme Administrative Court held that in certain cases it is inconsistent with EU law (the free movement of capital) to levy withholding tax on dividends paid to foreign life insurance companies. Since such insurance companies in certain situations are subject to both yield tax and withholding tax and the Swedish rules for avoidance of double taxation do not in all situations fully offset this, the court considered that the Swedish rules disfavour savings in foreign insurance companies.

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Preliminary ruling on cross-border deductions for losses: The Court of Justice of the European Union (CJEU) commented on the Swedish group relief rules that allow a Swedish parent company, under certain circumstances, to deduct final losses from a wholly-owned non-Swedish subsidiary located within the EU/EEA. The CJEU concluded that it is not proportionate for a Member State to condition the right to group relief on direct ownership, when the intermediate subsidiary is located in the same Member State as the loss-making company. The CJEU did, however, not consider such requirement unproportionate when the intermediate subsidiary is located outside of the EU/EEA.

Tax ruling on permanent establishments: The Swedish Supreme Administrative Court ruled that a Polish company that had performed work on the bottom plate of an ethane tank for a month and a half and then performed additional work on the roof dome of the same ethane tank for about eight months, with a four month break in between, did not constitute a permanent establishment under the tax treaty between Sweden and Poland and was therefore not tax liable in Sweden.

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In a world where increasing regulation and disruptive politics have become the new normal, our aim is to highlight key legal developments today and tomorrow to help you navigate the legal landscape and plan ahead.

Fredrik Lindqvist, Managing Partner, Sweden

Fredrik Lindqvist

2019 has seen significant changes in law at EU level, which will impact your business in the years to come. By watching this video, you can get a sneak peek into:

  • the sustainable finance package, which seeks to integrate environmental, social and governance considerations into the investment process;
  • the banking package, which brings changes to prudential regulation and the resolution of banks;
  • the investment firms review package, which marks a major reform for capital and liquidity rules for investment firms;
  • the clean energy package, which aims to create an integrated energy market;
  • the screening of FDI regulation, which sets minimum standards for national FDI screening.

Significant legal and regulatory events in 2020

2020 is likely to see significant changes as proposals and consultations launched in 2019 take more solid form.

Corporate and Commercial

New EU priorities follow institutional reshuffle: Following 2019’s European Parliament elections and appointment of a new Commission, 2020 will bring a wave of EU draft laws reflecting the priorities of European Commission President, Ursula von der Leyen. Digitalisation and sustainability will be high on the agenda of EU law makers during the coming legislative term.

Review of the EU Market Abuse Regulation: The European Commission will be conducting a review of the EU Market Abuse Regulation. An initial consultation by the European Securities and Markets Authority indicates that the review will cover a wide range of topics, such as possibly extending the scope to Spot FX contracts, potential amendments to the definition of inside information and extending the restriction on dealings in closed periods to closely associated persons of PDMRs.


Proposal for changes to the Swedish Corporate Governance Code: In October 2019, the Swedish Corporate Governance Board (Sw. Kollegiet för svensk bolagsstyrning) submitted a proposal for changes to the Swedish Corporate Governance Code (Sw. Svensk kod för bolagsstyrning). These include e.g. rules on remuneration guidelines and the remuneration report in light of the updated Shareholder Rights Directive (EU) 2017/828. The work on the changes to the Governance Code continues and is expected to be published next year.

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Lower capital requirements for private limited companies: In October, the Swedish government proposed that the lowest permissible share capital in private limited companies should be lowered from SEK 50,000 to SEK 25,000. The purpose is to make private limited companies more accessible to anyone who runs or wants to start such a company. The proposal is expected to become law in January.

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2020 review of Solvency II: During 2020, the European Commission will conduct a broad review of the EEA-wide framework for (re)insurers known as “Solvency II”. The Commission’s report is due by 1 January 2021 and is likely to include recommendations for change.

Increased criminal penalties against companies: In September 2019, the Swedish government submitted a proposal with the purpose of making sure that the penal code for companies is effective, modern and adapted to Sweden’s EU and international commitments. For example, it was proposed that the company fine (Sw. företagsbot) be increased in cases of particularly culpable crimes from SEK 10 million to SEK 500 million. The proposal is expected to come into force in January.

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Data privacy in electronic communications: During 2020, the EU could potentially adopt the ePrivacy Regulation to supplement the General Data Protection Regulation (GDPR) with specific rules on the use of electronic communications, cookies and electronic marketing which will apply in financial services. The ePrivacy Regulation will be a uniform framework directly applicable in the EU, including Sweden.

Data transfers under the microscope: The Court of Justice of the European Union will decide if Standard Contractual Clauses and the EU-U.S. Privacy Shield are valid. The loss of these key mechanisms would create serious problems when transferring personal data outside of the EU.

Investigations and reviews by the Swedish DPA: The Swedish data protection authority (Sw. Datainspektionen (Swedish DPA)) has elected key areas to prioritise in their investigations and reviews throughout 2019 and 2020. One of these areas is valid consent according to GDPR. In June 2019, the Swedish DPA initiated a review of how certain companies use consent to gather information about customers. The Swedish DPA envisions that the review will e.g. enable it to provide guidance to companies on the use of valid consent. All reviews are expected to be completed during the spring.

A new telecom directive: In December 2020, the new telecom directive (Directive (EU) 2018/1972) is set to be adopted and implemented by the EU Member States. The directive will include a new definition of “interpersonal communications service”, which will likely include services that are not subject to the current telecom directive, 2002/21/EC, such as Google Gmail.

Banking and Financial Markets

2020 Banking Package – implementing Basel III in the EU: The EU is working on the next round of amendments to the Capital Requirements Regulation and Directive, aiming to present draft laws to implement Basel III standards in the second half of 2020.

EMIR: Further changes will be phased in under the EMIR REFIT Regulation, including mandatory reporting by FCs for their NFC- counterparties and provisions related to initial margin model approval. EMIR 2.2 is expected come into force early in 2020 with changes to EU CCP supervision and delegated legislation expected relating to the new “tiering” of third country CCPs, comparable compliance and fees.

Degree of activity in funds: The Swedish Parliament approved the government’s suggestion to establish information requirements for funds to communicate whether the fund is being actively or passively managed. The new information requirements will take effect in January 2020 and require e.g. that the information is presented on the fund's website. The purpose of the suggestion is to make it easier for investors to assess whether a fund is being actively managed and whether or not the fund is worth the higher fees compared to a passively managed fund (e.g. an index fund).

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Emission of green bonds: The Swedish government has decided to commission the Swedish National Debt Office (Sw. Riksgälden) to, within its operating framework, issue a green bond no later than 2020. A particular feature of a green bond (compared to a conventional bond) is its green framework for selection, follow-up, accounting and reporting. The background is that in 2016 the special investigator appointed by the Swedish Parliament to analyse how the market for green bonds might develop, concluded that the most important measure to promote the market for green bonds was for the Swedish state to issue bonds.

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Employment law

Extended employee protection: The Swedish government has put forward a referral to the Council on Legislation (Sw. Lagrådet) proposing that employment protection be extended through amendments to the Employment Protection Act (Sw. lagen (1982:80) om anställningsskydd). The age limit for the right to remain employed will be increased to 69 years. Once that age has been reached, the employer shall be able to dismiss the employee without requiring objective grounds through a simplified termination procedure. It is proposed that the age limit is raised to 68 in January 2020 and to 69 in January 2023.


Mandatory disclosure: EU-wide disclosure rules will take effect from July 2020 requiring advisers, other intermediaries and taxpayers to provide details of tax avoidance and certain other arrangements to the tax authorities. Whereas DAC 6 only focuses on cross-border arrangements, the Swedish implementation also covers purely domestic arrangements. Members of the Swedish Bar Association are covered by the obligation to report information when they act as advisers. However, in view of their attorney-client privilege, a restriction is proposed on what information members of the bar or their legal practices are obliged to report.

Deferred withholding tax on dividends: The Swedish government has proposed a new system of deferral payment of withholding tax on dividends to foreign legal persons that show deficits for the current tax year, which is due to come into force in January. The possibility to defer payment is proposed to be open to foreign legal entities resident in the EEA and treaty states with articles on exchange of information and assistance in the collection of taxes.

Further implementation of ATAD II: Three changes in legislation related to the implementation of Council Directive (EU) 2017/952 (ATAD II) are due to come into force in January: exit tax rules and automatic exchange of information obligations; the OECD and EU Hybrid Mismatch Rules; and permanent establishments.

Amendments to the tax agreement between Sweden and Portugal: Sweden and Portugal have signed a protocol amending the current tax treaty between the countries. Under the protocol, it will no longer be possible to move to Portugal and receive tax-free pensions relating to employment in the Swedish private sector. For pensions that are not taxed in Portugal, taxation may take place in Sweden as of the date on which the protocol enters into force, but no earlier than 1 January 2020. For pensions that are subject to taxation in Portugal, taxation may take place in Sweden from 1 January 2023.

Explore our Year in Review 2019 and Year to Come 2020 series across 20+ jurisdictions and a number of topics.

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