Sweden proposes minimum-tax safe harbours and incentive relief

The proposition, approved by the government on 8 October, would amend Sweden’s rules for large multinational and domestic groups. It remains proposed legislation. The existing general scope test is consolidated revenue of at least €750 million in two of the four preceding fiscal years.^[1][2][3]

Safe-harbour elections

Chapter 8 sections 2 and 4 would extend transitional country-by-country reporting relief to fiscal years beginning before 1 January 2028 and ending by 30 June 2029. The effective-tax-rate test would remain 17% for years beginning in 2027. Section 14 would also accommodate 52- or 53-week accounting years under transitional UTPR relief: they must begin by 31 December 2025 and end before 4 January 2027, with the ultimate parent’s jurisdiction meeting the existing 20% corporate-rate condition.^[2][3]

New sections 18a–18b would permit annual reporting-entity elections. Side-by-Side relief would set income inclusion rule (IIR) and undertaxed profits rule (UTPR) amounts to zero where the ultimate parent’s jurisdiction has an OECD/G20 Inclusive Framework-approved domestic and worldwide minimum-tax system, including the group’s share of qualifying joint-venture amounts. The separate UPE safe harbour would remove UTPR amounts for the ultimate parent’s jurisdiction where its domestic system is approved. These elections would leave domestic top-up tax available.^[2][3]

Tax incentives and credits

New Chapter 4 sections 17a–17d would let qualifying incentives increase adjusted covered taxes by their tax effect, potentially reducing top-up tax. Generally available expenditure incentives must concern costs already incurred, with combined benefits no greater than that expenditure; production incentives must concern goods, including electricity, already produced in the jurisdiction.^[2]

The increase would be capped at the higher of 5.5% of eligible local payroll or 5.5% of eligible depreciation. An alternative cap of 1% of eligible tangible-asset carrying value would require a five-year election, excluding land, non-depreciable assets and the assets excluded by Chapter 5 section 4a. An annual choice could bring eligible refundable or marketable transferable credits into this treatment. Revised Chapter 2 definitions would also recognise tax credits as rights to reduce covered-tax liabilities, while retaining the existing four-year refund criterion for qualified refundable credits.^[2][3]

Deferred tax and reorganisations

Chapter 4 sections 25–27 would exclude blended CFC deferred taxes and determine the transition year by when the group enters the Act’s scope for each jurisdiction. Additional exclusions would cover specified authority agreements or retrospective elections made after 30 November 2021, tax-basis differences when corporate tax is subsequently introduced before transition, and losses arising more than five fiscal years before its introduction. Reversals of the first three categories would also be removed from transitional safe-harbour tax expense.^[2][3]

Chapter 1 section 10 would test each group resulting from a demerger separately against €750 million, starting with the first fiscal year ending after the split and including that year in subsequent tests. Chapter 7 sections 67–68 and Chapter 8 section 9 would prevent deductible-dividend and relevant flow-through profit reductions producing negative amounts.^[2][3]

Proposed application

Commencement would be 1 January 2027, generally for years beginning after 31 December 2026. Reporting entities could elect earlier application of individual provisions from years beginning after 31 December 2024; the new incentive and permanent safe-harbour provisions could start only after 31 December 2025. For multinational groups, the proposed choices require separate checks of jurisdiction approval, incentive eligibility and deferred-tax attributes before estimating any reduction in Swedish top-up tax.^[1][2]