Tax breaks for fund investors not flagged in latest Swedish Budget

Sweden’s minister for Finance Magdalena Andersson has outlined proposals for a Budget that tilts towards spending the surpluses expected to be made during the next Parliament, rather than reduce taxes.

Sweden is scheduled to go to the polls in a general election on 9 September this year, and the Spring Budget is the last chance that Andersson and the current ruling coalition have to put forward policy objectives ahead of the vote.

The country’s fiscal position is markedly solid, according to the figures presented: economic growth is forecast at 3% for 2018; employment is at a 25-year high, unemployment is expected to continue falling to a rate of about 6% over the coming year; the national debt as a share of GDP has fallen by 10% over the 2014-18 period, to its lowest level since 1977.

The public sector has been in surplus since 2015 and is expected to be continue being in surplus by about 1% in both 2018 and 2019, and thereafter increase up to 2021.

Andersson noted that there will be an increasing need to provide social security, particularly in light of demographic trends showing that Swedes continue to live longer and that more children are being born. This is why the government has prioritised spending “rather than large tax cuts for the richest”, Andersson said.

A key tax issue that has emerged during the current Parliament has been taxation of venture capital investments (see below).

More recently, the Swedish Private Equity & Venture Capital Association (SVCA) has noted the possible effects of a so-called ‘Exit Tax’ that has been proposed for “unrealised capital gains of physical persons emigrating from Sweden”, which the analysts at Copenhagen Economics have suggested would “increase the effective tax level for foreigners planning to live in Sweden for an extended period.”

“For foreigners planning to stay in Sweden for a limited period, the exit tax might shorten their stay, as the rule may create significant kinks in the tax schedule of such individuals, ie, serve as an incentive to emigrate just before the exit tax becomes effective.”

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Jonathan Boyd
Editorial Director of Open Door Media Publishing Ltd, and Editor of InvestmentEurope. Jonathan has over two decades of media experience in Japan, Australia, Canada and the UK. Over the past 17 years he has been based in London writing about funds and investments. From editing the newsletter of the Swedish Chamber of Commerce in Japan in the 1990s he now focuses on Nordic markets for InvestmentEurope. Jonathan was awarded Editor of the Year at the Professional Publishers Association (PPA) Independent Publisher Awards 2017. Shortlisted for the same in 2016, he was also shortlisted in 2017 and 2015 for the broader PPA Awards category Editor of the Year (Business Media).

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