Simpler and better tax rules for partners in closely held companies

The government's referral to the Council on Legislation broadly corresponds to the previous legislative proposals from the inquiry, which is natural given that the feedback received from the referral has been generally positive towards the inquiry's proposals. Below is a breakdown of what the government's proposal entails. The intention is for the rules to come into effect on 1 January 2026, and there is therefore every reason for co-owners in a close company to review their tax situation before the changed rules take effect.

Common rule for calculation of low-taxed space
The primary purpose of the 3:12 rules is to determine how much of a dividend or capital gain on shares in a closely held company should be taxed as capital income at 20 percent and how much should be taxed as salary at 30-55 percent.

In the current regulatory framework, the low-tax allowance (20 percent) can be determined according to a main rule or a simplified rule, and where the low-tax allowance for a sole owner of a closely held company for 2025, according to the simplified rule, amounts to approximately SEK 220,000. In the proposal, the low-tax allowance will only be calculated in one way, and where the lowest allowance (basic allowance) corresponds to 4 income base amounts, which for 2025 means approximately SEK 320,000. This amount is allocated to the shares in the company.

If a shareholder holds shares in more than one limited company, they cannot claim more than 4 income-based insurance premiums as a basic amount across all their shareholdings. If the basic amount for a limited company shareholder would otherwise exceed four income-based insurance premiums, the four income-based insurance premiums are distributed proportionally based on the size of the different shareholdings.

Abolished requirement for salary withdrawal
Under current rules, a shareholder needs to draw a certain minimum salary to be able to offset payments made to themselves in the company against the low-taxed allowance. The requirement for a certain minimum salary is being abolished in the government's legislative proposal.

The calculation of the size of the salary-based allowance will be based on the same principles as today, meaning that 50 per cent of the company's cash salary sum creates a low-taxed allowance. However, according to the proposal, a special salary deduction will be introduced for each shareholder, meaning that a deduction amounting to 8 income-based amounts, i.e. approximately SEK 645,000 for the 2025 tax year, will be made from the shareholder's share of the salary-based allowance.

The requirement that the salary-based allowance shall not exceed 50 times the individual's own salary will also remain. Consequently, the individual's own salary extraction will continue to be relevant for a co-owner's opportunities to account for paid salaries within the low-taxed allowance.

Abolished share requirements
To be able to count salary payments made in the low-tax bracket in the current regulatory framework, an ownership stake of at least 4 percent is required. This ownership requirement is now being abolished in the proposal for new rules.

Shortened waiting period
Following the cessation of an active shareholder's work efforts in the company, current rules stipulate that shares in the company remain qualified for a waiting period of five full tax years. The waiting period for a shareholder is now being reduced to four full tax years. The proposal for a shortened waiting period will also have an impact on other parts of the 3:12 regulations, for example, in the application of the arm's length rule.

The interest on the cost base
According to the main rule in today's system, a portion of the owner's cost basis (the government bond rate increased by nine percentage points) can be included in the low-taxed allowance, which for 2025 is 10.96 percent. According to the government's proposal, this portion of the acquisition cost will only be recognised in the cost basis that exceeds SEK 100,000. 

Distribute dividend
Today's enumeration of the saved dividend allowance (the government bond rate increased by three percentage points) will not be permitted under the new regulations. A deterioration that for some shareholders is wholly or partially compensated by a higher base amount.

The definition of a subsidiary is abolished
The specific definition of a subsidiary for limited companies within the 3:12 rules will be abolished, and the assessment of subsidiaries will revert to being based on civil law rules. This will reintroduce the possibility of dual group membership for two shareholders to be able to count salary expenses.
 
Unchanged tax rates
The government's proposal does not contain any changes to tax rates. Taxation within the low-tax bracket will therefore continue to be 20 per cent, and the taxation of capital income exceeding the ceiling amount will still be 30 per cent.

Unchanged rules
The inquiry included proposals to limit the circle of related parties so that siblings and other sibling-related family situations would no longer be counted as related. Furthermore, the inquiry also included a proposal to introduce a common cap rule for the taxation of capital gains and dividends, which limits the maximum taxation in the income class of employment. As further proposals, the inquiry also included a codification of the level established in preparatory works and case law regarding the extent of non-resident ownership when applying the 30 per cent non-resident rule. The government has chosen not to proceed with any of these proposals in its referral to the Council on Legislation.
 

For smaller companies, the proposal means, for example, an increase in the lowest low-taxed bracket from the current 2.75 income base amounts, approximately SEK 220,000, to 4 income base amounts, currently approximately SEK 320,000. Other clear improvements are the abolished salary withdrawal requirement and the abolished shareholding requirement in order to be able to count salary-based allowances. These abolished requirements mean that all co-owners in a closely held company will be able to count salary-based allowances when calculating the low-taxed bracket.

However, a deterioration is the wage deduction that will be made when calculating the wage-based allowance, meaning that 8 income base amounts will be offset from the owner's wage-based allowance. This restriction particularly affects smaller companies with a limited wage sum. Another deterioration could be the mandatory distribution of the base amount, which may be the effect for an owner with multiple shareholdings, and where a closer analysis may be needed of what the precise effect of this new distribution rule entails.

The next step in the legislative process is for the government to present its proposal to the Riksdag, which will then adopt the new legislation for small business owners. According to the government, the intention is for the new rules to come into effect on 1 January 2026. As a shareholder in a small business, there is therefore every reason to be aware of the design of the new 3:12 regulations and their effects on taxation.