The inquiry into the review of the 3:12 rules has submitted its report to the government. The proposal involves a number of tightening of the rules on taxation of shareholders in closely held companies. The directive to the inquiry indicated that the intention was to carry out a review of the entire 3:12 system and propose appropriate changes to primarily limit tax-related income conversion. Furthermore, it was stated that the proposals submitted would not collectively lead to reduced, but increased, tax revenues.
Against this backdrop, the investigation has now presented its proposal for changes to the regulations. All changes are proposed to take effect on 1 January 2018, meaning that disposals and dividends during 2017 will not be affected by the proposal.
Mainly, the following changes are proposed (the amounts shown below are calculated based on the 2016 income base amount).
- The tax on dividends and capital gains within the threshold amount is raised from 20 %to 25 %.
- The threshold amount under the simplification rule is lowered from 2.75 to 1.75 income-based amounts and can be used for one company per person. If the simplification rule is applied, this year's threshold amount (incl. wage base) cannot be calculated at all for shares in other companies.
- Today's calculation of the payroll base is limited from 50 % of paid salaries to a three-tiered scheme (see below). In addition, the calculation is individualised, meaning that the payroll base is distributed among the stakeholders before the payroll-based allowance is calculated (the opposite of today's provision). The scheme below therefore applies to the calculation per stakeholder/related circle:
- 10 % of salaries up to 8 income base amounts (474,400 kr)
- 25 % of salaries between 8 and 60 income base amounts (474,400 – 3,558,000 SEK)
- 50 % on salaries exceeding 60 income base amounts (over SEK 3,558,000)
- The existing ceiling rule stating that the salary-based allowance per year may not exceed 50 times the salary of one's own or a related person's salary is abolished.
- The withdrawal requirement for calculating the salary-based allowance is tightened and will be 8 income base amounts plus 5 % of the total payroll, or a maximum of 15 income base amounts (889,500 kr).
- The so-called 4 %threshold is abolished, meaning that shareholders holding less than 4 % of the capital will also be eligible to utilise wage bases.
- The rule that parent companies must own more than 50 % of the capital in subsidiary companies when calculating the payroll base is being abolished.
- The cap amounts for dividend subject to service tax and capital gains shall be merged into a common cap amount of 100 income-based units per year. Deferred consideration payments that mature in later years shall be included in the cap amount.
- The tax on dividends and capital gains exceeding the ceiling will be reduced from 30 %to 25 % .
- A special exemption rule shall be introduced for changes of ownership, meaning that shares in so-called partnership companies, subject to certain conditions, shall not be deemed qualified after the transfer solely because a related person is active.
Source: Wolters Kluwer – Tax Information
