Acquiring swedish real estate

Direct purchase of real estate

This section discusses the most important tax implications of the direct purchase of real estate. First of all, it discusses the impact for resident individuals and non-resident individuals. Thereafter it discusses the impact for resident companies and non-resident companies.

RESIDENT INDIVIDUALS

Stamp duty
All transactions on land and buildings are subject to stamp duty based on the higher purchase price and value assessed for tax purposes. The tax rate is 1.5 % if the buyer is an individual. The buyer is liable for the payment of the stamp duty. It is the Swedish tax authorities that set the assessed value for tax purpose. The owner of the real estate receives a property declaration every three or six years where information about the real estate is stated. The Swedish Tax Agency uses the information in the property declaration to calculate the tax value. Owners of real estate can get a special property assessment in between the three or six years if there have been any major changes to the property or if it is newly formed.

Value added tax
Transactions of land and buildings are not subject to VAT for individuals or companies.

NON-RESIDENT INDIVIDUALS

Non-resident individuals are treated in the same manner as resident individuals.

RESIDENT COMPANIES

Transfer Taxes
All transactions on land and buildings are subject to stamp duty based on the higher purchase price and value assessed for tax purposes. There are two different tax rates:

• 4.25 % if the buyer is a company for example a Swedish AB.
• 1.5 % if the buyer is a Non-business association, for example private person or housing cooperative association.

Value added tax
Purchase transactions of land and buildings are not subject to VAT.
However, the supplier and the recipient can opt for a VAT-able supply or lease of the property. The applicable VAT rate is 25 %. If the transaction is subject to VAT, the input VAT can be deducted.

Deductibility of costs
Depreciation costs, interest costs, maintenance costs and operating costs are deductible.

The acquisition or building costs of real estate can be depreciated between 2-5 % annually for tax purpose (excluding land). The depreciation rate for tax purpose does not have to correspond with the book depreciation.

Losses
Losses from a direct sale of real estate is deductible against capital gains from real estate. Non-utilised losses can be carried forward.

NON-RESIDENT COMPANIES

Non-resident companies are treated in the same manner as resident companies.

Indirect purchase of real estate

This section discusses the most important tax implications of the indirect (shares) purchase of real estate. First of all, it discusses the impact for resident individuals and non-resident individuals. Thereafter it discusses the impact for resident companies and non-resident companies.

RESIDENT INDIVIDUALS

Stamp duty
Transfer of shares do not trigger any stamp duty.

Personal income tax
Individuals who hold shares in a Swedish company generate capital income that is subjected to 20-55 % capital gains or dividends tax rate. The tax rate is progressive and depends on the individual’s other income. The 20 % rate is connected to a separate attachment of the Income tax return (K10). Every year the amount will be calculated to the extent the individual can take dividends with only 20 % taxation.
If the dividend exceeds the K10 threshold the tax rate is progressive between
30-55 %. Profits made by the company are subject to the corporate income tax of 20.6 % as of 2022. 

Dividend withholding tax
Shareholders of a Swedish company are subject to a 0-30 % dividend withholding tax in case of the distribution of dividend. The withholding tax does not need to be paid by the company when the dividend payment is made. The shareholders can choose to pay the withholding tax when filing their income tax statement.

Deductibility of costs
As the distribution of dividends are qualified as capital income, no costs related to the dividends are deductible. Interest expenses are in general deductible.

NON-RESIDENT INDIVIDUALS.

Dividend to a non-resident individual are in general subject to a 30 % withholding tax but may be reduced in double tax treaties.

RESIDENT COMPANIES

Stamp duty
Transfer of shares do not trigger any stamp duty.

Corporate income tax
Capital gains from Non-listed bonds are exempt from corporate tax. Non listed shares in real estate companies are included in the definition and therefore not subject to corporate tax. Dividends to a non-resident company are in general subject to a 30 % withholding tax unless an exemption apply, for instance if the shares are classified as business related or covered by the EU Parent-Subsidiary Directive.

Losses
Tax losses from previous years can generally be carried forward indefinitely for future offset of taxable profits. Carry back losses are not permitted. Tax losses can be restricted due to direct or indirect change of ownership. There are two types of restrictions that can affect tax loss carry forward. Both restrictions apply to change of ownership where one or more parties acquires the majority of the shares and votes of a loss-making company. The first restriction states that accumulated tax losses will be forfeited to the extent they exceed 200 % of the purchase price for obtaining the controlling influence (>50 %) of the Company. The second restriction only affects the timing of the use of the tax losses carried forward. Losses incurred during the fiscal year of the acquisition/change of ownership will not be restricted.

NON-RESIDENT COMPANIES

Non-resident companies are in general treated in the same manner as resident companies.