Swedish compromise on carried interest taxation

According to the policy briefing note, partners' carried interest would be taxed at the highest tier of income tax (57% excluding payroll tax) up to around SEK 5m. Anything above that point would be taxed ordinarily as capital gains, at a rate of around 30%.

The compromise derives from the so called "3:12 rules," a customary taxation model for small businesses where a maximum of four shareholders own the majority of the shares. The rules were initially set up to prevent a small number of equity partners from paying a lower tax rate by, for example, paying themselves dividends instead of a standard salary.

The new taxation model excludes venture capital funds by specifically targeting vehicles that take majority or controlling stakes in portfolio companies. The changes are proposed to be introduced on 1 January 2013.

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• Topics
• Nordics
• Regulation
• Sweden