Investigation regarding Swedish exit tax
On 25 May 2022, the Swedish Government appointed an inquiry to investigate the possibilities to implement exit tax rules targeting unrealised capital gains of individuals ceasing to be tax resident in Sweden (Dir. 2022:45).
Currently, Sweden does not levy exit tax but applies instead a special tax rule called the ten‑year rule, under which individuals who are not tax resident in Sweden may be subject to tax in Sweden on capital gains, if they have been resident or stayed permanently in Sweden at any time during the calendar year of realisation of such capital gains or during any of the previous ten calendar years. The applicability of the ten‑year rule is, however, in many cases limited by tax treaties between Sweden and other countries, many of which were concluded prior to the implementation of the ten‑year rule.
The purpose of the investigation is to propose a system for effective taxation of unrealised capital gains. For this purpose, the inquiry will:
- analyse and assess the rules that apply in other EU Member States upon an exit from that country;
- review and consider whether the current ten‑year rule should be replaced by or extended with general rules regarding the taxation of unrealised capital gains when an individual ceases to be tax resident in Sweden or becomes tax resident in another country; and
- propose a system for effective taxation of unrealised capital gains upon an exit.
The report is due to be published on 15 February 2024. It should be noted that the re-implementation of a Swedish exit tax has been discussed for years and a proposal was published by the Swedish Tax Agency in 2017, which was heavily criticised and ultimately abandoned.
Schjødt's tax lawyers in Sweden are following the development closely.