Additional amendments to the Swedish top-up tax act

The proposed amendments include changes to existing sections of the law and the introduction of 31 new paragraphs across various chapters of the Swedish Top-up tax Act, which entered into force last year in 2024. These amendments include, among others:

1. Securitisation special purpose entities
   The Inclusive Framework has agreed that jurisdictions adopting Qualified Domestic Minimum Top-up Taxes (QDMTTs) are not required to impose top-up tax liabilities on special purpose vehicles used in securitisation transactions. Instead, liability for such entity can be imposed on other Constituent Entities in the jurisdiction, or Securitisation Entities can be excluded from the scope of the QDMTT.
    
2. Tax allocation rules
   The proposal introduces comprehensive provisions for allocating covered taxes between group entities, including new rules for permanent establishments, controlled foreign companies, and hybrid entities. These include detailed formulas for calculating allocation amounts and handling foreign tax credit systems.
    
3. Deferred tax provisions
   New rules address the allocation of deferred tax costs between group entities, with specific provisions for hybrid entities and reverse hybrid entities.
    
4. Hybrid entity definitions
   The definition of hybrid entities is expanded to include entities resident in states without corporate tax systems, provided they are taxed at the owner level and are not tax transparent entities.

The proposed legislative changes are proposed to enter into force on 1 January 2026. However, there is also a proposal to allow reporting entities to request that all or certain provisions be applied for the first time for fiscal years beginning after 31 December 2023.