Proposed amendments to Swedish interest deduction limitation rules

Under the proposal, companies eligible to give or receive group contributions will form a “calculation unit” to consolidate their positive and negative net interest, as well as any remaining negative net interest carried forward. Instead of each company independently applying the interest deduction rules, the group will add together all interest expenses and incomes, compute one deduction base, and then determine how much negative net interest it can deduct in total. This group-wide approach should simplify intragroup financing arrangements and potentially increase usable deductions where some companies have current surpluses and others have large interest costs.

Currently, businesses may deduct up to SEK 5 million of negative net interest under a “safe harbour” rule, thereby avoiding the more complex 30% EBITDA-based limitation. The government proposes raising this threshold to SEK 25 million, aligning more closely with the EU Anti-Tax Avoidance Directive’s recommended ranges. This change should exempt many mid-sized companies that would otherwise need to perform a detailed annual interest capacity calculation. However, if any single company within a “community of interest” applies the safe harbour rule, the entire community shares the fixed SEK 25 million limit together.

The existing six-year cap on carrying forward negative net interest, which has not yet been deducted, is proposed to be removed. Under the proposal, any remaining negative net interest can be utilised without an expiration date. Nonetheless, standard ownership-change blocking rules will remain in place, meaning if controlling influence in a company shifts, previously accrued negative net interest may still be lost.

The proposal refines current rules to ensure compliance with EU law in the following ways:

• Interest paid to an affiliated lender in another EEA member state will generally remain deductible.
   
• The rules will introduce an artificial arrangement test, allowing the Swedish Tax Agency to deny deductions if the loan structure is deemed purely tax-driven.
   
• This shift responds to recent European case law emphasising that denying deductions requires proof of a predominantly tax-motivated and artificial structure.

After reviewing the draft legislation, the Council on Legislation issued an opinion that raised no objections to the proposal. The government is now expected to table a formal bill to the Swedish parliament, likely during the autumn, with a proposed for the rules to enter into force on 1 January 2026. Companies should begin assessing how a group-based calculation might affect existing loan structures and confirm whether they can benefit from the simplification-rule threshold increase.

Please feel free to contact Schjødt's tax department to discuss any specific queries interest deductions.