Proposed amendments to the Swedish interest deduction limitation rules

The proposal is in line with the previous legislative proposal, which was submitted to the Council on Legislation in June 2025 (see our article here) without receiving any objections, with respect to the change to the so‑called targeted limitations for intra‑EEA loans. The other proposed amendments to simplify and improve the interest deduction framework, e.g., the introduction of group‑wide “calculation units” or the increased “safe harbour” threshold from SEK 5 million to SEK 25 million, has not been included in this formal legislative bill.

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 and artificial.
   
•  This shift responds to recent European case law emphasising that denying deductions requires proof of a predominantly tax-motivated and artificial structure.
   

The proposed amendment is proposed to enter into force on 1 January 2026.

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