Ebba Perman Borg
Partner
Stockholm
Newsletter
by Ebba Perman Borg, Victor Elovsson and Maria Ström
Published:
As we have previously reported on, the Swedish government presented its Budget Bill for 2024 (prop. 2023/24:1) on 20 September 2023 (see the article here). The Budget Bill includes, among other things, a proposal to change the taxation of certain share redemption and repurchase procedures. Schjødt has previously written about the Ministry of Finance's proposal which was submitted to the Legislative Council (see the article here). The now proposed changes are based on the prior proposal.
In short, the proposed changes suggest that the allocation of redemption shares (Sw. inlösenaktier) to shareholders in connection with a share redemption procedure or a takeover offer should be treated as a dividend. The value of a redemption share is proposed to be the compensation to be paid at redemption or acquisition (Sw. inlösenbeloppet), and the time of taxation is when the redemption shares can be disposed of by shareholders. The purpose of the proposal is to tax the value that shareholders receive through redemption shares in the same way as cash dividends.
Under current legislation, non-resident shareholders may avoid paying withholding tax in a share redemption procedure if they dispose of the redemption shares before the redemption date, since the receival of such shares has not been considered a dividend until redemption. However, with the proposed changes, this will no longer be possible as the definition of a “dividend” under the Swedish Withholding Tax Act will be extended to include the value of redemption shares at the time when they can be disposed of.
The changes are proposed to enter into force on 1 January 2025 and apply on redemption shares that are allocated after 31 December 2024.
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