Cross‑Border Tax Forecast 2026 in Sweden

On 26 November 2025, the Swedish Parliament adopted a reform to simplify and improve the rules on closely held companies introduced in the early 1990s to prevent income shifting – where owners took dividends instead of salary to reduce tax.

Today, these rules regulate whether dividends and capital gains paid to owners of closely held companies should be taxed as capital income, or in part as employment income. The system is complex, with complicated calculations.

The reform took effect on 1 January 2026.

Under the new rules on closely held companies, the initial threshold amount –dividends and capital gains taxed at 20% – consists of (in short):

• a basic allowance (SEK 322,400)
• a salary-based allowance equal to 50% of the salary base above a threshold (SEK 644,800).

Key changes include:

• abolition of the 4% ownership and 9.6 income base salary requirements
• alignment of the subsidiary definition with the Swedish Companies Act
• exclusion of salaries paid via alternative investment funds (AIFs)
• revised rules on return on acquisition cost and carry-forward of unused allowance
• a shorter qualifying period of 4 years.

The rules targeting closely held companies apply to anyone who owns qualified shares in a closely held company. If the rules apply, the described calculations must be done, and specific tax forms (K10) must be submitted in the owner’s private income tax returns.
With appropriate governance and planning, these rules can be used proactively to support tax‑efficient outcomes.

Following the implementation of new rules targeting closely held companies, shareholders should review their corporate and ownership structures to ensure continued strategic alignment with the revised framework. 

Owners of closely held companies should consider if a broader group of shareholders is eligible for the salary-based allowance, and if the revised definition of subsidiaries creates new planning opportunities. However, shareholders with lower salary withdrawals should be aware that they may be disadvantaged by the requirement that only salaries exceeding the threshold of SEK 644,800 are counted.

Where there are several owners, a holding company for each owner may be beneficial to secure a full basic allowance. If the salary base is large, direct ownership may be more attractive due to the abolition of the 4% ownership threshold. The optimal structure for each closely held company should be evaluated case by case.

From 2026 certain individual level tax changes apply, including a reduced SINK rate for non-residents. 

The flat SINK rate applicable to non-resident individuals receiving Swedish employment or pension income is reduced from 25% to 22.5%. A further reduction to 20% is planned from 1 January 2027.

The reduced SINK rate affects non-resident individuals with Swedish source income and requires employers and payers to apply correct withholding.

Non-resident individuals and employers with employees working cross-border should ensure that correct Swedish withholding tax is applied following reduction of the SINK rate.

A further change in individual tax levels has been made with the abolition of interest deductibility for unsecured loans from 2026.

Interest expenses on unsecured loans are no longer tax deductible (e.g. private and consumer loans), while bank mortgages and similar secured loans are generally unaffected.

The abolition of interest deductibility primarily impacts individuals with unsecured or private loans.

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A limited tax-free allowance has been introduced within the Swedish investment savings account (investeringssparkonton or ISK) regime.

A tax-free allowance will apply from 2026 to Swedish ISKs up to SEK 300,000.

The change regarding Swedish ISKs has limited relevance outside Sweden.

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For 2026 the Swedish government has initiated reviews of potential tax incentives for R&D activities and the deductibility of sponsorship costs.

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Clients should monitor ongoing government reviews as these initiatives may result in legislative changes impacting future structuring and planning.