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Amendments to Income Tax Law and Coupon Tax Law — Orbitax Tax News & Alerts

The Swedish Parliament, on 14 December 2005, adopted new rules amending the Income Tax Law and Coupon Tax Law to ensure compliance with the new Company Law. The new rules apply from 1 January 2006, and the details of the main amendments are summarized below:

-   the previous rule requiring shares to have a nominal value has been abolished. The term "nominal value" has now been replaced with "the ratio" (kvotvärde). This means that each share represents the proportionate value of the equity;
-   "future participating debentures" (kapitalandelslån) has been introduced. This is a loan where the amount the company is required to repay depends on the (i) dividend paid to the shareholders, (ii) company's profit/loss or (iii) financial position;
-   the legal reserve constitutes free capital instead of restricted capital; and
-   the new Company Law contains new rules on divisions. No new rules on the taxation of divisions (spin-offs) were introduced.

Coupon Tax Law

In the event of a division (split-off), withholding tax is to be levied only on the remuneration that does not constitute shares in the recipient company.