Sweden: Ministry of Finance circulates memo proposing withholding tax exemption for foreign states
The Swedish Ministry of Finance has issued a proposal to exempt from Swedish withholding tax on dividends (Sw. kupongskatt) foreign states and their equivalents to Swedish regions, municipalities, or municipal associations. This follows a 19 December 2024 ruling by the Supreme Administrative Court, which found that taxing foreign public pension institutions while exempting domestic ones violates EU rules on free movement of capital.
For the exemption to apply, certain conditions must be met:
- The foreign state must be located within the European Economic Area or have an agreement with Sweden that allows for information exchange in tax matters.
- The foreign equivalent to a Swedish region, municipality, or municipal association must be based in such a state.
The proposal is currently under consultation, with feedback due by 26 September 2025. If adopted, the changes would take effect on 1 July 2026. The final scope and timing remain subject to legislative process.
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