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Post by Sapphire Capital on Sept 5, 2008 4:05:01 GMT 4
Sweden reconsiders plans for tax deductions on interest expenses
Sweden's ministry of finance has amended a proposal to change the laws on the tax deductions for certain intra-group expenses after industry members blasted its original plans.
The new, and less extensive, proposal still targets intra-group interest expenses but only when the relevant debt arises from a direct intra-group transfer of shares. The new rules would no longer cover debts that arise on transfers of receivables or indirect share transfers.
Interested parties including the Confederation of Swedish Enterprises, the courts, the law faculties of the Swedish universities and the Swedish Bar Association all strongly criticised the first proposal published by the Swedish tax authority earlier this summer.
The new proposal suggest the rules should apply where the interest is subject to tax in the hands of the recipient at a rate of at least 10%, or the interest cost is principally motivated by a business purpose such as external acquisition or group-restructurings for organisational reasons.
The plans are expected to enter into force on January 1 2009. The government is expected to publish a bill within a couple of months.
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