Final (?) proposal for new 3:12 rules

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Final (?) proposal for new 3:12 rulesOn 8 June, the Government presented its consultation report to the Council of Legislation regarding the proposal for new 3:12 rules. This report is the same as the draft report presented on 22 March 2017 and which was subsequently sent out for consultation. In other words, the Government has not taken consideration of the criticism presented in the replies to the consultation process.

Consequently, the Government proposes that 3:12 rules are to be designed according to the following, from and beginning 1 January 2018:

Tax rates

  • Dividends and capital gains within the owner’s threshold amount are to be taxed at 25 % (today the rate is 20 %).
  • Dividends and capital gains in excess of the ceiling amount taxed as employment income (see below) are taxed at 30 %.

Simplification rule

  • The threshold amount according to the simplification rule, also called the standard rule, is 2.75 income base amounts (SEK 169,125 for 2018).
  • If the simplification rule is used in a given company, the owner may not calculate any threshold amounts, at all, for any other company.

Main rule

  • The salary based amount according to the mail rule will be calculated according to the following scale (today 50% of the salary basis). The calculation is individualized which implies that the salary basis (total salaries within a group) is divided between partowners (related parties are seen to comprise a partowner) prior to calculating the salary-based amount. The scale below is, in other words, per partowner/ per related party.
    • 15 % of the partowner’s share of the salaries up to 6 income base amounts (SEK 369,000 for 2017)
    • 30 % of the partowner’s share of salaries between 6 and 60 income base amounts (SEK 369 000 – 3 690 000)
    • 40 % of the partowner’s share of salaries in excess of 60 income base amounts ( SEK 3 690,000)
  • The ceiling rule, stipulating that the salary-based amount can be a maximum of up to 50 times one’s own or a related party’s salary, will no longer be in effect.
  • The requirement to take out salary in order to qualify for calculating the salary-based amount is unchanged at 6 income base amounts (SEK 369,000 for salaries in 2017) plus 5% of the total salary base, however, at a maximum of 9.6 income base amounts (SEK 590,400) for salaries in 2017.
  • The previous 4% rule, which had implied that an owner controlling less than 4% of the capital in a company could not utilise the salary-based amount, will no longer apply. For partowners owning less than 4% of the capital in a company, the salary-based amount is, instead, limited to a maximum of 0.25 times the individual’s (or the related party’s) cash compensation from the company and its subsidiaries.
  • The special fiscal definition of subsidiaries is maintained.

Ceiling amount for services

  • The ceiling amounts for taxation of dividends and capital gains as employment income are to be combined into one ceiling amount of 120 income base amounts (SEK 7,380,000 for 2017) per year. Any additional purchase price received in subsequent years will, however, be included in the ceiling amount.

Ownership changes in family businesses

  • A special exemption is to be introduced regarding ownership changes between related parties which aims at preventing the negative effects of generational shifts compared with external sales.
  • However, the new regulations will be applied only to generational shifts executed after 31 December 2017.

Indexation of saved threshold amounts

  • Limitation on the annual indexation of the saved distribution capacity from today’s government lending rate of +3 percentage points to a government lending rate of + 2 percentage points.

The changes are proposed to come into effect on 1 January 2018.

The consultation report has now been sent to the Council on Legislation whose responsibility is to provide a statement as to whether the proposal is in accordance with existing laws and other legislation in the area, and as to whether the purpose of the proposal is achieved based on the proposed wording of the law. The Government shall revert, thereafter, with a final law proposal which will probably be presented as a part of the Budget bill no later than 20 September 2017.


It can be concluded that the Government has not accepted the extensive criticism presented regarding the proposal in the two consultation procedures. This criticism has stated that the less advantageous rules negatively impact Swedish entrepreneurs and Swedish business operations and that a legal framework which is already, now, very complicated will become even more difficult to understand. The criticism refers, primarily, to the increased tax rate, deteriorated possibilities for calculating a low taxed amount based on salaries and the increased ceiling amount for taxation as employment income. In addition, many are critical of the fact that the exemption for ownership changes within a family cannot be applied on ownership changes executed prior to 1 January 2018.

Within the Alliance (opposition parties), there has been no consensus in this area, with certain politicians arguing in favour of presenting a joint Alliance budget, while others want to exclude the tax proposals from the Government’s budget. In a debate article in SvD, there is a general plea from Minister of Finance Magdalena Andersson and Minister of Financial markets Per Bolund to ensure a manageable budget process. It remains to be seen how the political parties will react to the proposal.

Do you have any questions on entrepreneur and SME Taxes?

Annika Svanfeldt och Fredrik Richter

Annika Svanfeldt och Fredrik Richter

Annika Svanfeldt och Fredrik Richer arbetar som skatterådgivare för entreprenörer och deras bolag på PwC:s kontor i Stockholm respektive Jönköping.
Annika: 010-212 48 04,
Fredrik: 010-212 52 37,
Annika Svanfeldt and Fredrik Richter works at PwC’s office in Stockholm and Jönköping and specialises in tax-related issues concerning entrepreneurial companies and their owners.
Annika: +46 10 212 48 04,
Fredrik: +46 10 212 52 37,

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