Proposal for exit tax on certain capital assets when moving abroad

The Swedish Tax Agency recently presented a proposal to the Ministry of Finance on an exit tax on individuals moving abroad implying that such individuals would be required to report unrealised net gains on capital assets in conjunction with moving from Sweden.

The proposed exit tax would apply to individuals who have resided in Sweden during five of the last ten years, who move from Sweden and who have unrealised net gains on capital assets in excess of SEK 100,000. The capital gains which are proposed to be taxed are, amongst others, shares and participations in Swedish partnerships. Assets in investment savings accounts, assets in business activities, real estate and tenant owner apartments are, however, not to be included in these tax rules.

The proposal on an exit tax when moving abroad implies that capital assets are to be seen to be sold in conjunction with the taxpayer moving from Sweden, implying that the unrealised net gain is to be reported for taxation in Sweden. Any possible capital losses on such assets can only be deducted against capital gains reported for taxation according to these new tax rules. However, a person moving to a country within the EEA , or to a country with whom Sweden has a tax agreement, will have the possibility of being granted a respite in paying the tax until the capital asset in question is sold and the net profit is, then, realized. Any possible decline in value, arising after the point in time at which the capital assets are seen to have been sold, is to be considered in conjunction with the net gain being realized.

The purpose of the proposal is said to be to protect the Swedish tax base and counteract tax avoidance in conjunction with people moving from Sweden. The right of taxation secured in these rules, which are to apply when individuals move abroad, will not be limited in time.

The rules regarding exit tax on certain capital assets when moving from Sweden are proposed to come into effect on 1 January 2020. The proposal is now being considered by the Ministry of Finance who has the responsibility to determine whether to take the proposal further in a legislative process.