PwC monitors tax proposals in the 2016 spring budget – a summary of known proposals

On Wednesday, 13 April, the Ministry of Finance will present its spring budget for 2016. Following is a list of the tax proposals which can be expected to be included in this spring budget. Many of these proposals have already been announced and can be found on the Ministry’s web site (in Swedish).

Proposals for changes to take effect already on 1 August 2016

• Increased possibility of utilising RUT deduction for certain gardening, removal and IT services (calculated to decrease tax revenues by SEK 335 million in 2016).
• Decreased tax on certain biofuels (calculated to decrease tax revenues by SEK 150 million in 2016).

Proposals for changes to take effect on 1 January 2017

• Prohibited deductibility for representation in conjunction with meals and other types of refreshment, and introduction of a ceiling of SEK 300 per person and occasion for VAT deduction. This proposal is expected to increase tax revenues by SEK 640 million in 2017. Read more in previous articles in Tax matters.
• Increase in the thresholds for state income tax for income year 2017, with a lower limit of SEK 438,400 and a higher limit of SEK 644,000. These increases are lower than usual and this is expected to raise tax revenue by SEK 1.13 billion in 2017.
• Reduced VAT from 25 percent to 12 percent for smaller repairs of bicycles, shoes, leather goods, clothes and home textiles. This proposal is deemed to reduce tax revenues by SEK 270 million in 2017 and, subsequently, by SEK 240 million per year.
• Reduced employers’ contributions in certain cases for sole proprietorships undertaking new recruitment. This reduction is intended to be implemented through the old age pension fees applying only during the first 12 months of employment. The proposal is expected to reduce tax revenues by SEK 410 million in 2017 and by SEK 330 million in the following year. This change is proposed to be temporary and will be applied on compensation paid out up to and including 31 December 2021 and which refers to employment commencing after 1 April 2016.
• A new possibility for RUT deduction for repair and maintenance of white goods in private residences (calculated to reduce tax revenues by SEK 190 million between 2017 and 2020). This change is proposed to come into effect for the first time in the income year starting after 31 December 2016.
• Prohibition of deduction of interest expenses on certain subordinated debt instruments for, amongst other entities, banks (calculated to increase tax revenues by SEK 1.38 billion in 2017). The proposal also includes a supplement to the group contribution rules and a simplification of the loss carried forward rules, which are deemed to reduce tax revenues by SEK 50 million in 2017. Read more about this in previous articles in Tax matters.
• New deduction to compensate the elimination of certain emission rights for companies not covered by the EU emissions trading system. This change is proposed to be applied for the first time during the income year following 31 December 2016.
• Decreased carbon dioxide taxation of diesel fuel used in boats and ships in agriculture, forestry and aquaculture (calculated to decrease tax revenues by approximately SEK 1 million).
• Changed rules for valuation of financial instrument portfolios and obligations in taxation incurred through fusions and fissions. This change is proposed to be applied first in the income year following 31 December 2016.
• Reduced interest income on tax accounts, at lowest 0 (zero) percent, in order to avoid tax accounts being used for savings. Read more in Tax matters.

Other proposals

• Introduction of certain definitions in the previously presented proposal regarding taxes on so-called substances of very high concern (chemicals substances the use of which is proposed to be subject to authorization within the EU) in the budget proposal for 2017. This is proposed to come into effect on 1 July 2017.
• Application of the previously introduced rules on the decrease of the benefit value of certain environmentally-adapted cars to be extended until 31 December 2019.
• Continued decrease in energy tax for households and for the private and public service sector in certain municipalities in northern Sweden.

Comments

Based on what has previously been communicated by the Government and the areas listed above, we do not expect any major news in conjunction with the spring budget being presented.

What could be interesting to follow is how the Government plans to finance cost increases previously advised as regards the so-called “welfare billions” to be provided to the municipalities (in Swedish).

We will monitor the above tax proposals and revert with follow-up articles after the Government has presented its 2016 spring budget, now, on Wednesday, 13 April 2016.

Andreas Stranne och Filip Engström