Since 1 January 2026, legal entities that make donations to non-profit organisations approved by tax agency can receive a tax reduction. The purpose is to encourage companies to contribute more to socially beneficial activities in the areas of social welfare and scientific research. Below, we summarise the new rules and what they mean in practice.
Background
Since 2019, individuals have been able to receive a tax reduction for donations to approved recipient organisations. A corresponding incentive for companies has been absent, and under previous rules, donations from companies – of more than negligible value – could trigger tax consequences for both the company and its shareholders. In the spring of 2023, the Supreme Administrative Court (HFD) confirmed that donations from companies to charitable organisations are non-deductible and that such donations can result in dividend taxation for the shareholders. Against this backdrop, the Government appointed an inquiry – "Tax incentives for legal entities' donations to non-profit activities" (SOU 2024:90) – which was presented in December 2024. In 2025, the government published a legislative proposal, which was then adopted in the budget for 2026.
Who is eligible for the tax reduction?
Legal entities, such as limited liability companies (aktiebolag) and economic associations, that pay state income tax, can receive a tax reduction for donations. However, legal entities that are wholly or partially exempt from income tax liability – for example, public-benefit non-profit associations and registered religious communities – cannot receive a tax reduction. General partnerships (handelsbolag) and limited partnerships (kommanditbolag) are likewise ineligible.
Conditions for the donation
To be entitled to the tax reduction, the donation must meet certain conditions. It must be a monetary donation intended to promote social welfare activities or scientific research. The donation must be made to a recipient approved in advance by the Swedish Tax Agency (Skatteverket). Each individual donation must amount to at least SEK 2,000 at a single donation occasion to be included in the basis for the tax reduction.
Size of the tax reduction
The tax reduction is offset against state income tax, i.e. at the same rate as the corporate tax rate – currently 20.6 per cent. The basis for the tax reduction is the value of donations paid during the calendar year, regardless of whether the donor has a split financial year. The basis may not exceed SEK 800,000 per calendar year, meaning the maximum tax reduction is SEK 164,800 (20.6 per cent × SEK 800,000) per calendar year and per legal entity. If the basis for the tax reduction cannot be fully or partially utilised in the current year, it may not be carried forward to the following tax year.
How it works in practice
An approved recipient that has received a donation of at least SEK 2,000 that may give rise to a tax reduction must submit a control statement (KU 65) to the Tax Agency. However, the basis for the tax reduction will not be pre-printed in the donor's income tax return. The donor must request the tax reduction and report the basis in the income tax return that is due no later than after the end of the calendar year in which the donation was made.
As a practical example: If a limited company, under 2026, donates SEK 10,000 to an approved recipient and reports a taxable profit of SEK 300,000, the tax reduction amounts to SEK 2,060 (SEK 10,000 × 20.6 per cent), reducing the company's final tax expense from SEK 61,800 to SEK 59,740. If the company has calendar year as financial year, the tax reduction will be considered in the income tax return of fiscal year 2026.
Exemption from taxation of shareholders and members
An important new feature is that a donation entitling a legal entity to a tax reduction shall not be included in the taxable income of any person who directly or indirectly holds a share in that legal entity. The same applies to members of associations. This means shareholders no longer need to risk dividend taxation for donations covered by the tax reduction. However, if the donation is below SEK 2,000 per occasion, or if the total donations exceed the cap of SEK 800,000 per calendar year, shareholders may still be taxed on the portion that does not qualify for the tax reduction.
Our reflections
Enabling companies to make donations without adverse tax consequences for the company and its shareholders is a welcome step that should create new incentives for the business community to contribute to socially beneficial purposes. However, the tax incentive is limited to organisations engaged in social welfare activities and scientific research, meaning that donations to, for example, culture, sports or animal welfare are not covered. Currently, approximately 200 organisations are registered as approved recipients with the Tax Agency. The Government has, however, indicated openness to including additional purposes through a new inquiry into broadened funding for the cultural sector.
Furthermore, the tax reduction is not available to legal entities with tax losses, since the deduction is made against the current income tax expense.
It is also important to remember that the tax reduction cannot be saved or deferred to subsequent years, and that it is the calendar year that determines the basis regardless of the company's financial year. Companies planning to take the tax reduction in their income tax return have the burden of proof that the intended recipient is approved by the Tax Agency at the time of the donation, and that the donation meets all the other applicable conditions.
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