Swedish Government withdraws the proposed restriction on tax deductibility of Swedish "group contributions"
A previous proposal from the Ministry of Finance would have restricted the tax deductibility of group contributions where the maker of the contribution incurred a loss. In addition, allocation of income between companies in a fiscal commission resulting in a loss would not have been allowed.
Had the proposal been enacted, the legislation would have put more pressure on companies to make accurate fiscal assessments before calculating group contributions, since any future adjustments may have resulted in part of the group contribution being non-tax deductible.
The preliminary bill, which the Government submitted to the Council on Legislation (Sw. Lagrådet) on 18 February 2010, no longer includes a proposal on restricting the right to give group contributions between Swedish companies nor how to allocate income between companies in a fiscal commission. Apparently, the Government has listened to the criticisms of the proposal given during circulation, for instance by KPMG (for more information in Swedish, please click here).
In September, 2009, the Ministry of Finance issued a proposal including regulations on cross-border group contributions, please see TaxNews No. 13, 2009.
The proposal has been followed by a preliminary bill, which on 18 February 2010, was submitted to the Council on Legislation. The preliminary bill states that in certain cases a Swedish parent company will be admitted deduction for its foreign subsidiary's final loss.
We will shortly get back to you with a more detailed description of the proposal's section covering cross-border group contributions and its implication in practice, please see TaxNews No. 4, 2010.
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[2010-02-18]
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