Global Daily Tax News, Sweden Enacts Pillar Two Minimum Tax Law, (Dec 28, 2023)

Sweden's parliament, the Riksdag, has endorsed legislation to implement a Pillar Two minimum corporate tax of 15 percent for large multinational and domestic groups or companies with a combined annual turnover of at least EUR750m.

It is estimated that around 124 multinational groups headquartered in Sweden will be covered by the rules, with a total of 4,000 resident constituent entities. Further, there are also thought to be about 8,000 constituent entities in Sweden that are owned by foreign-headquartered multinational companies that are within scope.

The legislation transposes into Swedish law the EU's Minimum Tax Directive (EU Directive 2022/2523), with some changes specific to Sweden's situation, including amendments agreed in the area of accounting standards by the Riksdag.

The Directive provides that large multinational groups' profits should be liable to a corporate tax rate of at least 15 percent. The rules apply to any group, both domestic and international, with a parent company or a subsidiary situated in an EU member state, if the group's combined annual turnover is at least EUR750m, beginning for fiscal years from January 1, 2024.

If the minimum effective rate is not imposed by the country where the subsidiary company is based, there are provisions for the member state of the parent company to apply a "top-up" tax.