Swedish tax proposals criticised for leniency

The carried interest tax proposal launched by Sweden’s Ministry of Finance has taken flak for being too generous to private equity.

The Ministry proposed a hybrid tax model whereby the first SKr5 million ($740,000; €562,000) would be taxed at the standard income tax rate of 57 percent (excluding payroll tax), while any money above that threshold would be taxed at 30 percent.

The proposed model is seen as a tax break by its critics when compared to the tax authority's original wish to tax all carried interest at the standard income tax rate of 57 percent.

In an interview with a Swedish radio station, minister of finance Anders Borg said: “We have served to sharpen taxation in this sector and bring in another hundred million in tax revenue, partly by raising taxes, and closing loopholes.”

The proposal is in the middle of a review stage where feedback is garnered and which ends on 30 April. The government has the opportunity to make changes before sending a final proposal to parliament.

One source close to the matter said there may be changes to the initial proposal or it may possibly be postponed. The ruling party does not have a majority in the government so it is dependent on the support of other parties.  

A government spokesperson said: “We will look at this and see if we have taken appropriate measures. From there we will see if we can make a law proposal, or if we have criticism that makes us do it all over again or puts the proposal on ice.”